The Scope 3 framework also supports strategies to partner with suppliers and customers to address climate impacts throughout the value chain. Investment portfolios are not usually static. These methods are designed for addressing scope 1 and 2 emissions, but they can be applied to scope 3 as well. Scope 3 emissions, also referred to as value chain emissions, often represent the majority of an organizations total greenhouse gas (GHG) emissions. The franchisor, the organisation granting the license, should report the the Scope 1 and Scope 2 emissions of franchisees. Powered byWPtouch Mobile Suite for WordPress, Take the pain out of reporting Employee Commuting emissions, Scope 3 emissions are not currently included in the, The emissions specifically related to purchases made from suppliers, fall into, This category is all the upstream emissions from the production of capital goods purchased or acquired by the organisation. organization. As organizations develop better methods of data collection and calculation, they can move from the collection calculation of spend-based data to activity-based data. Opting out of these cookies may impact some minor site functions. - Franchises It is also important to note that relevant categories may vary greatlyboth between and within industries. These are further divided into 15 distinct categories by the GHG Protocol. The organization may be able to expand its reporting by estimating these relevant categories in the future, which is recommended to increase completeness. A lock (LockA locked padlock) or https:// means youve safely connected to the .gov website. Capital goods, including all emissions from the production of purchased or acquired capital goods. Also referred to as value chain emissions, they are the hardest to measure and reduce. Scope 3 emissions, also known as value chain emissions, are indirect GHG emissions both upstream and downstream of an organisation's main operations. Through its award-winning software solutions and client support team of reporting experts, Greenstone enables its clients to accurately calculate and report on all scope 3 categories. Our podcast network features some of the brightest minds in sustainability, ESG, and climate technology. For GHG Protocol, the feedback from Kraft Foods informed the final Scope 3 standard WRI will be launching around the world this October. Scopes 1, 2 and 3 are a way of categorizing the different kinds of carbon emissions a company creates in its operations, and its wider value chain. Explicitly excludes low-pressure water dispensers and pot fillers from the faucet definition: Clarifies scope of coverage. What are Scope 3 Emissions? | IBM In addition, IBM provides insight to drive performance improvement in the form of internal reports that highlight emissions reduction opportunities, workflow management tools such as Kanban boards to encourage clear tracking and accountability for data capture tasks, and performance reports that keep key stakeholders informed of progress. For example, if a company buys steel from a supplier, the emissions resulting from the steel production would be upstream . operational sites or to customers, product use, and end-of-life Emissions from wastewater treatment relate to the energy used to supply the water, in the treatment process. 2,300 participants were involved from 55 countries; 96 members participated in technical working groups to draft the standard,and; 34 companies from various industries road tested the standard in 2010. Corporate Value Chain (Scope 3) Standard | GHG Protocol . For example, Table 8 of the GHG Emission Factors Hub lists factors aligned with the distance-based method. Scope 3 emissions are not currently included in the Streamlined Energy and Carbon Emissions Reporting. Encourage product innovation to create more sustainable and energy-efficient products. Direct emissions generated by assets owned or operated by the company (scope 1) Indirect emissions are generated from the purchase of energy; e.g. landfill, incineration and recycling. They are classed as Scope 3: Category 14 Franchises. They are indirect emissions that take place in an organisations value chain. Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly affects in its value chain. - Upstream transportation and distribution Scope 3 emissions are a category of greenhouse gas (GHG) emissions originating from business operations by sources that are not directly owned or controlled by an organization, such as supply chain, transportation, product usage, or disposal. Upstream scope 3 emissions refer to the suppliers of an organization or everything needed to produce their product. Measuring scope 3 supply chain emissions - choosing the right method, 4 key steps to starting your scope 3 emissions reporting journey, On-Demand Webinar | How to measure and report scope 3 GHG emissions accurately. Once you have entered your contact details, the resource will appear at the bottom of this page. Downstream, to the organisations customers. By Randi Morrison posted 11-14-2022 07:37 PM. People (and Local Authorities) in different regions view waste-disposal in different ways. This includes supply chain emissions as well as those from the use of a product. You can then use these calculations to identify hotspots, implement reduction measures, and track your progress. Why is the GHG Protocol important for companies? emissions is of most immediate relevance to organizations that report to Overview of GHG Protocol scopes and emissions across the value chain Source: Scope 3 Standard, page 5. Enable your organization The scope 3 emissions