The Challenge of Scope 3 Emissions Data Collection
Accurately measuring and reporting Scope 3 greenhouse gas (GHG) emissions is a top priority for companies commiting to emissions reduction targets like Science Based Targets (SBT) or Net Zero Targets. However, given its breadth, complexity, and diversity, many businesses struggle with Scope 3 emissions data collection and measurement.
Defining Scope 3 Emissions
Scope 3 emissions are all of a company's "indirect" or value chain emissions. For many companies - particularly companies with a physical product and supply chain - Scope 3 emission will represent most of the business' carbon footprint.
Scope 3 emissions include purchased raw materials ("upstream Scope 3"), as well as distribution, transportation, and shipping products, plus customer usage and end-of-life treatment ("downstream Scope 3").
There are 15 categories of Scope 3 emissions:
- Purchased goods and services
- Capital goods
- Fuel- and energy-related activities
- Transportation and distribution (upstream)
- Transportation and distribution (downstream)
- Waste generated in operations
- Business travel
- Employee commuting
- Leased assets (upstream)
- Leased assets (downstream)
- Processing of sold products
- Use of sold products
- End-of-life treatment of sold products
Certain Scope 3 categories, like business travel and employee commuting, are easier to quantify. Data for other Scope 3 categories like purchased goods and services or end-of-life treatment of sold products may require complex modeling, inputs, and assumptions - and can be difficult to calculate. Depending on your industry, not all 15 categories will be relevant to your company.
Common Scope 3 Data Collection Challenges
Some of the factors that can make Scope 3 data collection and measurement so difficult and time-consuming include:
- Reliance on external organizations - For most companies, Scope 3 data collection requires engaging external partners, particularly suppliers, for information. These organizations may have different data collection policies, systems, and accounting standards, and may not share the same degree of accountability or urgency
- Supply chain traceability and transparency - Most organizations know their Tier 1 and Tier 2 suppliers, but may not have full visibility into their Tier 3 and Tier 4 sourcing relationships
- Company-specific and sector-specific methodology - While there are often resemblances between companies within a specific sector or industry, every company's value chain and Scope 3 profile is different. A Scope 3 measurement and reporting strategy needs to be tailored to a specific organization
- Carbon accounting methodology and data availability - What data does your organization have? What are the data gaps? Are we calculating emissions from spend? Activity? A blend of both?
- IT systems complexity - It's common during a company's Scope 3 journey that we need to work with them to map their different Scope 3 data sources across their existing IT systems, then figure out the best method to collect and process data from each one via APIs, integrations, exports, file uploads, and other data collection options
- Value chain emissions factors - Depending on how deep and thorough your lifecycle assessment (LCA) analysis of your products are, your organization likely needs to use specific emissions factors for your Scope 3 emissions calculations. There's no universal source of emissions factors (although we've been working hard to collect and build them into our software, and hope to open source a directory of emissons factors in the near future). The emissions factors you choose will need to come from government agencies, academic research, company reports, and third party standards organizations
But despite these challenges, Scope 3 data collection and accurate calculations are doable. In the following paragraphs we'll explain how and share some of our suggestions and experiences.
Scope 3 Emissions Data Collection in Practice
Scope 3 carbon accounting involves defining which Scope 3 categories to account for, collecting, organizing, and reviewing your emissions and environmental data, then performing carbon calculations to convert everything into CO2e.
With Scope 3 emissions specifically, we have seven data recommendations:
- Make sure you've already measured Scope 1 and Scope 2 - It doesn't make sense to engage on Scope 3 emissions until you understand your direct emissions and energy purchasing. Many of the learnings and processes developed for Scope 1 and 2 measurement can be expanded or applied to your Scope 3 efforts
- Prioritize material sources - Use materiality assessment analysis to identify your organization's largest Scope 3 categories. For example, if you're an apparel, food, or consumer products company your largest source of Scope 3 emissions will be purchased goods and services plus use of your products. Start there. Measure the biggest categories first
- Engage your vendors and suppliers - For Scope 3 categories like purchased goods and services and capital goods, use purchase data if you can't access primary data. Where you can, work directly with your vendors to collect data, ideally digital data you can easily integrate into your carbon accounting tools, rather than paper or document invoices and order forms that require manual input. Again, this is another place to focus and prioritize. Start with your most strategic Tier 1 relationships, and gradually work your way down your supply chain
- Set up scheduled surveys - Whether you need to collect supplier data, or information from employees on their commuting habits, it helps to set up and automate scheduled sustainability surveys to internal and external Scope 3 data providers with a tool like Brightest that directly integrates with the rest of your carbon accounting data
- Use weight for waste emissions - Emissions from waste generated in operations (recycling, waste-to-energy processing, and anaerobic digesting) should be calculated using pounds, kilograms, of tons of weight, or a proxy assumption if you don't have the resources to weigh your trash
- Look for smart data integration wins - Are you able to integrate or export a record of all your employee travel from your travel or expense reporting software? Does your financial accounting system collect vendor payments for Scope 3-related metrics? Try to find easy wins in your existing data sources that can be inputs into your carbon calculations
- Focus on continuous improvement and learning - Scope 3 emissions measurement is a journey that doesn't happen overnight. Supplier engagement, data collection, emissions factor research and modeling - all of these steps take time. The best thing to do is start by focusing on your most material and largest Scope 3 emissions categories, work through a system to start gathering data and engaging your value chain, and take it from there. If you need support speeding up the process, Brightest can help
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Your Next Steps with Scope 3 Data Collection
In 2022, thousands of companies, including Amazon, Apple, Google, Levi's, Netflix, Unilever, Walmart, and many more are setting emissions reduction targets and implementing sustainability measurement programs focused on Scope 3 emissions. Moreover, in addition to setting and achieve their own SBTs, leading companies are also working with their suppliers and vendors to help them understand and reduce their emissions.
Whether you and your company's new to carbon accounting or have been doing it for years, we recognize this is difficult, time-consuming work, particularly when it comes to gathering and fully understanding Scope 3 value chain emissions. Working with sustainability experts at hundreds of organizations, we've spent years developing flexible, comprehensive, and easy-to-use carbon accounting software, tools, and methods to help sustainability teams collect data easier, engage stakeholders, do more with less, and understand their full emissions picture across Scope 1-2-3.
Our carbon accounting and sustainability reporting software helps organizations efficiently collect Scope 3 GHG emissions data from a variety of sources
Whichever methods and tactics you use to improve your organization's Scope 3 emissions tracking, we wish you all the best as you continue your sustainability journey. If we can be helpful at all (at any step in your process), please get in touch. A central part of our mission and work here at Brightest is enabling better data-driven decision-making (and actions) that lead to a better future for us all.