The latest IPCC report states that “observed global mean surface temperatures for the decade 2006-2015 was 0.87°C higher than the average over the 1850–1900 period” (IPCC, 2018) and we have only a dozen years to keep global warming below 1.5°C, before risks continue to increase.
The business community have been increasingly reporting their progress on climate change with over 8,400 companies disclosing through the Carbon Disclosure Project ‘CDP’ in 2019, where only 228 started in 2003 (CDP, 2020).
Figure 1 Growth in companies disclosing climate impacts since 2003 (CDP, 2020)
When it comes to reporting climate change information, historically companies have only been reporting their scope 1 and 2 emissions, whereas scope 3 are often not reported, and if they are, then non-material categories are reported.
Scope what?
The Greenhouse Gas ‘GHG’ protocol defines three ‘scopes’, as seen in Figure 2.
· Scope 1 emissions are direct emissions from owned or controlled sources,
· Scope 2 emissions are indirect emissions from the generation of purchased energy,
· Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.
The GHG Protocol supplies the world's most widely used greenhouse gas accounting standards. The Scope 3 Standard and supplementary technical guidance is the only internationally accepted method for companies to account for their value chain emissions.
Figure 2 Overview of GHG Protocol scopes and emissions across the value chain
It is often difficult for companies to source the required information needed for material scope 3 reporting. CDP have looked into the most common scope 3 categories that companies report on with business travel, employee commuting, purchased goods and services and waste generated in operations being the most common (Figure 3). It does depend on the sector a company operations in, however often these are the easiest to collect data and report on but are not the most material across the value chain for a reporting entity. Hence we see companies only self-reporting the tip of the iceberg and not a true reflection of their total emissions.
Figure 3 Self-reported relevant scope 3 emissions by categories.
CDP modelled emissions of over 35,000 companies and identified most emissions come from purchased goods and services and use of the sold products, which is in stark contrast to what is actually being reported.
Figure 4 Scope 3 categories modelled by CDP for 35,000 companies
Why are Scope 3 emissions important?
Often a company’s scope 3 emissions make up to 40-70% of an organisation’s total emissions. Apple, for example, has 99% of their emissions falling into Scope 3 categories (Value Change in the Value Chain, 2018).
If you want to understand more about your scope 3 impacts then feel free to reach out and we can review the entire iceberg, not just the tip.
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