The Scope 3 Journey: Turning Hidden Emissions into Net Zero Action

In the tenth session of the Navigating Net Zero webinar series, we delved into the most complex but crucial aspect of carbon accounting: Scope 3 emissions. While Scope 1 and 2 are relatively manageable, Scope 3 represents the majority of a company’s carbon footprint—and poses the greatest challenge. Here's a comprehensive overview of the insights, challenges, and practical solutions covered during this session.

Scope 3: Understanding the Complexity

Scope 3 emissions include 15 categories of indirect emissions that occur across a company’s value chain, both upstream and downstream. Key challenges include:

1. Category Confusion

• Upstream vs. Downstream: Misunderstanding leased asset directionality
• Transmission losses: Often miscategorized under Scope 2 instead of Scope 3
• Fuel refining (Well-to-Tank): Frequently overlooked
• Water and wastewater emissions: Incorrectly excluded from Scope 3

2. Data Collection Gaps

• Limited stakeholder engagement and poor value chain visibility
• Lack of supplier willingness or infrastructure to share emissions data
• Incomplete or unvalidated activity data

3. Emission Factor Challenges

• Varied sources with significant discrepancies (e.g., India’s CEA vs. UNFCCC or IEA)
• Confusion around localized vs. international factors
• Missing factors for niche categories (e.g., electronics, services)

Scope 3 Activity Breakdown

Each Scope 3 category has unique emissions boundaries and data requirements. Highlights include:

• Purchased Goods and Services / Capital Goods: Material type, quantity or spend; use cradle-to-gate boundaries
• Transportation & Distribution (Up/Downstream): Distance, transport mode, emission intensity
• Waste Generated in Operations: Type, weight, treatment method
• Employee Commuting / Business Travel: Mode of travel, distance per trip
• Leased Assets (Up/Downstream): Energy consumption during lease period
• Investments / Franchises: Proportional Scope 1 & 2 data from portfolio companies
• Fuel & Energy-related Activities: Refining, transmission losses, upstream fuel emissions
• Use of Sold Products / End-of-Life: Lifetime energy use or disposal emissions

Case Study: University in India

A real-world Scope 3 implementation was showcased through a central university with 7000+ students and 50+ buildings. Highlights:

1. Scope 1: Diesel gensets, campus buses, refrigerant leakages

2. Scope 2: Grid electricity (India CEA EF used); rooftop solar offset

3. Scope 3:

• Business Travel: 4.4 tCO₂e (air travel)
• Employee Commuting: 63.2 tCO₂e
• Student Commuting: Counted under Downstream Transportation
• Capital Goods: Desktop computers
• Purchase of Services: Housekeeping and paper use
• Waste Generation: Food and plant waste
• Fuel & Energy-related Activities: Well-to-Tank emissions for diesel and transmission losses for electricity
• Upstream Leased Assets: Guest house with electricity usage

Total Emissions:

• Scope 1: 108.85 tCO₂e
• Scope 2: 5203.84 tCO₂e
• Scope 3: 16,411 tCO₂e

Key learning: Scope 3 was over 3x the combined Scope 1 & 2 emissions.

Building a Reliable GHG Inventory

1. Supplier Engagement

• Focus on high-impact suppliers
• Develop trust, provide incentives or co-benefits

2. Capacity Building

• Provide ESG/GHG training
• Offer bilingual tools or simplified data capture methods

3. Methodology Transparency

• Disclose activity data, EF sources, and assumptions
• Use proxy data with clear justifications

4. Confidentiality and Assurance

• Use NDAs and ensure third-party audits of supplier data when needed

Sustainium: Your Partner in Scope 3 Reporting

Sustainium offers a SaaS platform and expert services for:

• Scope 1, 2, 3 carbon accounting
• Automated emissions calculation
• Integrated dashboards and ESG reports
• Scope 3 data collection via survey and ERP integrations
• Ready-to-disclose formats (e.g., BRSR, GRI)

Let Sustainium help you uncover your hidden emissions and move from reporting to net zero action.