Measuring and reporting scope 3 GHG emissions accurately is a key topic for most businesses and one that’s becoming increasingly important as more organisations commit to ambitious emissions reduction targets such as Science Based Targets or Net Zero Targets.
As part of its scope 3 reporting series, Greenstone held a webinar on 22 April, covering the increased reporting of scope 3 emissions as well as the challenges that your business might come across during the process of measuring and reporting. In this blog, we cover some of the challenges that companies face when reporting scope 3 emissions, 4 key steps on where to start and some top tips to help companies prepare.
The challenges of measuring and reporting scope 3 emissions
There are several hurdles companies can come across when it comes to the measurement and reporting of scope 3 emissions. Each business and organisation will face very specific challenges for them, but some of the most common ones include:
Reliance on external organisations
Most of the data associated with scope 3 emissions need to be accessed from sources external to your organisation (e.g. suppliers), which can make data collection more challenging.
The reliability of data
The reliability of the data you receive that’s outside of your company’s operational control can be difficult to manage, especially if you don’t have access to the primary data or their methodology.
Value-chain specific emission factors
The emissions calculation process for specific emission factors can be challenging especially when suppliers are not able to provide primary data.
Value chains can be complex and reaching out and engaging with all suppliers to collect data could be a daunting task, depending on the relationships and contact information you have.
Wider scope of data collection
If you have just been collecting and reporting scope 1 & 2, scope 3 adds a lot more data collection requirements.
Not all 15 categories are relevant
There is no ''one size fits all'' approach for scope 3, which can be complicated and may take longer to understand what applies to your business.
Overlaps between scope 1, 2 & 3 categories
There is a fine line between when the data should lie within scope 1, 2 or 3 categories and it is crucial for a company to first map out where the data needs to sit.
4 steps to starting your scope 3 reporting journey
The following steps and tips apply to organisations and businesses that are either in the beginning stages of their scope 3 reporting journey or have been reporting on scope 3 emissions for some time.
1. Understand your current data collection and reporting processes
- Decide which scope 1, 2 and 3 categories are you reporting against and where the current data gaps are.
- Data coverage and quality are key metrics that should be tracked for all emission scopes over as they can indicate where the improvement opportunities are.
2. Utilise guidance and resources
Scope 3 reporting can be a big undertaking for your business as it is a complex process to go through. Using guides and publicly available resources can help you during your journey. Some essential sources include:
- GHG Protocol: Corporate Value Chain (Scope 3) Standard
- GHG Protocol: Technical Guidance for Calculating Scope 3 Emissions
- EPA: Scope 3 Inventory Guidance
- SBTi: Best Practices in Scope 3 Management
3. Assess relevance of the 15 GHG scope 3 categories
- Focus on the material impact areas by undertaking an initial scope 3 screening that will help you identify where the hotspots are in your value chain in your organisation.
- Utilise sector case studies and best practice. This can be a solid starting point as it can provide you with some likely focus areas that you might need to address.
- Map material categories across your value chain. At this point, you should be able to identify who is involved in each category (e.g. suppliers, customers).
4. Plan data collection methods and calculation approaches
- Understanding when you can collect your primary data from external sources and when you might need to rely on estimations or high-level methods is determinant.
- Emissions factor selection will depend on the scope 3 category, the data you will be able to collect, as well as the nature of your company. It can be a combination of:
- National location-based methodologies vs. supplier-specific
- Supply chain spend / EEIO / LCA
- Use a system to manage or even automate the data collection process. As there are a lot of steps and parties involved, this can help make your journey in scope 3 reporting simpler.
Scope 3 emissions reporting - top tips
Be strategic in your engagement
For example, start with your Tier 1 suppliers when it comes to data collection. Generally, these are the suppliers that represent the biggest impact and those that you will get the most engagement from.
Keep the engagement simple
Try not to over-complicate the information and data you request and be conscious about over-burdening your suppliers with unrealistic deadlines.
Consider emissions from events
If your company usually runs events it’s important that you include that in your scope 3 reporting.
Ensure alignment with frameworks
Work towards coverage and quality
Scope 3 reporting is a journey. As you continue working towards your goal, you will gather more information and improve your overall performance.
How software is being used to accurately measure and report scope 3 emissions
Through its award-winning software solutions and client support team of reporting experts, Greenstone enables its clients to accurately calculate and report on all scope 3 categories. Greenstone’s suite of sustainability, ESG and supply chain software solutions provide integrated GHG emissions calculations following the GHG Protocol.
Greenstone Enterprise enables the complete scope 1, 2 & 3 calculations. Users can upload data from any category and automate that calculation process. This means that all 15 scopes 3 categories can be tracked against long term targets in our Enterprise Environment module.
SupplierPortal and InvestorPortal can be used to collect primary data from external organisations. So, data directly gathered from suppliers and portfolio companies is converted into carbon emissions data and automatically shared across our platform to ensure the clients have an accurate and responsive scope 3 emissions inventory.
If you are struggling to accurately calculate your organisation’s scope 3 emissions, or need some advice on where to start, talk to us.