Scope 3 Emission · Climate Dictionary

Scope 3 emissions are all indirect greenhouse gas emissions that occur in a company's value chain, both upstream and downstream. Unlike Scope 1 (direct emissions from owned or controlled sources) and Scope 2 (indirect emissions from purchased electricity, steam, heating, and cooling), Scope 3 emissions are not under the direct control of the company. They include emissions from sources like purchased goods and services, business travel, employee commuting, use of sold products, and end-of-life treatment of sold products. Scope 3 often represents the largest portion of a company's carbon footprint, making it crucial for comprehensive climate action strategies, despite being the most challenging to measure and manage.

Broad Impact and Responsibility

1.Scope 3 emissions often account for over 70% of a company's total carbon footprint.

2.They extend beyond a company's direct control, encompassing emissions from suppliers, customers, and even competitors using the same resources.

3.Understanding Scope 3 means recognizing that a company's climate impact—and responsibility—extends far beyond its own operations.

Complexity in Measurement and Reduction

1.Measuring Scope 3 emissions is complex due to the vast, interconnected nature of global supply chains.

2.Reducing these emissions requires collaboration with suppliers, changes in product design, and influencing customer behavior.

3.Despite challenges, addressing Scope 3 is crucial for meaningful corporate climate action and can drive industry-wide changes.

Business and Reputational Risk

1.Investors, customers, and regulators are increasingly scrutinizing Scope 3 emissions.

2.High Scope 3 emissions can pose risks: supply chain disruptions, changing regulations, consumer boycotts.

3.Companies that manage Scope 3 well can gain competitive advantages, enhance brand reputation, and future-proof their business.

References

Scope 3 Inventory Guidance — EPA 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. An organization’s value chain consists of both its upstream and downstream activities.
Corporate Value Chain (Scope 3) Standard — Green House Gas Protocol 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.
Why Companies Should Be Required To Disclose Their Scope 3 Emissions — Centre for American Progress. Investors and other market participants concerned about climate-related risks have placed a major focus on greenhouse gas emissions—the emissions that cause climate change.