Navigating Scope 3 Emissions

Scope 3 greenhouse gas (GHG) emissions result from sources that are not directly owned or controlled by the reporting company but are a consequence of its operations. For many businesses and sectors scope 3 GHG emissions account on average for more than 70% of total Scope 1, 2 and 3 emissions. However, collecting and managing Scope 3 emissions can be complex due to the indirect nature of the activities causing these emissions.

For example, a consumer products company may find that the majority of its emissions come from raw material extraction and manufacturing stages that are typically outside of its direct control.

The GHG Protocol defines the following scopes:

• Scope 1: Direct emissions from sources controlled by the company.
• Scope 2: Indirect emissions from purchased electricity or steam.
• Scope 3: All other indirect emissions associated with the company's activities.

How can you reduce your Scope 3 emissions? Our comprehensive suite of carbon services is designed to assist companies in identifying, measuring, reporting, and verifying their GHG emissions, including navigating the complex Scope 3 management for targets setting and emission reduction.

The importance of Scope 3 emissions has put pressure on companies to act on multiple fronts:

• Regulatory requirements: As climate policies tighten, reporting and reducing Scope 3 emissions becomes a mandate. As governments around the world implement stricter climate policies, companies may be required to report and reduce not only their direct emissions (Scopes 1 and 2), but also their Scope 3 emissions.
• Risk management: Addressing climate-related risks is critical to investor confidence and compliance with frameworks such as IFRS S1 & S2, TCFD and US SEC rules. Climate change poses physical, transitional and financial risks to companies. Investors and market regulators are also demanding greater transparency into companies' exposure to climate-related risks. IFRS S1 & S2, TCFD and US SEC rules on climate disclosure are examples of market-regulated frameworks for climate risk assessment and disclosure. By managing Scope 3 emissions, companies can better mitigate these risks and increase their attractiveness to investors.
• Supply Chain Resilience: Effectively managing Scope 3 emissions can reveal supply chain efficiencies and cost savings opportunities. Understanding and managing Scope 3 emissions can help companies identify risks and opportunities within their supply chain, leading to increased resilience and potential cost savings.
• Innovation and growth: Addressing Scope 3 challenges can drive the creation of sustainable products and services. Addressing Scope 3 emissions can drive innovation and lead to the development of new, more sustainable products and services.
• Stakeholder expectations: Stakeholders demand action on climate change, including management of Scope 3 emissions. Customers, employees, and other stakeholders increasingly expect companies to take action on climate change, including managing Scope 3 emissions. Proactively managing Scope 3 emissions can enhance a company's reputation and demonstrate sustainability leadership.

Our comprehensive suite of carbon services is designed to assist companies in identifying, measuring, reporting, and verifying their GHG emissions, including the intricate Scope 3 category. We support the development of robust strategies to manage and reduce your carbon footprint, propelling your business towards the global goal of a Net Zero transition.