Becoming a sustainable business starts with gaining a comprehensive understanding of a company’s greenhouse gas (GHG) emissions. Many of the world’s major companies are consistently making big improvements to the way they measure and report the emissions arising from their own operations and purchased electricity, their Scope 1 and 2 emissions. However, many are still grappling with how best to manage their Scope 3 emissions, those arising from activities in their wider value chain, from raw material sourcing to product disposal.
We continue to see an increasing amount of interest and activity in this area. Our clients are typically broadening their Scope 3 measurement and reporting activities and adding more activities to each of the 15 Scope 3 categories. This is being driven by a desire to make progress on sustainability performance and achieve improved reporting scores via respected frameworks, as well as to demonstrate progress to investors and other stakeholders.
As companies get to grips with analysing their wider carbon ecosystem, we are also seeing a great deal of innovation taking place. For example, companies in different sectors are innovating to incentivise suppliers to drive improvements, whether it’s in water use or energy efficiency, and they’re tracking these savings via their sustainability data management system.
In 2013, the GHG Protocol released a new set of guidance to help companies measure Scope 3 emissions. This provides a great deal of clarity on how to measure and calculate the emissions arising from each of the 15 Scope 3 categories. In particular, it includes more detailed calculation methods for category 1 ‘Purchased goods and services’ and for category 5 ‘Waste generated in operations, as well as extended guidance for category 15, ‘Investments.’
If your company is beginning to measure or scale up its measurement of Scope 3 emissions, we recommend firstly reading the guidance very carefully. It’s then advisable to conduct a full materiality assessment and decide which of the 15 categories are most relevant to your business. Cross-reference this with data availability to identify the areas where you’ll be likely to make the most impact. Finally, take action incrementally – don’t try to do everything at once.
Adopting smart measurement techniques
Cost-effective, efficient sustainability data collection and reporting requires a structured and systemised approach, particularly given the ever-expanding breadth and complexity of the data to be captured. Using a smart data management system in this context allows companies to put a framework in place to collect vital emissions data – this can be scaled year on year as companies increase the breadth of data gathered. Once the system is embedded as part of the data collection process, the overall reporting process becomes more straightforward and streamlined.