for one organization are the scope 1 and 2 emissions of another organization. - Build value chain emissions baseline and exchange data with suppliers. All other trademarks and company names are property of their respective owners. - develop effective strategies for managing and reducing Scope 3 emissions We encourage other businesses to similarly employ this effective method to measure, and subsequently address, greenhouse gas emissions from the entire value chain. A few ways to understand the definition of "Scope 3" emissions The Corporate Value Chain (Scope 3) Standard is designed to enable comparisons of an individualcompanys GHG emissions over time. They are indirect greenhouse gas emissions resulting from the organisations operations. The term covers the emissions from the movement of goods by land, sea and air. Engage suppliers Watch our free on-demand webinar Included in this guide This usually means all of the emissions a company is responsible for outside of its own operationsfrom the goods it purchases to the disposal of the products it sells. Organisations need to determine the total mass of products sold and its associated packaging. Push ecosystems Scope 3 emissions, also referred to as value chain emissions, often represent the majority of an organization's total GHG emissions. Build an actionable plan that makes the most of your data. Our tools enable companies to develop comprehensive and reliable inventories of their GHG emissions. This free, web-based tool helps overcome barriers to Scope 3 reporting by providing a quick, rough estimate of a companys GHG emissions, making it easier for both experts and novices to measure, report, and reduce emissions throughout their value chain. As part of this, our experts help you take pragmatic steps to measure your footprint, spending effort on the most material categories of emissions. Please click here to see any active alerts. Definition of Scope 3 Emissions Scope 3 emissions are emissions that result from activities not under the organization's direct control but from the organization's business. air travel, employee commuting). the supply chain alone,which is a large portion of the emissions Step 3: Improve and expand emissions estimate over time. One of the biggest challenges is establishing the boundaries for Scope 3 datadetermining which emissions categories to report, and the suppliers and data types within each. - Scale up buying groups to amplify demand-side commitments. Upstream leased Assets are classed as Scope 3 Category 8, whilst Downstream Leased Assets are Scope 3 Category 13. Therefore, understanding which categories are relevant to a company's operations is essential for accurate carbon footprint calculations and emission reductions. Necessary and Functional Cookies - These cookies are necessary for the Site to function and cannot be switched off in our systems. Instead of manual calculations, businesses can use software-based carbon accounting to calculate, report, and reduce their upstream and downstream emissions. Accelerate sustainability by managing all your environmental, social and governance (ESG) indicators in a single platform. Scope 1 covers direct emissions from owned or controlled sources. The GHG Protocol's Corporate Value Chain (Scope 3) Accounting and Reporting Standard (Scope 3 Standard) presents details on all scope 3 categories and requirements and guidance on reporting scope 3 emissions. We believe that by adopting the same standards, we can move ahead faster with confidence to tackle product emissions. In this Green Business Bureau article, we explain what scope 1, 2, and 3 emissions are, to help you understand the GHG Protocol emission classification system. You can manage your preferences at any time. Purchased goods and services, including manufacturing-related products such as materials and parts, and non-manufacturing-products like office supplies and furniture. Get in touch to see how our experts can help you. They are classed as Scope 3: Category 11 Use of Sold Products. To decipher which of the two an emissions activity belongs under, consider one simple question: a) Did my company or employees pay for the good or service, Or did my customers or consumers pay for the good or service? Greenstones suite of sustainability, ESG and supply chain software solutions provide integrated GHG emissions calculations in accordance with the GHG Protocol. Communication, collaboration and shared goals are key to achieving successful scope 3 disclosure. Optimize for CO PDF Category 4: Upstream Transportation and Distribution - GHG Protocol But there is a big problem: These avoided emissions claims are often unverifiable or inaccurate. hbspt.cta._relativeUrls=true;hbspt.cta.load(12523, '939c681f-fef0-4ab0-927d-12a99b87aa93', {"useNewLoader":"true","region":"na1"}); GHG Protocol , What Are Scope 1, 2, and 3 Emissions? | Blog | OneTrust Addressing Scope 3 emissions can help advance an organisations decarbonisation and sustainability journey. This includes a portion of the manufacturing companys Scope 1 (direct), Scope 2 (Indirect), as well us a portion of the manufacturing companys Scope 3 upstream indirect emissions from its value chain. Measuring Scope 3 emissions across the entire value chain can be complex, especially for organizations just getting started. "Once in a Lifetime" - Know more about Emily's experience as a Persefonite! Step 4: Disclose, communicate and track progress with reporting templates and custom reporting tools. They then need to estimate how to divide up the waste into different streams, e.g. Transportation and distribution: