Increasingly, more businesses realize that IT operations account for the majority of their energy costs and are searching for ways to operate more efficiently. When booking business travel, they buy carbon offsets to counter the greenhouse gas emissions from the flight. Before purchasing any product, they consider how much oil was used to manufacture and deliver it.
Environmentally-conscious companies are entering a new phase of their sustainability journey. They’re looking more broadly to find ways to limit their impact on the planet. To achieve the Paris Climate Agreement’s goal of net-zero operations by 2050, companies are moving beyond Scope 1 and Scope 2 emissions and finding ways to cut Scope 3 emissions.
The GHG Protocol’s Corporate Accounting and Reporting Standard defines each scope as:
- Scope 1: Direct GHG emissions – These occur from sources that are owned or controlled by the company, for example, emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.; emissions from chemical production in owned, or fuel burned when operating an organization's fleet of vehicles or to heat facilities.
- Scope 2: Electricity indirect GHG emissions – This accounts for GHG emissions from the generation of purchased electricity consumed by the company. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organizational boundary of the company. Scope 2 emissions physically occur at the facility where electricity is generated.
- Scope 3: Other indirect GHG emissions – this is an optional reporting category that allows for treating all other indirect emissions. Scope 3 emissions are a consequence of the company's activities but occur from sources not owned or controlled by the company. Some examples of scope 3 activities are extraction and production of purchased materials; transportation of purchased fuels; and use of sold products and services.
To understand Scope 3 and learn how to reduce them, enterprises are tapping into new data streams and using cloud-based analytics tools to create a more accurate picture of their environmental impact.
What Are Scope 3 Emissions?
Scope 3 emissions are emissions from assets and activities that are outside of a company’s direct control, including those from business travel; employee commuting; the transportation and use of sold products; and the manufacturing, distribution and disposal of purchased goods.
According to the U.S. Environmental Protection Agency (EPA), these emissions often constitute the bulk of an organization’s greenhouse gas emissions. For example, emissions from its vehicles account for 75% of Ford’s Scope 3 emissions.