How-To Calculate Scope 3 Emissions

September 15, 2020

How to Calculate GHG Emissions from Scope 3 Reducing supply chain emissions can seem challenging, as these emissions are outside of a company’s direct control and require a deep understanding of each scope both up and downstream.

Scopes 1-3 Defined

GHG Protocol is the world’s most widely used greenhouse gas accounting standards. Calculation guidance can be found here.

Scope 1: Direct emissions from a company’s operations or are under a company’s control, such as onsite fuel combustion, company-owned vehicles and in-house energy consumed by processing equipment.

Scope 2 Indirect GHG emissions that result from purchased and consumed electricity, heat, steam or cooling.

Scope 3: Other indirect emissions from the value chain activities. These emissions occur because of a company’s operations but are produced from sources neither owned nor controlled by the company. Examples include emissions generated by suppliers, transportation of goods, capital goods, employee commute and business travel and use and end of life of sold products.

Scope 3 is often the biggest contributor to emissions for industrial sites

As an example of Scope 3 emissions calculation, emissions from 25 industrial sites were calculated and the average proportion of each category is demonstrated in the following pie chart.

This carbon footprint calculation is the starting point for a low-carbon strategy and has identified that an industrial company’s supply chain accounts for the largest portion of its overall carbon footprint (28 percent for scopes 1 and 2 and 72 percent for scope 3)

The first category (54 percent) is the purchase of goods and services and includes all upstream (i.e., cradle-to-gate) emissions from the development of products. This was estimated using industry average emission factors and data on the mass of raw materials. The second category includes all energy – from fuel combustion to electricity consumed on site. Although 28 percent of carbon footprint represents a large chunk, it could come unexpected that energy, representing the entirety of scope 1 and scope 2 emissions, is not an even bigger proportion for operations of the industrial nature.

Collecting Data and Calculating a Carbon Footprint

Prior to diving into data collection for a carbon footprinting exercise, there are a series of steps that we will not cover in-depth, but must take place to ensure that it is a successful endeavor:

Choose a methodology
Determine the reference year
Define the organizational and operational scope
Determine the product(s) considered
Develop a cartography of the flows of CO2
Understand data accessibility

After these decisions have been made, and the scope of the calculation is clear, you may begin to collect the data and calculate a carbon footprint.

Data collection can be quite tedious the first time that a carbon footprint is performed on scope 3 because data is not always readily available, and companies are not typically used to handling scope 3 information. For example, the weight of the purchased materials may not be available, but rather a number of parts that must then be converted into weight.

We recommend collecting as much primary data as possible from the databases and, if available, using secondary data. Accuracy of data can also be a sticking point when it comes to calculating scope 3. We recommend not getting lost in the details. First, calculate CO2 from the most important sources and those known in detail. Then, calculate emissions from the least important sources in aggregate when greater detail is not available. For example, all raw materials purchased in small quantities can be grouped into a global category with only one average emission factor. ISO standards note a “materiality” limit, or a tolerance for errors and omissions of 5% over the entire carbon footprint, indicating that a certain level of estimation of emissions is acceptable.

Calculation of the carbon footprint enables a company to determine the stages of the life cycles that generate the most significant emissions (those most exposed to carbon price changes) and to identify the most emitting stages. These are the hot spots where the company can act first and foremost to make an immediate impact. Stay tuned for part 2 of this blog, where we discuss how to reduce emissions from scope 3.

Schneider Electric provides sustainability reporting services and support to companies — from building questionnaires to identifying a clear sustainability roadmap. Reach out to our team for more information.

To continue on to part 2 of this blog on how to reduce scope 3 emissions, click here!