FMJ.CO.UK SUSTAINABILITY FOCUS
CO2 CH4 N2O HFCs PFCs SF6
Scope 3
INDIRECT
investments
franchises
DECEMBER/JANUARY 2022 37
purchased
goods and
services
Protocol, they are defined as:
- Scope 1 covers direct emissions from
owned or controlled sources, such as
buildings and premises. This includes fuel
combustion and company vehicles.
Scope 2
INDIRECT
- Scope 2 covers indirect emissions from the
generation of purchased electricity, steam,
heating and cooling.
- Scope 3 includes all other indirect
emissions that occur in a company’s
value chain. This includes business
travel in non-company vehicles as well
as employee commuting. It also includes
emissions arising from your purchased
goods and services and both upstream
and downstream transportation and
distribution.
Until recently, many businesses have
focused on reducing emissions from their
own operations and power consumption
under the GHG Protocol Scope 1 and Scope
2 framework as they are largely within a
business’ control. You can, for example,
switch to renewable energy or commit to
electrifying your fleets to help reduce these
emissions. While using power from the grid
will still have emissions associated with
it, as the grid moves to renewables, these
emissions will reduce.
However, the move towards net zero
means that businesses need to look beyond
this and across their entire supply and value
chain, which is where Scope 3 comes in.
Scope 1
DIRECT
company
facilities
company
vehicles
Scope 3
INDIRECT
leased assets
This is where it gets more complicated as it
covers everything from the goods purchased
to the disposal of the products you sell. In
general terms - everything that happens
outside of your business’ walls.
Typically Scope 3 can account for 80-90
per cent of an organisation’s emissions.
However, while the Scope 3 standard is
the only internationally accepted method
of measuring value chain emissions,
measuring Scope 3 emissions can be
complex and time-consuming.
That said, there are numerous commercial
and reputational benefits to
understanding Scope 3
emissions. For example,
as they become more
climate aware,
consumers are
now more likely
to look at a
company’s
whole value
chain when
it comes to
brand loyalty.
For businesses
who form the supply
chain, future contracts
may depend on having a
strong sustainability plan in place.
That is why collaboration is crucial. With
more organisations in both the public and
private sectors now declaring Scope 3 as
part of their decarbonisation strategies,
the importance of understanding what this
means for your business’ net zero plans will
only grow.
DECIDING WHICH AREAS OF SCOPE 3 ARE
MOST RELEVANT
The first step towards e ective Scope 3
reductions is deciding where to focus your
e orts for maximum impact.
There are 15 distinct Scope 3 categories,
ranging from business travel to leased
assets, all relating to the indirect emissions
which come from your business’ value
chain. Depending on what your business
does, some will deliver more
valuable and measurable
results than others.
When deciding
where to focus
your e orts,
there are
several
things to
consider.
For each of
the 15 Scope
3 categories,
begin by using
high-level data
to determine the
contribution it makes to
your overall GHG emissions.
Then, go a little deeper by using criteria
such as size, influence or risk to the business
to decide whether the category should be
considered a relevant focus area for your
business’ Scope 3 emissions reduction
activity.
transportation
and distribution
processing of
sold products
end-of-life
treatment of
sold products
use of sold
products
leased assets
Upstream activities Reporting company Downstream activities
capital
goods
purchased electricity, steam,
heating & cooling for own use
business
travel
waste
generated in
operations
fuel and
energy related
activities
transportation
and distribution
employee
commuting
“Typically Scope 3 can account
for 80-90 per cent of an organisation’s
emissions. However, while the Scope 3
standard is the only internationally
accepted method of measuring value
chain emissions, measuring Scope 3
emissions can be complex and
time-consuming.”