Scope 3 - Challenges and Solutions 

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Climate reporting is rapidly evolving with new discourse and standards regularly emerging. In order to understand an organisation's environmental impact, stakeholders are encouraged to calculate greenhouse gas (GHG) emissions across the value chain. Gaining these measurable and comparable insights proves invaluable in sustainable development and organisation wide emission reductions. While direct emissions are important, these only account for a small portion of the overall carbon footprint, while indirect or Scope 3 emissions make up the vast majority. Scope 3 emissions are the indirect emissions from across the value chain such as suppliers emissions. Understanding and accurately reporting Scope 3 emissions is crucial to gaining an understanding of our true overall impact on the climate. 

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What is Scope 3 Emissions? 

Scope 3 emissions are an organisation's indirect emissions. These usually account for around 70% of the total emissions generated, this is why it is so vital that we measure, understand and compare our Scope 3 emissions. Not only to meet developing targets, but to ensure stakeholder expectations are met in terms of meaningful climate action. Scope 3 emissions can be categorised into 2 distinct groups- upstream and downstream emissions. Upstream Scope 3 emissions include purchased goods and services, business travel and employee commuting to name a few. While downstream emissions include use of sold products, downstream transportation, distribution, and investments.  

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Why are Scope 3 emissions important? 

Scope 3 emissions often make up the largest portion of an organisation's carbon footprint. As governing bodies and stakeholders increasingly call for full comparable and accurate carbon accounting, Scope 3 emissions are on track to become compulsory. Measuring Scope 3 emissions provides a substantially more detailed map of an organisation's impact on the environment, which is vital to aiding their sustainability journey. 

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Measuring Scope 3 emissions allows organisations to identify emission hotspots throughout the entire value chain. Ultimately, this allows organisations to implement the best and most effective emission reduction strategies. Furthermore, understanding Scope 3 emissions allows the organisation to recognise their most environmentally conscious suppliers and those who do not align with sustainable practices. 

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Gathering the full data set across all 3 Scopes allows for informed decision making across operations. This will benefit logistics, production, marketing and other core processes. By understanding the full organisational footprint, genuine, impactful strategies can be implemented across the board. 

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The Challenges

The core challenge of gathering Scope 3 emissions is motivating suppliers and those outwith the organisation to accurately measure and collect their emissions data. Once engaged, it becomes easy for organisations to access supplier data. However, finding actionable data is where the second challenge lies. To implement an action strategy we must understand the full scope and encourage suppliers to action change, this can be challenging. 

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Across industries there is a lack of knowledge on Scope 3 data, this creates a barrier at both the organisation and out with such as suppliers. Organisation wide awareness of Scope 3 emissions must be increased. This factors into the integration of Scope 3 considerations when making decisions surrounding goods and services although this is an essential element of steering and impacting Scope 3 emissions. 

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Collecting and reporting Scope 3 data can be both time consuming and resource intensive. This is due to organisations relying heavily on third party data sources, which are often not involved within the Scope 3 data collection process. As they are most likely not involved, they may struggle to grasp the data required and how to gather it. 

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Some data may be based on an industry standard which provides a  helpful insight but is not wholly accurate and specific to individual organisations. This means that developing and implementing reduction strategies can be a challenge due to no core baseline being identified, nor is there an accurate way to account for emission reductions. Another part of this challenge is that small sample sizes are used to generate the average data information, this means that when companies lack the statistical expertise, the data can be unreliable. 

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Poor quality data and lack of availability is also a challenge when looking at Scope 3 emissions data. Supply chain partners and smaller businesses often lack strong primary data or resources to accurately and efficiently measure it. Feeding into this is the lack of common data-sharing infrastructure across value chains and countries. In the absence of primary data, measuring Scope 3 is significantly more challenging and less accurate. 

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Overcoming challenges/ strategies 

The core mission is to accurately measure all three Scopes across an organisation. To overcome the challenges presented by Scope 3 we have identified several solutions. 

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Focus on areas that contain the largest impact. The areas that drive up overall Scope 3 emissions are vital to prioritise efforts and resources to accurately measure. Leveraging your data to focus efforts on areas of the greatest impact are key to success. 

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Build supplier relationships by making it as easy as possible for them to report their Scope 3 emissions. This may be in the form of providing information and resources for them to better understand the hows and whys of measuring all three of their scopes. Another way to aid the Scope 3 data collection process is to create a questionnaire for suppliers to complete. Data collection technology is also a great resource to aid small businesses. 

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Scope 3 data is optional now but soon it will be a requirement, as this transition happens, more guidance, resources and information will become readily available and accessible. Key global players in 2023 have begun to harmonise standards and guidance; the implementation of this aids the consistency and thus understanding of emission data collection. 

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Another great way to overcome data collection challenges is to collaborate with other organisations within the industry. This collaboration can reduce costs and increase supplier engagement.

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We hope that you now have a deeper understanding of Scope 3 emissions, what they are, why they matter, the challenges of collecting them and most importantly how to overcome them. 

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