Demystifying scope 3 emissions

What are scope emissions?

Let’s start with a definition: Scope emissions are essentially a way of categorising the carbon emissions a company emits in its operations and its wider value chain.

There are 3 categories: Scope 1 and 2 which are relatively easy to measure, and scope 3 which is much more complex. It is also arguably the most important as it contributes a significant amount to a business’s overall emissions (for example, BrewDog estimate over 80% of their emissions are Scope 3).

So what’s the difference between the scopes? Let’s break it down:

Scope 1: Direct emissions

These are greenhouse gases a company makes as a direct result of its operations. Scope 1 emissions are subdivided into the following:

• Stationary combustion: This includes emissions from boilers, engines, incinerators, and process heaters.
• Mobile combustion: Emissions from any company-owned vehicle that burns fuel, for example, delivery vans.
• Fugitive emissions: These are gases that are emitted due to faulty equipment, e.g. a leaking air conditioning unit.
• Process emissions: Gases that are released during the industrial processes, i.e. factory fumes.

Scope 2: Indirect emissions

This includes the emissions a company makes indirectly, generated from purchased electricity, steam, heating and cooling.

Scope 3: Indirect emissions

This is where it gets tricky. This category includes all the emissions that an organisation is indirectly responsible for, up and down its value chain. It’s helpful to group scope 3 emissions by upstream and downstream activities:

Upstream activities:

• Business travel: This includes travel that is not owned by an organisation, for example, air travel, taxis, etc.
• Waste disposal: This relates to waste sent to landfill and wastewater treatment.
• Employee commute: Emissions generated from teams travelling to and from work.
• Purchased goods and services: The emissions related to purchases made from suppliers.
• Transportation and distribution: This occurs in upstream (suppliers) and downstream (customers) activities, and includes emissions from transport by land, sea and air, and emissions relating to third-party warehousing.

Downstream activities:

• Investments: This includes emissions from equity investments, debt investments, project finance, managed investments and client services.
• Franchises: Any emissions from franchisees operations.
• Leased assets: This corresponds to leased assets by the organisation (upstream) and assets to other organisations (downstream).
• Use of sold products: Emissions resulting from people using the product.

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Benefits of measuring all 3 scopes

While measuring scope 3 emissions is complex, it can help businesses:

• Discover emission hotspots in the supply chain
• Identify resource and energy risks
• Measure suppliers’ sustainability
• Identify energy efficiency and cost reduction opportunities in the supply chain
• Engage team members and encourage them to measure and reduce emissions from business travel and employee commuting

However, according to research by our partner, Natwest, 87% of UK SMEs are unaware of their business’s total carbon emissions, despite good intentions. Why is there a gap? Because assessing, calculating, managing, and reporting carbon emissions is not an easy task.

"We already measure our carbon emissions; but the challenging aspect of this is measuring our Scope 3 emissions. Getting carbon emissions information from suppliers is never straightforward. Our Scope 3 emissions include inward freight, fabric supply and dying mills and we don’t have the direct relationships needed to assess these emissions accurately. At the same time, putting our head in the sand wasn’t an option and Cogo offered us a pathway to start this measurement journey immediately." Kylie Matthews of Awwa Period Care

The solution

Introducing Cogo’s Business Carbon Manager. We empower businesses to track their carbon footprint.

Cogo’s Business Carbon Manager does not rely on simplified equations to calculate the emissions factors of key aspects of a carbon footprint. Instead, we use the UK’s best economic models that track the entire supply chains of UK industries to ensure all components are included.

If you are a bank looking to improve your own scope 3 reporting and want to help your small businesses measure their scopes, then get in touch today. Or if you're a small business owner looking to start your sustainability journey, start today.