These activities are part of the upstream (suppliers) and downstream (customers) components of the value chain. Upstream Scope 3 emissions are those that result from the production of goods and services that an organization uses. If fuel activity data are available, the fuel-based method should be used, so the factors presented in Tables 2 and 3 would be applicable. PDF Scope 3 Emissions Calculation Methodology 2019 - BHP Reporting and reducing Scope 3 Two of the key drivers are Science-Based Targets and Net-Zero pathways. - Use of sold products Step 2: Establish a strategy for capturing the best information in the most efficient way to achieve the highest levels of accuracy. Scope 1 includes all direct emissions from an organization, such as company vehicles, emissions from manufacturing processes, and fuel combustion on site, such as burning gas to produce heat. Scope 3 is one of three emissions streams defined by the Greenhouse Gas Protocol (GHGP). PERSEFONI and PERSEFONI LOGO are trademarks of Persefoni AI and may not be used without permission. To calculate emissions, estimate the lifetime electricity consumption (in kWh) for all products sold in the reporting year. Figure 1. The emissions from using an iPhonecould take months or even years to equal those producedin makingit. Learn about partnership opportunities. Scope 3 Carbon Emissions: Seeing the Full Picture - MSCI This category is all the upstream emissions from the production of capital goods purchased or acquired by the organisation. To fully meet GHG Protocol standards, an organization must report emissions from all relevant scope 3 categories. Thisgenerally relates to waste sent to landfill and wastewater treatment. Persefoni also enables companies to add suppliers onto the platform and provide data for their portion of the companys scope 3 emissions categories 1-8. Scope 3 actors (from citizens consuming, to SMEs - small- and . - prepare accurate Scope 3 inventory reports using standard approaches and principles Scope 3 emissions are also indirect GHG emissions, accounting for upstream and downstream emissions of a product or service, and emissions across a business's value chain. Scope 3 Emissions | Definition, How They Work, Categories & Importance United States Environmental Protection Agency (EPA). Scope 3 Greenhouse Gas (GHG) emissions explained The greenhouse gas emissions resulting from how products are used variesconsiderably. Federal Register :: Energy Conservation Program: Test Procedures for Upstream Scope 3 emissions. Skip to primary navigation Skip to main content Skip to primary sidebar. Examples of upstream Scope 3 emissions sources are; business travel by means not owned or controlled by an organisation, waste disposal and purchased goods & services. To calculate your full carbon footprint, you must take into account both direct and indirect emissions across scopes 1, 2, and 3. - Employee commuting Increasingly, organizations are setting GHG emissions reduction targets that include their supply chain emissions, thereby linking the success of their suppliers to reduce GHG emissions to their ability to meet ambitious GHG reduction targets. Persefoni's post: " Upstream vs Downstream: Breaking Down Scope 3 " explains the difference between upstream and downstream emissions; depicts graphically and describes each of the 15 categories of Scope 3 emissions relative to the upstream/downstream classification; and provides a simple . - Introduce low-carbon governance to align internal incentives and empower your (Direct) Scope 1 emissions (Indirect) Scope 2 emissions (Indirect) Scope 3 emissions Who uses the GHG Protocol? Scope 3 Reporting | Requirements | FAQs | Guide | UK A lock (LockA locked padlock) or https:// means youve safely connected to the .gov website. By dividing its scope 3 carbon footprint into upstream and downstream sources, a business can better focus its emissions calculation and reduction efforts. Stay up-to-date on our latest product releases and updates. In some cases, an emissions estimate may be necessary to determine if the category is relevant based on size. Examples of upstream Scope 3 emissions sources are; business travel by means not owned or controlled by an organisation, waste disposal and purchased goods & services. Based on this information, companies can select which categories should be prioritized for more robust data collection and decarbonization strategies. Upstream versus Downstream Scope 3 Emissions Scope 3 emissions can be broken down into: upstream emissions that occur in the supply chain (for example, from production or extraction of purchased materials) and downstream emissions that occur as a consequence of using the organization's products or services. Corporations are increasingly claiming that their goods and services reduce emissions. The GHG Protocol splits Scope 3 emissions into two broad categories: upstream (from your suppliers) and downstream (from whoever buys your company's goods or services). Companies can start by using simple spend-based data to simplify this process. Net zero means the point at which global net human-caused GHG emissions, including CO2 and CH4, have been cut to as close to zero as possible with any remaining residual emissions permanently removed from the atmosphere. Scope 3 includes all other indirect emissions that occur in a companys value chain and include instances of carbon emissions outside of their direct physical footprint. Wherever you are in your carbon journey, were here to help. The Greenhouse Gas. The GHG Protocol defines 15 categories of scope 3 emissions, though not