The Invisible Impact: A Deep Dive into Scope 3 Emissions Examples by sector

The Scope of Scope 3 is Larger Than You Imagine 

When we talk about climate change and corporate responsibility, the term “scope emissions” often surfaces, particularly Scope 3. These emissions, unlike their direct Scope 1 counterparts or indirect Scope 2 siblings, encompass all other indirect emissions that occur in a company’s value chain. They are the shadow lurking in our environmental impact, often accounting for the lion’s share—typically 80–90%—of a company’s carbon footprint. But what makes Scope 3 particularly insidious is its pervasive nature, touching on every facet of a business’s operations, from the procurement of raw materials to the end-of-life disposal of its products. 

It’s a Two-Way Lane- Scope 3 Emissions Examples

Delving into Scope 3 emissions is akin to embarking on an expedition through the extensive networks that sustain modern businesses. It’s a two-way classification where both upstream and downstream activities contribute to a company’s carbon narrative. 

In Upstream classification, we consider the emissions from producing the goods and services a company purchases. For example, the carbon footprint of manufacturing the steel used in automotive production, or the greenhouse gases emitted during the cultivation of raw materials for the food industry. 

In Downstream classification, we journey through the emissions tied to the distribution, use, and disposal of a company’s products. This includes the energy consumers use to operate appliances, the transportation of products to end-users, and the eventual waste generated when these products are discarded. 

Here are some more examples, crafted to connect with you on a personal level: 

Upstream Activities:

• Purchasing Office Supplies: For a marketing firm, the carbon footprint of procuring paper for brochures.
• Manufacturing Components: If you’re in electronics, think about the emissions involved in creating the batteries that power your devices.
• Transporting Raw Materials: Imagine the greenhouse gases emitted while shipping cotton to your textile factory.
• Producing Capital Goods: Consider the emissions from manufacturing the machinery used in your coffee roasting plant.
• Waste Generated in Operations: The emissions tied to disposing of waste in your corporate offices.
• Business Travel: The carbon footprint of your sales team’s flights across the country.
• Employee Commutes: The daily emissions from your employees’ journey to the office, whether by car, train, or bike.
• Leased Assets: For a fashion retailer, the emissions associated with the buildings you lease for your stores.
• Investments: The indirect emissions from your company’s investment in a startup developing new packaging solutions.

Downstream Activities:

• Transporting Finished Products: If you are a watch manufacturer, the emissions to package and deliver your watches.
• Use of Sold Products: The energy consumption and emissions when customers use your home appliances.
• End-of-Life Disposal: How the materials of your sports equipment degrade in landfills.
• Processing of Sold Products: The emissions associated with a third-party service refurbishing your returned electronics.
• Franchises: The footprint of your branded café’s daily operations worldwide.
• Customer Travel to Stores: The emissions generated by customers driving to your outlets.
• Use of Digital Services: The carbon impact of streaming services for an IT company, from server energy use to consumer device consumption.
• Packaging Disposal: If you’re a food and beverage company, consider the end life of your packaging materials.
• Employee Working from Home: The indirect emissions from your staff’s home offices.
• Corporate Financial Services: The emissions tied to the banking and insurance services your company utilizes.

Industry-wise, Scope 3 emissions present a unique and often overwhelming challenge across various sectors due to their indirect nature and the broad activities they encompass 

For example, in the manufacturing sector, Scope 3 emissions can arise from both upstream activities like the procurement of raw materials and downstream activities such as the use phase of sold products and end-of-life disposal.

In the automotive industry, significant Scope 3 emissions are generated from the use of sold products, highlighting the environmental impact of vehicles during their operational life.

Similarly, in the food industry, emissions can span from agricultural production to consumer food waste, encompassing a wide range of activities outside the direct control of the producing companies.

Each of these examples not only sheds light on the diverse ways in which your business impacts the environment but also underscores the interconnectedness of our global ecosystem. Understanding and addressing Scope 3 emissions is not just about compliance or marketing—it’s about taking responsibility for the entire lifecycle of your products and services, making choices that benefit not just your bottom line but the planet as well. 

Many leading organizations across various industries have recognized the importance of reporting Scope 3 emissions as part of their sustainability and corporate social responsibility initiatives. Here are examples of some organizations that actively report on their Scope 3 emissions: 

1. Unilever: As a multinational consumer goods company, Unilever has been at the forefront of sustainability reporting, including comprehensive data on Scope 3 emissions. They focus on reducing emissions across their value chain, from sourcing raw materials to the use of their products by consumers. 
2. Google: Google has committed to operating on carbon-free energy 24/7 by 2030 and includes Scope 3 emissions in its detailed environmental reports. Their reporting covers emissions from business travel, employee commuting, and the production of sold products. 
3. Microsoft: Microsoft has pledged to be carbon negative by 2030 and includes Scope 3 emissions in its environmental sustainability reports. They actively work on reducing emissions related to their supply chain, product use, and employee business travel. 
4. Walmart: The retail giant reports on Scope 3 emissions, particularly focusing on emissions from purchased goods and services, as well as the end use of sold products. Walmart aims to engage its suppliers through the Project Gigaton initiative to reduce emissions in its global value chain. 
5. Apple: Apple’s Environmental Progress Report includes Scope 3 emissions, with a significant focus on reducing emissions from product manufacturing, which constitutes the largest portion of their carbon footprint. Apple works closely with suppliers to increase the use of renewable energy in the production process. 
6. Coca-Cola: The beverage company reports Scope 3 emissions related to its value chain, including packaging, distribution, and refrigeration of its products. Coca-Cola aims to reduce its carbon footprint by improving packaging sustainability and energy efficiency across its operations. 
7. HSBC: As one of the world’s largest banking and financial services organizations, HSBC includes Scope 3 emissions in its reporting, covering areas such as business travel and the indirect emissions associated with lending and investments. 

