Scope 3 Emissions: What They Are and Why They’re Important

What are Scope 3 Emissions?

As defined by the EPA, Scope 3 emissions are emissions created from the result of activities from assets not owned or controlled by a reporting organization, but the organization indirectly affects its value chain.

The Greenhouse Gas Protocol identifies 15 different categories of Scope 3 emissions. These include:

1. Purchased goods and services
2. Capital goods
3. Fuel- and energy-related activities
4. Upstream transportation and distribution
5. Waste generated in operations
6. Business travel
7. Employee commuting
8. Upstream leased assets
9. Downstream transportation and distribution
10. Processing of sold products
11. Use of sold products
12. End-of-life treatment of sold products
13. Downstream leased assets
14. Franchises
15. Investments

For most organizations, Scope 3 emissions account for most of their greenhouse gas emissions. Most of these emissions come from upstream or downstream activities, such as delivery of products, raw materials, or distribution.

Why Scope 3 Emissions Matter to Your Business

With stakeholder scrutiny of corporate climate action rising, overlooking Scope 3 poses growing risks. Investors now factor Scope 3 transparency and mitigation into evaluations of climate commitment. Regulations like the SEC’s proposed climate disclosure nod to a likely future where reducing Scope 3 emissions is a necessity for organizations in the future.

How to Measure Scope 3 Emissions

The Greenhouse Gas (GHG) protocol has established standard frameworks on how you can measure and manage emissions across your organization’s value chain. While there’s no official standard for what an organization should use, it is the most widely used standard.

When establishing your Scope 3 emission reduction strategy, include input from major stakeholders such as your board of directors and the C-Suite. For more information on this, learn how you can develop a strong ESG strategy.

How to Mitigate Scope 3 Emissions

The majority of Scope 3 emissions come from your company’s value chain. The supply chain and distribution practices are one of the leading causes of emissions, so the first step to evaluating your Scope 3 emissions is to look at your value chain.

Here are a few strategies you can take to reduce your Scope 3 emissions:

• Purchase raw materials from vendors with similar sustainability goals
• Purchase raw materials from more local vendors to minimize transportation emissions
• Minimize the amount of business travel
• Offset carbon emissions created by commuting by offering employees benefits like a Carbon Savings Account
• Implement opportunities to use sustainable energy options, such as recycling water or utilizing solar energy

To learn more about how Scope Zero’s carbon management platform can assist your company in addressing Scope 3 emissions through supplier integration and renewable energy investments, request a demo today.

Scope 3 Emissions FAQ

What is the difference between Scope 1, 2, and 3 emissions?

Scope 1 emissions are greenhouse gas (GHG) emissions that a company directly makes. A good example of this would be the emissions it creates by running boilers.

Scope 2 emissions are GHG emissions a company makes indirectly through purchased means. For example, purchasing electricity or cooling is an example of a Scope 2 emission.

Scope 3 emissions are greenhouse gas emissions that are created anywhere else in a company’s value chain.

What is an example of a Scope 3 emission?

An example of a Scope 3 emission is the emissions created by an employee commuting to work via car or bus. While these emissions are not directly created by the organization, they occur because of regular business operations.

Are Scope 3 emissions included in Net Zero targets?

A Net Zero goal refers to the amount of greenhouse gasses going out into the environment being balanced out by removal from the atmosphere. Many organizations aim to reach a net zero status as part of their ESG strategy. To achieve net zero targets, an organization needs to cover 95% of Scope 1 and 2 emissions in addition to 95% of Scope 3 emissions.

Minimize Scope 3 Emissions with Scope Zero

Provide employees with opportunities for financial wellness while minimizing Scope 3 emissions. Schedule a demo to learn how you can measure, reduce, and report Scope 3 work-from-home and commute emissions while reducing spend on sustainability goals.

Learn more.