every category will be relevant to all organizations (see Figure 1). The new Corporate Value Chain Standard provides a much needed harmonized global methodology for businesses to measure value chain greenhouse gas emissions. Complete theform below to access this resource (the download will appear at the bottom of this page). Transportation and Distribution occurs in both upstream and downstream elements of the value chain. - Set ambitious targets on Scopes 12 and publicly report progress. The most ambitious scope 3 targets are set using a science-based targets setting method. To reduce upstream emissions, companies can change their procurement policies and choices; innovate their products, services, and business models; and engage with suppliers. They also have the most impact for organizations that operate in one of Upstream applies to suppliers of the organisation. - Downstream transportation and distribution Whilst reducing the emissions associated with your own organisations operational or equity boundary ensures that your own sustainability performance improves, tackling scope 3 requires engaging with many other businesses and stakeholders throughout the value chain. These are used to let you login and to and ensure site security. Over a three year period: The Scope 3 Standard provides a methodology that can be used to account for and report emissions from companies of all sectors, globally. - End-of-life treatment of sold products Should your scope 3 emissions account for more than 40% of your overall emissions, then the SBTi requires you to set a target to cover this impact. Scope 3 includes all other indirect emissions that occur in the upstream and downstream activities of an organisation. Downstream, to the organisations customers. Upstream Scope 3 emissions are emissions related to For example, you might already have data on purchased goods and services in your organizations accounting system, or you might be able to source data directly from your suppliers. Receive the latest news, insights and events from the Carbon Trust directly to your inbox. A convenient online training on accounting for emissions throughout the corporate value chain. Within the commercial real estate sector, a real estate firm that constructs new buildings will have a very different Scope 3 category mix than a real estate investment trust that only invests in existing constructions. - Investments. It is not designed to support comparisons between companies. Transportation and distribution are a good case in point as they are considered part of both the upstream and downstream value chain. Examples include most McDonalds burger outlets and Hilton Hotels & Resorts. Scope 3 emissions are split into 15 categories, which in turn are organized into two types--upstream or downstream emissions in the value chain. The Leading Resource on Next-Generation IT Infrastructure. Therefore minimising waste to landfill and incineration. Proposing Release, p. 156. The levers for reducing emissions across the value chain differ for downstream and upstream emissions. What are Scopes 1, 2 and 3 of Carbon Emissions? - Plan A Academy Net-zero goals demand similarly long term and well-defined emission reduction pathways. Sustainability Vision Ltd.takes the security of your datavery seriously. It also includes emissions from third-party warehousing along the supply chain. A franchise is a business that is licensed to sell or distribute another organisations goods or services within a specific location. Carbon accounting, like financial accounting, quantifies the impact of an organizations business activities though instead of financial impact, it measures climate impact. As Scope 3 emissions usually account for more than 70 percent of a business' carbon footprint, it is crucial that companies tackle Scope 3 emissions to meet the aims of . Then calculate electricity emissions using emission factors in the EF Hub. Scope 1 2 3 Emissions Explained: Understanding the GHG Protocol's Additionally, under the GHGP, Scope 1 and 2 emissions are mandatory to report, whereas Scope 3 emissions reporting is voluntary. Scope 3 also called value chain emissions accounts for around 90% of the average businesss climate impact. - Upstream leased assets, Downstream Scope 3 emissions are emissions related to hbspt.cta._relativeUrls=true;hbspt.cta.load(12523, 'ebbf3e6e-a6e6-4b26-b647-080798eee1db', {"useNewLoader":"true","region":"na1"}); Scope 3 Greenhouse Gas (GHG) emissions explained, Greenstone worked with Hypertherm to migrate all of its historical environmental data into Greenstones Enterprise and fully implement the software across the organisation. All you have to know, right here. Create transparency These emissions are a consequence of the companys business activities but occur from sources the company does not own or control. Accounting wise yes, but not in terms of action. Reporting greenhouse gas emissions is intended to encourage organisations to reduce their products in-use emissions. The scope 3 emissions for one organization are the scope 1 and 2 emissions of another organization. Step 3: Calculate emissions for each category using the most appropriate emissions factors and assessment methodologies based on the quality of data available. The inclusion of investments is designed mainly for financial institutions, but can be relevant to any organisation. Our analysis helps lay the foundation for your climate change strategy using insightful data to engage other value chain partners involved in your carbon reduction efforts. With time running out to make the drastic global emissions cuts