Navigating Scope 3: How Can You Conduct Initial Estimates for Your Environmental Impact?
While accounting for a company’s Scope 1 and 2 emissions can be relatively straightforward, Scope 3 emissions – which is always the largest portion of a company's carbon footprint – present a more complex challenge. Imagine navigating a vast landscape without a map.
Initial Scope 3 estimates can act as a guiding tool, helping businesses establish data collection priorities and identifying carbon “hotspots,” to set the foundation for effective reduction strategies, set realistic targets, and advocate for the critical resources needed for your company to see steady decarbonization.
Understanding Scope 3 Categories:
Scope 3 emissions span your company’s value chain, and Scope 3 emissions sources exist upstream and downstream. Calculating and addressing Scope 3 emissions can be a complex process and each category contributes differently to a company's overall carbon footprint, requiring a tailored approach for accurate estimation.
Steps for Conducting Initial Estimates:
Conducting initial estimates for Scope 3 emissions involves a systematic approach. Here are 6 steps to get started with conducting your initial estimates:
1. Define Your Boundaries:
Before diving into the estimation process, it's essential to clearly define the boundaries of your Scope 3 inventory. Scope 3 emissions exist across 15 categories, including purchased goods and services, transportation and distribution, energy consumed during the product’s use, end-of-life treatment of sold products. Identifying which Scope 3 categories are to your business will set a framework for the estimation process.
2. Gather Data:
“Activity data” is the backbone of all emissions accounting. Collecting accurate and complete data is essential for estimating Scope 3 emissions. Engage with key stakeholders, suppliers, and partners to gather data on energy consumption, raw material extraction, transportation methods, and other relevant activities throughout your value chain.
3. Select Emission Factors:
Emission factors are the multiplier you use to convert activity data (business activities like dollars spent or gallons of fuel used) into greenhouse gas emissions. Common sources of credible emissions factors include: The US EPA Emissions Factors Hub and the UK’s Department of Environment, Food, and Rural Affairs (DEFRA). Which emissions factors you choose depends on where the business activity is taking place. For electricity use in the US, you can find emissions factors via the EPA’s Power Profiler website.
4. Apply Relevant Methodologies:
Different methodologies exist for estimating Scope 3 emissions, such as the market-based method and the location-based method. Choosing the appropriate approach depends on which of the 15 Scope 3 categories are most relevant to your company and what types of data you have available. Companies can choose to gather spend-based data (dollars spent on a purchase or activity), or pull data from an internal system to record the mode of transport and miles for each mode for all major business travel. As another example, most companies don’t know the specific daily commuting miles or mode of transportation of each of their employees. Because this portion of their Scope 3 may be insignificant (maybe around 3 percent of their total carbon footprint), companies often opt to build a simple model to conduct high level estimations rather than put effort into gathering that raw data. .
5. Engage with Suppliers
Collaboration is key when it comes to estimating Scope 3 emissions. Engage with suppliers and partners to gain insights into their environmental practices and encourage the adoption of sustainable measures. A transparent and collaborative approach will not only improve the accuracy of your estimates but also foster a culture of environmental responsibility throughout your supply chain.
6. Consideration of Uncertainties:
Recognize that estimating environmental impact, especially in the realm of Scope 3 emissions, comes with uncertainties. Factors such as data accuracy, evolving industry standards, and variations in emission factors can contribute to uncertainties. Clearly document assumptions and uncertainties in your estimates to facilitate continuous improvement and refinement of your environmental impact assessment.
Conclusion:
Conducting initial estimates for your environmental impact, specifically Scope 3 emissions, is a critical step toward building a sustainable business model. By defining boundaries, gathering accurate data, utilizing emission factors, applying relevant methodologies, engaging with stakeholders, and considering uncertainties, your organization can lay the foundation for a robust environmental impact assessment. Embracing transparency and continuous improvement will not only enhance the accuracy of your estimates but also contribute to the broader effort of combating climate change and fostering a greener future.
The Uplift Agency
Uplift builds strategies, programs, and communication campaigns that advance ESG in workplaces, supply chains and communities.
We know how to navigate the road ahead because we’ve already been down it – 90 percent of our team has led environmental or social programs in corporations or nonprofits. Because ESG is all we do, our services are more comprehensive and integrated than most firms.
