eBooks & Guides

THE BAS ICS The Greenhouse Gas (GHG) Protocol, an established framework for the measurement and management of greenhouse gas emissions, breaks down emissions into 3 distinct categories or scopes for differentiating between direct and indirect emissions of a business and for more accurate measurement and reporting. As businesses and public organizations strive to take impactful climate action, it is essential to understand how to manage Scope 3 emissions. These indirect emissions from upstream and downstream activities like purchasing goods and services or the use-phase of products can make up 70-90% of a corporation's carbon footprint. As a result, Scope 3 presents the most significant opportunity to influence emissions reductions for many sectors. Tracking Scope 3 emissions can also help corporations reduce value chain risk, unlock innovations, and improve the quality of a firm's reporting. Externally, companies are facing pressure from their investors to report on and reduce their Scope 3 emissions, not to mention increasing regulatory requirements and customer expectations. However, most companies still face many challenges when measuring and managing Scope 3 due to a persistent lack of reliable primary data and the unwieldy size of Scope 3 emission sources for certain industries. Over the next couple of years, corporations and investors should start navigating Scope 3 reporting parameters to work through these challenges through trial and error. In this report, we take a deeper look into the activities that make up Scope 3 emissions, the nuances of calculating Scope 3, and the implications of mandated sustainability reporting on Scope 3. SCOPE 3 DEFINED: Scope 3 emissions, also known as value chain emissions, encompass all indirect emissions that occur in a company's value chain. These include emissions beyond the organization's direct operations, spanning both upstream and downstream activities. In most sectors, Scope 3 emissions typically exceed the direct emissions from Scope 1 (direct emissions from owned or controlled sources) and Scope 2 (indirect emissions from the generation of purchased energy) combined, thus representing a significant Sustainability & Energy Management Simplified portion of a corporation's carbon footprint. While these emissions are a consequence of your activities and decisions, they occur in sources that are owned or controlled by other entities.

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