Your Quick Guide to Scope 3.1 Emissions – the How, What and Why!
In pursuit of their climate goals, businesses are on a quest to uncover the holy grail of decarbonization – identifying where emissions come from and reducing those. Most understand that the answer often lies within the supply chain – and more precisely in Scope 3.1 emissions (Purchased Goods and Services).
This article gives you an introduction to Scope 3.1, why these emissions play a major role, which methods you need to calculate them, and why supplier engagement helps you reducing them.
What is Scope 3.1?
Scope 3 emissions encompass in 15 different categories all indirect emissions generated throughout an organization’s value chain, from the extraction of raw materials to the disposal of products. Scope 3.1, one of those 15 categories, specifically refers to the carbon emissions associated with the products or services an organization purchases. These emissions are bought in from suppliers and are often beyond the organization’s immediate control.
Why is Scope 3.1 Important?
Understanding and addressing Scope 3.1 emissions is crucial for several reasons:
- Holistic Climate Impact: Scope 3.1 emissions often constitute the largest portion of an organization’s carbon footprint. By ignoring them, companies fail to address a significant part of their climate impact.
- Stakeholder Expectations: Stakeholders, including investors, customers, and regulatory bodies, increasingly demand transparency and action on Scope 3.1 emissions. Failure to comply can lead to reputational damage and financial consequences.
- Regulatory Compliance: As governments worldwide tighten climate regulations, monitoring and reducing all emissions, but especially the significant portion of Scope 3.1 emissions, help companies avoid legal and financial penalties.
How to Calculate Scope 3.1 Emissions
Calculating Scope 3.1 emissions according to GHG Protocol can be a complex task, but essential for informed decision-making. Companies can chose from four different methods. The more effort these methods require, the better the results they produce:
- Spend-Based Method
- Calculation Basis: This method relies on the financial expenditures associated with products or services. It calculates emissions based on the amount of money spent on procurement or outsourcing.
- Benefits: The spend-based method is relatively simple and cost-effective to implement, making it suitable for organizations with limited resources. It provides a high-level overview of emissions associated with the supply chain.
- Average-Data Method
- Calculation Basis: The average-data method uses industry or sector-specific emission factors to estimate emissions. These factors are based on aggregated data from similar organizations.
- Benefits: It offers a quick and accessible way to estimate emissions, making it a good starting point for companies new to Scope 3.1 calculations. However, it may not be as accurate as other methods because it relies on generalized data.
- Hybrid Method
- Calculation Basis: The hybrid method combines elements of both the spend-based and average-data methods. It considers financial data along with industry-specific emission factors for a more tailored approach.
- Benefits: This approach strikes a balance between simplicity and accuracy. It provides a more customized estimate of Scope 3.1 emissions while still being feasible for organizations without extensive data resources.
- Supplier-Specific Method
- Calculation Basis: The supplier-specific method involves collecting detailed data directly from suppliers, including emissions from their operations and transportation. It offers the most granular and precise calculation.
- Benefits: This method yields the most accurate and specific results, allowing organizations to pinpoint emission hotspots within their supply chain. It also fosters transparency and collaboration with suppliers, encouraging joint efforts to reduce emissions.
Why the Supplier-Specific Method Stands Out
While the supplier-specific method achieves by far the best results compared to the other methods, it is also the most challenging to implement. The supplier-specific method is distinguished by its precision, aiming to provide a granular view of emissions associated with each supplier. However, this precision comes at a cost:
- Data Variability: Suppliers’ emission data can be highly variable, making it challenging to standardize and aggregate across a diverse supplier base.
- Data Availability: Obtaining supplier-specific data requires active engagement and cooperation from numerous suppliers, which can be time-consuming and complex.
- Data Validation: Verifying the accuracy of supplier-reported emissions adds another layer of complexity, as discrepancies can arise.
Kickstart your Supplier-Specific Data Collection
The Climate Intelligence Platform, a specialized Supplier Data Collection and Engagement Solution, offers a streamlined approach to tackle these challenges.
Start tracking progress towards your Scope 3 targets by accessing existing data from over 35.000 companies and proceed by gathering primary data from your suppliers. Utilize the supplier-specific data to refine your company’s own greenhouse gas emission calculations and reduction tracking.
The platform is used by leading companies across industries from Telecommunication, to Automotive and Manufacturing, over Food, Energy and FMCG to reach their Scope 3 targets.
Join them in making a difference!