What are Scope 3 emissions?

‍Whatis Scope 1 to 3?

In the world of sustainability and environmental management, "scopes" refer to the categories of greenhouse gas emissions caused by an organization. This categorization helps companies to calculate their carbon footprint and define measures to reduce their emissions.

The origin of the Scopes dates back to 2001, when the Greenhouse Gas Protocol (GHG) created an international standard for emissions reporting. Prior to the introduction of the GHG Protocol, there was no generally accepted method by which companies could quantify their contribution to climate change. The clear division into Scopes 1, Scope 2 and Scope 3 enables companies to present a structured and comparable method for calculating and reporting their carbon footprint. In addition, the GHG Protocol and the scopes are the first uniform standard that is recognized by both companies and environmental organizations. 

What belongs in Scope 3?

Scope 3 emissions, often referred to as the largest part of a company's corporate carbon footprint, are a key factor for companies that want to calculate their carbon footprint and set sustainability targets. Under the Greenhouse Gas Protocol, Scope 3 emissions are defined as indirect emissions that occur outside a company's own business activities but are nevertheless part of its value chain.

Scope 3 includes emissions resulting from the production and transportation of purchased products and services, business travel and employee commuting, the use of products by end consumers and the disposal of products sold. Scope 3 also includes investments and the outsourcing of business processes.

How do Scope 3 emissions differ from Scope 1 and 2 emissions?

Scope 3 emissions differ fundamentally from Scope 1 and Scope 2 emissions in terms of their origin and the influence a company can exert on them.

Scope 1 emissions are direct emissions caused by a company itself, for example through the combustion of fuels in its own or controlled sources such as air conditioning systems in companies, company-owned vehicles or production processes. These are usually directly measurable and can be reduced through direct measures taken by the company.

Scope 2 emissions are indirect emissions resulting from the generation of purchased energy. This includes electricity, steam, heat or cooling that a company purchases for its operating activities. Companies can influence these emissions, for example by switching to renewable energies or purchasing electricity from lower-CO₂ sources.

How does Scope 3 vary by division?

In a manufacturing company, Scope 3 emissions can arise from the production of the materials it purchases, for example. The emissions here are often high, as the materials used in the production processes themselves and the associated energy consumption must be taken into account. In service companies, on the other hand, the largest Scope 3 emissions could result from business trips or employee commuting.

For companies that manufacture and sell air conditioning systems in companies or other products, Scope 3 emissions also include the use and disposal of these products by end consumers. Scope 3 also includes emissions generated by the use of services, such as banking services or consulting services. In general, processes in the value chain that are outside the company's direct sphere of influence or take place after the sale are more difficult to determine.

Why are Scope 3 emissions important?

Scope 3 emissions are crucial for a holistic understanding and reduction of the corporate carbon footprint. They include indirect emissions along the value chain, which often make up the majority of a company's carbon footprint. For companies where carbon accounting is mandatory, it is essential to record and manage these emissions in accordance with standards such as ISO 14064 and the Greenhouse Gas Protocol. The correct calculation and reporting of Scope 3 emissions is essential for the sustainability strategy and compliance with reporting obligations. Tools such as CO₂ footprint calculators help companies to effectively quantify their Scope 3 emissions.

When will Scope 3 become mandatory?

With the new CSRD reporting guideline, the calculation and documentation of Scope 3 emissions will become mandatory for many companies once the double materiality analysis has been carried out.

How are Scope 3 emissions measured?

Measuring Scope 3 emissions for a company that wants to calculate its carbon footprint is done through a detailed analysis of the entire value chain. This involves applying the Greenhouse Gas Protocol, which defines carbon accounting across 15 categories of Scope 3 emissions. The calculation of these emissions often involves complex data from the entire supply and distribution chain, including the use and disposal of products. 

The best measures to reduce Scope 3 emissions?

To effectively reduce Scope 3 emissions, companies should analyze their entire supply chain in terms of their carbon footprint. Partnerships with suppliers to promote sustainability, investments in environmentally friendly technologies and the promotion of the circular economy are key measures. Another step is switching to renewable energy and optimizing logistics. In addition, the use of carbon footprint calculators helps to record emissions and calculate the carbon footprint. Companies can also work with their customers to increase the sustainability of products and thus reduce CO₂ emissions along the value chain.

Software for measuring Scope 3 emissions

Specialized software solutions are available for recording, analysing and managing the scopes, which help to automate CO₂ accounting and implement the entire decarbonization strategy on a single platform. These tools also facilitate compliance with reporting standards such as the CSRD or ISO 14064.

Carbon accounting software enables companies to streamline and automate their carbon accounting, with comprehensive sustainability software allowing companies to carry out their entire decarbonization journey on a single platform. 

Planted supports companies with a holistic sustainability platform for carbon accounting, decarbonization and audit-proof ESG reporting. The calculation of the carbon footprint to record the scopes takes place intuitively within the software, is based on the GHG Protocol and is certified by TÜV Rheinland. With personal consultants, Planted also helps companies to reduce their internal emissions with the involvement of their employees.

Book your free, no-obligation consultation now and start your journey towards Net Zero.