Issue link: https://resources.tangoanalytics.com/i/1522480
CALCULATING SCOPE 3 EMISSIONS Companies are faced with a daunting level of complexity when trying to assess Scope 3 emissions because they take place outside of organizational boundaries and cannot be measured directly. This is on top of the fact that there is no straightforward and standardized way to calculate Scope 3 like there is for Scopes 1 and 2. Ultimately there is no one-size-fits-all approach to Scope 3 reporting, but what is important is that firms get started, even while using incomplete data. This allows firms to make mistakes and learn from them in preparation for more rigorous expectations in the future. Small iterative steps, while promoting full transparency around calculation methodologies are key. Steps to Get Started: Even if you plan to work with a consultant to guide your inventory process, it is recommended to take the time to review the accounting standards and methods, starting with the GHG Protocol Technical Guidance for Scope 3 Emissions. Review the Accounting Standards and Methods: Conduct a preliminary Scope 3 inventory to identify emission hotspots to know where to focus (you will need to define the boundaries of your operations, map out your value chain, and undertake a Scope 3 inventory, likely starting by using estimation until you can gather more robust data). When it comes to mapping the value chain, a common approach is to select your top product(s) by revenue and identify the suppliers for key components, focusing on areas where you might anticipate that there would be high emissions. If you are not sure where to focus, start by identifying your most significant direct suppliers, customers, and end users. Preliminary Inventories A meaningful and consistent comparison of emissions over time requires that companies set a performance datum with which to compare current emissions. Setting a base year is essential to be able to observe and account for changes and trends in your emissions. Select a Base Year Not all Scope 3 categories may be relevant to a particular reporting company. You will need to go through a structured process to understand the different Scope 3 categories and determine which are relevant for your company. Determine the Relevance of Scope 3 Categories Sustainability & Energy Management Simplified