These organizations demonstrate leadership in sustainability by not only focusing on direct emissions from their operations (Scope 1 and 2) but also addressing the broader impact of their value chains through Scope 3 emissions reporting. By doing so, they are taking a comprehensive approach to understanding and reducing their environmental impact. 

Expanding the Horizon: Advanced Strategies for Managing Scope 3 Emissions

Quantifying Scope 3 Emissions in the Technology Sector

In the technology sector, Scope 3 emissions are predominantly generated through extensive supply chains and product lifecycles. Measuring these emissions involves assessing the environmental impact of cloud computing, component production, and device disposal. As tech companies face pressure to reduce their carbon footprint, accurate quantification becomes crucial to identify significant emission sources and implement effective reduction strategies.

Impact of Scope 3 Emissions on Financial Services

Financial services influence Scope 3 emissions through their investment and lending practices. By integrating emissions assessment into their portfolio management, financial institutions can encourage sustainable practices across industries. Adherence to frameworks like TCFD helps these institutions assess and disclose the carbon impact of their financed activities, driving a broader commitment to climate goals.

Scope 3 Emissions in the Consumer Goods Industry

In the consumer goods industry, Scope 3 emissions span from production to post-consumer disposal, with significant impacts arising from packaging, transportation, and waste. Embracing circular economy principles, such as sustainable packaging and product recycling, can drastically reduce these emissions. Companies leading in this area demonstrate how industry-specific challenges can be turned into opportunities for innovation and sustainability leadership.

Innovative Reduction Strategies for Scope 3 Emissions

Companies are increasingly turning to innovative strategies to tackle Scope 3 emissions, focusing on collaboration and technological advancement. Key approaches include:

1. Supplier Engagement: Encouraging suppliers to adopt renewable energy solutions and improve their manufacturing processes to reduce emissions.
2. Product Redesign: Developing products that are more energy-efficient or easier to recycle can significantly lower emissions during consumer use and disposal.
3. Logistics Optimization: Implementing more efficient logistics and distribution strategies, such as route optimization and switching to lower-emission transport modes.
4. Extended Producer Responsibility: Initiating programs to take back used products for recycling or disposal to manage end-of-life emissions effectively.
5. Digitalization: Utilizing digital tools to improve the efficiency of operations and reduce resource wastage, indirectly cutting down on Scope 3 emissions.

These strategies not only help reduce emissions but also often lead to cost savings and enhanced corporate sustainability profiles.

Where to Begin 

Understanding and computing Scope 3 emissions might seem daunting. 

 The challenge lies in the vast amount of data scattered across different systems, often misclassified, making it hard to get a clear picture. Adding to this, Activity-based data is rare and hard to find. Emission factors vary by region and category and are not always available. Getting accurate data from suppliers is another hurdle, as not all have the capability to calculate their emissions. 

Yet, with the right approach, it becomes a manageable task. Starting with an inventory of your emissions sources is the first step. Mapping out all the activities that contribute to your carbon footprint—both upstream and downstream—provides clarity and direction. From there, consulting with departments across your organization can help gather the necessary data, turning a seemingly Herculean task into a series of actionable steps. 

Finding the Hidden 

Taking stock of Scope 3 emissions often reveals hidden aspects of a company’s environmental impact. For instance, a deep dive into the lifecycle of a product might uncover that significant emissions are associated not with its manufacture but with its disposal. This insight can lead to strategies focused on extending product lifecycles or improving recyclability. 

The Way Ahead 

As businesses chart their course through the complexities of Scope 3 emissions, developing a robust Scope 3 strategy is also essential. This strategy must balance the dual objectives of trusting our initial emission data—to swiftly identify and leverage reduction opportunities—and ensuring rigorous data quality standards. By adhering to best practices in data management, companies can effectively track the impacts of their reduction initiatives, ensuring meaningful progress towards sustainability goals. It’s a forward-looking approach, marrying confidence in action with the precision of monitoring, all aimed at a sustainable future. Book a demo today!

FAQs

1.What are Scope 3 emissions?

Scope 3 emissions are indirect emissions that occur in a company’s value chain, including both upstream and downstream activities. They are not produced by the company itself but result from activities like business travel, procurement, waste disposal, and use of sold products.

2. Can you provide examples of Scope 3 emissions by sector?

• Manufacturing: Emissions from procured raw materials and outsourced activities.
• Technology: Emissions from data centers, third-party cloud services, and end-user device usage.
• Retail: Emissions from transportation of purchased goods and waste generated by product packaging.
• Automotive: Emissions from the use of sold vehicles and end-of-life vehicle processing.

3. How do Scope 3 emissions differ from Scope 1 and 2 emissions?

• Scope 1: Direct emissions from owned or controlled sources, such as company vehicles and facilities.
• Scope 2: Indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting company.
• Scope 3: All other indirect emissions that occur in a company’s value chain.

4. Why is it important to manage Scope 3 emissions?

Managing Scope 3 emissions is crucial for comprehensive greenhouse gas (GHG) management, as they often represent the largest source of emissions and offer significant opportunities for reductions and engaging the supply chain in sustainability efforts.

5. What strategies can companies use to reduce Scope 3 emissions?

Companies can reduce Scope 3 emissions through supplier engagement programs, efficient logistics, sustainable procurement policies, and by encouraging or facilitating lower emissions from the use of their products by consumers.