Seven ways to reduce emissions in your supply chain – demystifying Scope 3 greenhouse gas emissions

In most cases, over 60% of a company’s emissions lies outside its own operation, in the supply chain. New guidance released by the Science-Based Targets initiative aims to help demystify Scope 3 greenhouse gas emissions, supporting companies to make material emission reductions.

What are Scope 3 emissions and why are they important?

To help avoid the worst impacts of climate change, companies must reduce their greenhouse gas (GHG) emissions as much and as quickly as possible. This includes emissions from across the value chain (i.e. scope 3) emissions.

Scope 3 emissions often represent the largest portion of companies’ GHG inventories but due to challenges around data quality and degree of control, it can be difficult to know how to make meaningful Scope 3 emission reductions.

Despite the challenges, addressing Scope 3 emissions can lead to substantial business benefits. For example, companies can mitigate climate-related risks within their value chains, unlock new innovations and collaborations, and respond to mounting pressure from investors, customers and society.

How do you calculate Scope 3 emissions?

Calculating Scope 3 emissions can be complicated. The first step is to conduct a Scope 3 gap analysis or screening, to understand what is relevant and determine the materiality of each emission source. The GHG Protocol Scope 3 Standard outlines the components of a company’s value chain (upstream in the supply chain and downstream) that make up a Scope 3 footprint.

Did you know?

The Science-Based Target Initiative (SBTi) requires companies submitting targets to undertake a Scope 3 screening. If Scope 3 emissions make up over 40% of total Scope 1, 2, and 3 emissions then at least 66% of Scope 3 emissions must be included in the target.  Read a blog by our technical lead on science-based targets to understand more.

7 ways to reduce Scope 3 emissions

Once you’ve conducted a screening and have a good understanding of emission hotspots in your value chain the next step is to build a strategy to reduce Scope 3 emissions. This can be difficult due to the global scale and complexity of corporate supply chains. Recent guidance by the SBTi highlights some key levers companies can use to tackle Scope 3 emissions.


Scope 3 management is not easy, but new technologies such as data analytics, smart sensors, and blockchain will help by offering powerful insight into complex, global value chains. These technologies will play a key role in business innovation and offer exciting opportunities to improve a company’s environmental footprint, but also its bottom line.

Demonstrating the impact of Scope 3 management?

Complexities around data availability can make it difficult to show the positive impact of Scope 3 reduction strategies. A new standard is under development which aims to help companies account for emissions ‘interventions’ (i.e.  programmes and decisions that reduce emissions in key areas of their supply chain) and include them in reporting in a credible way.  The approach is to be used in conjunction with the accounting methodology provided in the GHG Protocol Scope 3 Standard.

We will keep you updated on the guidance as it develops.

What next?

Whether you’re are the start of your Scope 3 journey or looking to build a strategy to monitor and reduce key Scope 3 emission sources – we can help. Please get in touch at:

UPCOMING BLOG: Scope 3 biogenic carbon and ‘Net Emissions Change’ – requirements for science-based targets

Tackling Scope 3 for Science Based Targets

[Updated] Organisation completing science-based targets (SBTs) often experience challenges throughout the target setting process. Carbon Credentials has helped numerous clients satisfy the requirements set by the Science-Based Target initiative (SBTi) as many find the Scope 3 emissions assessment can often be the most troublesome requirement.

So what are Scope 3 emissions?

The Greenhouse Gas Protocol (GHG Protocol) is the most widely used accounting standard for GHG emissions. In another blog, my colleague Kyna wrote about the use of emission scopes for allocating emissions for investor reporting. The same methodology is also drawn upon by the SBTi to provide the basis for long-term target setting.

This GHG Protocol categorises an organisation’s emissions into three “scopes”.

