Insights / What can businesses do about Scope 3 emissions?

What can businesses do about Scope 3 emissions?

15th September 2022

Scope 3 emissions are the greenhouse gas (GHG) emissions that your company is responsible for, but which are outside your direct control. And because they’re outside your control, it’s no surprise that they can be the hardest to reduce. But it’s possible to do it.

What can businesses do about Scope 3 emissions - hero

Across the UK, businesses are striving to reduce or eliminate their carbon emissions. It’s a vital part of what we need to do if we’re to keep our commitment to achieve net-zero by 2050. It’s also vital if we’re to avoid catastrophic climate change.

The path most businesses tend to follow is to mitigate or remove their emissions under Scope 1 and 2 of the GHG Protocol. But even once they’ve done that, it still leaves their emissions under Scope 3 untouched.

Scope 1 emissions are those that are directly linked to your organisation’s activities. Scope 2 are linked to the energy or electricity you use. It’s relatively simple to reduce or eliminate, them entirely by changing the way your organisation works, and by using only renewable source energy.

What are Scope 3 emissions?

Scope 3 emissions are the GHGs that are produced because of your organisation, but that you can’t control directly. They can be caused by your upstream or downstream activities.

They could come from areas like transport – if you use contractors to deliver your goods. Or they could include the emissions released during the production of goods you buy in to sell or which form part of your ultimate product. They tend to form by far the largest part of any organisation’s emissions.

Scope 1,2,3 chart

It’s more difficult – but by no means impossible – to take action to reduce or eliminate your Scope 3 emissions. But before you can do anything about these emissions, you need to calculate them.

Reporting Scope 3 emissions

The GHG Protocol identifies no fewer than 15 areas of activity from which Scope 3 emissions may come:

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

By dealing with each area individually, you can see how you can take a programmatic approach to dealing with the carbon produced by the different elements of your business. This affects your partners and suppliers too.

Measuring your emissions in this way can help you to:

  • Identify which parts of your supply chain are responsible for emissions
  • Quantify resource and energy risks in your supply chain
  • Highlight which of your suppliers are doing more or less in terms of sustainability
  • Spot opportunities to improve energy efficiency and reduce cost throughout your supply chain
  • Get your suppliers involved in reducing emissions and support their efforts – both within your supply chain and on their own account
  • Work with your team to reduce emissions from commuting and business travel.

Our Guide to Carbon reporting can help you work out how you can calculate and report your Scope 3 carbon emissions.

Once you know the size of the challenge you’re dealing with, taking action to mitigate or remove these emissions is much simpler.

How can your business mitigate its Scope 3 emissions?

When you’ve taken action to reduce GHG emissions as much as possible, the logical next step is to mitigate the emissions that remain – your ‘residual emissions’.

To achieve this, you’ll need the support of partners and suppliers who are involved in both your ‘upstream’ and ‘downstream’ activities. (Your first step would need to be to talk to those involved in all 15 of the areas listed above.)

Working together with them could enable you to:

  • Engage with them on a strategic level, sharing expectations and setting clear expectations for the emissions reductions you need them to make.
  • Share your emissions reduction targets – and ensure those targets are adopted and met.
  • Work together to achieve emissions reductions faster.
  • Make working together to reduce emissions a contractual requirement for your future business relationships. It could even be one of your KPIs when identifying appropriate investments or leased assets.

What about carbon emissions that can’t be avoided?

Once you’ve taken all the action you can to eliminate your own emissions and to ensure your partners are acting too, you can still do more to mitigate unavoidable GHGs. One way you can do this is by offsetting your Scope 3 carbon emissions.

For example, one of your distribution partners may report that their deliveries on your behalf are responsible for one tonne of CO2 emissions over the course of a year. You can offset emissions by choosing to support an activity that results in an equal amount of emissions being avoided. This might entail planting trees over a certain area. Because of this, the carbon emitted will be offset, making your distribution partner’s activities ‘carbon neutral’.

How can your business use carbon offsets to mitigate Scope 3 emissions?

Your business can choose to engage directly in carbon offsetting projects on its own account. You can also purchase carbon offsetting credits from the market. We can help with that too.

What do carbon offsetting credits prove?

As Scope 3 emissions are often far more difficult to reduce than Scope 1 and 2 emissions, offsetting provides an excellent opportunity to immediately reduce your business’s overall climate impact as a complement to a longer term strategy for reducing these emissions.

If you’ve made a commitment to decarbonise as part of your Environmental, Social and Governance policies, carbon offsetting credits show that you’re actually doing it. This is important information for potential customers and prospective business partners. And more importantly, it will show that your business is playing its part in helping us reach net zero.

If you’d like to find out more about how we can help your business reduce its Scope 3 emissions, please contact us using the form below.

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