Purchased goods and services : addressing the most challenging Scope 3 emissions . By Anuj Saush
The phrase ‘ Purchased goods and services ’ may seem innocuous , but sustainability executives know better .
Corporate emissions originate from various sources , which are grouped into ‘ scopes ’. Scope 1 refers to direct emissions from owned or operated assets e . g ., emissions from the burning of diesel fuel in company trucks . Scope 2 refers to indirect emissions from purchased energy used in the company ’ s own operations , e . g ., electricity used in company facilities . Scope 3 refers to indirect emissions originating from all other sources in the upstream and downstream parts of the reporting company ’ s value chain , e . g ., processing and production of raw material and emissions coming from employee commuting .
Across industries , ‘ purchased goods and services ’ usually represent supply chains ’ highest source of ‘ Scope 3 ’ emissions . Inherently data-intensive , this can be one of the most difficult to handle categories of Scope 3 emissions , as they require extensive supplier engagement and collaboration and potentially the innovation of and reformulation of existing products and processes .
Actionable strategies are emerging , however . The Conference Board , a global think tank providing businesses with trusted insights for what ’ s ahead , has developed a realistic sustainability pathway for executives to reduce their companies ’ purchased-goods-andservices emissions . There are four key steps to an effective Scope 3 emissions reduction strategy : screen and prioritize ; acquire data ; refine supplier base ; and , finally , set targets , monitor , and audit .
Emissions screening and prioritization
Prioritizing data collection efforts requires ranking Scope 3 emissions and then focusing on the most significant categories . One way to rank Scope 3 categories is based on the activities ’ relative financial significance . However , spending and revenue do not always correlate well with emissions and actual environmental impact . Instead , companies must work toward using actual data – unit of measure of a product in dollars , kilograms , tonnage , and the associated emissions factor – to accurately quantify Scope 3 emissions . While the required data may be incomplete , for efficient and reliable monitoring of Scope 3 emissions in the future , companies should create robust quality-controlled master data management systems .
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