What Are Scope 3 Emissions, and Why Should Your Organization Care?

A look at the hidden emissions that can make or break your carbon-neutral commitment.

What Are Scope 3 Emissions?

Scope 3 emissions are indirect emissions that are a result of the activities of an organization but are not under the direct control of the organization. These emissions can come from a variety of sources, including business travel, employee commuting, waste disposal, and procurement.

While Scope 1 and 2 emissions are typically well-defined and easier to track, Scope 3 emissions can be more difficult to identify and quantify.
As a result, many organizations choose to focus their efforts on reducing Scope 1 and 2 emissions first.


Scope 1 vs. Scope 2 vs. Scope 3 Emissions

Scope 1, 2, and 3 is a way of categorizing a company’s greenhouse gas (GHG) emissions.
It’s often used by businesses to identify and track their direct and indirect emissions so they can set reduction goals accordingly.

Scope 1: Direct Emissions

These are emissions from sources that are owned or controlled by the company.
For example, if a company has its own fleet of vehicles, the emissions from those vehicles would be considered Scope 1.
These emissions are under direct control of the company and can be reduced through measures like switching to cleaner energy sources or improving efficiency.

Scope 2: Indirect Emissions

These are emissions from the generation of energy that the company consumes.
For example, if a company buys electricity from the grid, the emissions associated with generating that electricity would be considered Scope 2.
These emissions aren’t a direct result of the company’s own activities, but they are still indirectly under the company’s control. Companies can reduce them by choosing suppliers who support cleaner operations.

Scope 3: Residual Emissions

Scope 3 emissions are all other indirect emissions that are a result of the company’s activities but are not directly emitted by the company or indirectly emitted as a result of energy consumption. This includes both upstream and downstream activities.

For example, if a company’s employees travel by plane for business, the emissions from those flights—which were not directly emitted by the company nor indirectly emitted as a result of energy consumption—would be considered Scope 3.
Companies can reduce Scope 3 emissions by selling goods with lower GHG emissions, investing in green infrastructure, or setting policies to encourage sustainable travel.

Why Should Organizations Care About Scope 3 Emissions?

As energy efficiency becomes a growing trend in business, Scope 3 emissions are an increasingly important area of focus. Tracking Scope 3 emissions enables businesses to:

  • Effectively evaluate their performance.
  • Focus on creating value with their emissions strategies.
  • Create a lasting impact from their emissions reductions.

Additionally, addressing Scope 3 emissions can help to build goodwill with customers and other stakeholders.

Performance Evaluation

Scope 3 carbon and greenhouse gas emissions monitoring helps firms set goals and measure performance both internally and against their peers.
By determining the most critical sources of upstream and downstream emissions and mapping out where improvements can be made, businesses gain a comprehensive understanding of their entire carbon footprint.
This in-depth analysis allows organizations to make well-informed decisions about which actions will have the biggest impact on reducing emissions.

Focus on Value Creation

Emissions reduction strategies should focus on creating value, not just minimizing costs.
Scope 3 emissions can help businesses assess their level of exposure to climate risks (e.g., carbon and energy “hot spots” in the supply chain or use of products) and create more efficient value chains.
Additionally, by understanding the sources of emissions, businesses can develop products and services that directly address customer needs for low-carbon options.

Create a Lasting Impact

Addressing Scope 3 emissions is an opportunity for companies to not only reduce their own environmental impact but also help their suppliers and customers do the same.
In many cases, the most impactful way to reduce Scope 3 emissions is to work with suppliers and customers to change their practices.

For example, a company could invest in green infrastructure or set policies to encourage sustainable travel. By taking these types of actions, businesses can create a lasting impact that goes beyond their own operations.

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