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The complexity of Scope 3
While Scope 1 and 2 emissions are relatively straightforward to calculate and control , in theory , Scope 3 data is intricate and complex . Typically , it also accounts for the lion ’ s share of an organization ’ s greenhouse gas ( GHG ) footprint , on average coming in at 26 times higher than emissions from direct operations and relates to the entire supply chain all the way to the end consumer .
As a result , many businesses currently rely on broad estimates to report their carbon footprint . However , estimates are still estimates , and they do not provide accurate Scope 3 calculations . Without being armed with such data , businesses cannot calculate the true size of their GHG footprint or the rate at which they are decarbonizing . To be in line with the Paris Agreement , an average global reduction of supply chain emissions of between two-to-five percent is needed today . Realistically , it ’ s difficult to determine whether we are hitting that target given the lack of supply chain data available .
A move towards incorporating more primary data direct from suppliers and less secondary data from third parties , such as industry bodies , is needed . This will increase transparency of suppliers ’ sustainability actions , helping businesses identify hotspots and those in the chain posing a risk to compliance . Stringent practices for measuring Scope 3 emissions are therefore becoming a pressing priority , to strengthen businesses ’ resilience to regulatory change and protect their reputation .
Barriers to decarbonization
Drilling down to product-level emissions has its challenges , particularly for those with complex supply chains .
While incorporating primary data is a crucial step to improving the accuracy of reporting , each supplier will also be on its own journey to Net Zero , with varying levels of maturity in their collection of emissions data .
Further fragmenting the landscape , suppliers will be adopting disparate methods for calculating emissions , with differing standards , allocation methods , and emission factors applied . This leaves businesses struggling to manage large volumes of data while questioning its accuracy and reliability .
Actionable steps to strengthen reporting methods
There are practical steps that can be taken , however , to overcome these hurdles and increase the transparency of supply chain emissions .
Firstly , work with , not against competitors to form coalitions and accelerate progress . Harnessing cross-industry and sector collaboration to streamline practices will reduce discrepancies and alleviate some of the reporting pressures on suppliers . Partnership for Carbon Transparency ( Pact ) for example provides a unified process for carbon data reporting while examples of sector specific processes include Catena X in the automotive industry , or the Pharmaceutical Supply Chain Initiative .
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