  • Scope 1 emissions (direct emissions) are defined as emissions from sources that are owned or controlled by the organisation. This might include, for example, natural gas combusted in a boiler at a company’s head office.
  • Scope 2 emissions (indirect emissions) are emissions from purchased electricity, heat, steam or cooling consumed by the company, but generated elsewhere.
  • Scope 3 emissions (other indirect emissions) are emissions that occur as a consequence of the operations of the organisation but are not directly owned or controlled by that organisation. For example, emissions from waste generated by a company are defined as Scope 3 emissions.

The GHG Protocol Scope 3 guidance outlines the 15 different Scope 3 categories and each should be assessed in terms of their materiality in order to understand what an organisation should report on. A summary of the three scopes of emissions and their definitions can be seen in the infographic below.

Figure 1 A breakdown of how different emissions are categorised into Scope 1, 2, or 3.

Scope 3 emissions are especially important for organisations because they often make up the largest portion of the overall footprint. The challenge organisations face in quantifying Scope 3 lies in the degree of control they have over these activities and the collection of data associated with them. Paradoxically, the most significant emission reductions can be made by targeting Scope 3 activities. By calculating Scope 1, 2 and 3 emissions, an organisation can understand its full climate change impact and prioritise efforts to reduce emissions.

What does the Science-Based Targets initiative require for Scope 3?

Previously, the SBTi only recommended that companies submitting targets undertake a Scope 3 screening, but this is now a requirement of the process. This means that organisations must look at all relevant Scope 3 categories and determine their significance.

The SBTi requires that if Scope 3 emissions make up over 40% of total Scope 1, 2, and 3 emissions then the majority of Scope 3 emissions must be included in the target. The “majority” is defined as the top 3 categories or 2/3 of total scope 3 emissions.

In terms of ambition, it is not a requirement that Scope 3 targets are in line with a 2 degrees scenario, but that the targets are challenging and robust. The organisation must demonstrate that their Scope 3 targets are addressing the main sources of GHG emissions within their value chain in line with current best practice.

So how do I begin with setting a target on my Scope 3 emissions?

So far, most organisations have focussed on Scope 1 and 2 emissions and many are not yet even measuring Scope 3. The graph below demonstrates that over twice as many UK CDP respondents are setting Scope 1 & 2 targets versus those companies that are setting Scope 3 targets.

[image] Figure 2 A comparison of the number of UK companies setting Scope 1 and 2 versus Scope 3 targets as reported in CDP 2016.

Figure 2 A comparison of the number of UK companies setting Scope 1 and 2 versus Scope 3 targets as reported in CDP 2016.

It can be difficult to set a target when there is no baseline data to compare against. Subsequently, there is a lot of uncertainty about how to get started on the journey. The process diagram below gives a high-level understanding of the steps to evaluating an organisation’s value chain impacts:

[image] Figure 3 A high-level process diagram demonstrating the steps for understanding Scope 3 emissions.

Figure 3 A high-level process diagram demonstrating the steps for understanding Scope 3 emissions.

The first step in the process is to perform an initial Scope 3 gap analysis. The gap analysis is where organisations can assess current reporting against the 15 Scope 3 emissions categories to determine whether all relevant emission sources are covered. This analysis will allow you to either move on to set your targets or demonstrate that more work must be done in this area.

What should I do next?

If the results of the gap analysis show you haven’t quite analysed everything you need to, firming up the Scope 3 reporting boundary will be of huge benefit and move you along the SBT process. Remember, a central requirement of the SBTi is to demonstrate that you have considered the relevance of emission categories included and can provide a justification for excluding the others.

By evaluating Scope 3 emissions against the GHG Protocol Value Chain criteria, a company can identify which emission sources are truly relevant to their organisation and should, therefore, be included within the target. My colleague Scarlett Benson will describe this process in more detail in the second part of this Scope 3 SBT blog series.

If you would like help understanding your Scope 3 emissions or developing a science-based target, please get in touch with one of our experts here.

Emma Watson, Consultant

[Updated March 2018. Originally posted July 31st 2017]