required under the Paris Agreement, scope 3 offers an opportunity to drive rapid environmental engagement through supply chains, global and local businesses, local and national governments and consumers. Obvious items may include the emissions caused by producing food and household products consumed, including the energy intensive . No matter what your role is in your organization, we can help you meet regulatory requirements and achieve your net zero goals. Users of the standard can now account for emissions from 15 categories of Scope 3 activities, both upstream and downstream of their operations. Depending on the data available for the location of product use, apply eGRID subregion or U.S. national average factors. Released in 2011, the Scope 3 Standard is the only internationally accepted method for companies to account for these types of value chain emissions. Scope 3 emissions account for 75% of companies greenhouse gas emissions on average, Corporate Value Chain (Scope 3) Accounting and Reporting Standard. CGF represents more than 400 members in the Consumer Goods Sector with annual sales of more than $3 trillion. Whereas there are no CO2e emissions from using a screwdriver. Join our newsletter full of insights, experts, trends and news. When measuring flow rate upstream of a showerhead or faucet using a fluid meter (or equivalent device) as described in section 5.4.2.2(c) of ASME A112.18.1, ensure the fluid meter (or equivalent device) meets the . Some scope 3 categories may be relevant, but initially lack readily available data to use in estimating emissions. And finally, Scope 3 emissions are . According to McKinsey (link resides outside ibm.com), by 2021 nearly 240 companies have signed up for the Science Based Targets initiative (SBTi) (link resides outside ibm.com)an independent organization promoting climate action in the private sectorand 94% of these firms have committed to reducing emissions linked to their customers and suppliers. How does GHG Protocol reporting work? The Proposed Rules provide a non -exhaustive list of such upstream and downstream activities. Figure 2 shows an example progression over time of improvement and expansion. specialist software such as that provided by IBM Envizi. In fact for many organisations, this embodied carbon causes the greatest environmental impact; e.g. EPA Center for Corporate Climate Leadership, Corporate Value Chain (Scope 3) Accounting and Reporting Standard, The Global GHG Accounting and Reporting Standard for the Financial Industry, Partnership for Carbon Accounting Financials, Conversion factors 2022: full set (for advanced users), Greenhouse Gas Inventory Guidance: Indirect Emissions from Events and Conferences, ENERGY STAR Scope 3 Use of Sold Products Analysis Tool V1.2, Renewable Electricity Procurement on Behalf of Others: A Corporate Reporting Guide, Center for Corporate Climate Leadership Home, GHG Inventory Development Process & Guidance, Corporate GHG Inventorying and Target Setting Self-Assessment, Reporting Corporate Climate Risks and Opportunities, 4 (upstream transportation and distribution), 9 (downstream transportation and distribution), 12 (end-of-life treatment of sold products), The UK Department for Environment Food & Rural Affairs provides well-to-tank (i.e., upstream) emission factors for fuel in the ". - Processing of sold products A franchise is a business that is licensed to sell or distribute another organisations goods or services within a specific location. - Capital goods Specifically, Scope 3 requires organizations to look for instances of carbon emissions outside of their direct physical footprint and quantify them through the value chain outside of their direct control. Our work with the GHG Protocol was instrumental in guiding our first efforts towards environmental footprinting. Scope 3 Emissions: Upstream or Downstream? A .gov website belongs to an official government organization in the United States. A consultant can help assess whether you have access to primary or secondary activity data and where this data can be sourced. To read more about Scope 3 emissions from the organisation that defined them, click here. - Design value chain/sourcing strategy for sustainability. Advance their climate strategy to create genuine, quantifiable, and visible change. There are assets leased by the reporting organisation (upstream) and assets to other organisations (downstream). - Downstream leased assets Upstream emissions of electricity purchased by the university: extraction, production, and transportation of fuels or . Use sustainability as a catalyst for profitable business transformation. Research indicates that 5.5 times more emissions come from What are Scope 3 emissions? First, transport and distribution (T&D) losses, which applies to the losses in grid, the energy that is lost getting the electricity from the power station to the organisation that has purchased it. The Corporate Value Chain (Scope 3) Accounting and Reporting Standard allows companies to assess their entire value chain emissions impact and identify where to focus reduction activities. Figure 1. Scope 3 refers to all other indirect emissions generated throughout an organization's value chain. The complete guide to Scope 3 emissions | Supply Pilot For exampleautomobile companies manufacturing fossil fuelpowered cars would see a significant portion of their scope 3 emissions originating from downstream Category 11, use of sold products, whereas Fast Moving Consumer Goods (FMCG) firms would find most of their emissions coming from upstream Category 1, purchased goods and services.