When doing carbon accounting, it is incredibly important to understand the differences between scope 1, scope 2 and scope 3 emissions. This blog post will help you understand what scope 3 emissions are. Learn more about scope 1 emissions here and scope 2 emissions here.
What are Scope 3 Emissions?
These types of emissions are the biggest contributor to total company emissions for a number of industries, yet simultaneously, they are the hardest to track and calculate.
Why is that?
Firstly, it is important to understand how broad the category is. Scope 3 emissions are all indirect emissions not included in scope 2, which means that they include all emissions from upstream and downstream activities.
Upstream Activities
These are things like business travel, employee commuting, waste disposal, emissions generated from purchased goods and services, as well as transportation and distribution of the company’s products by its suppliers.
Downstream Activities
On the other hand, these are factors like a company’s investments, franchises, leased assets or the use and disposal of sold products by its consumers (think about oil companies — use of the oil they sell is a great contributor to their emissions).
Under-reporting Crisis
There are hundreds of factors that must be taken into account when trying to calculate these emissions. This is often why many companies don’t track them, which results in under-reporting on a massive scale, alongside:
- Complex supply chains: Tracking emissions across multiple suppliers and vendors can be challenging, leading to incomplete data.
- Lack of visibility: Companies may not have access to detailed emissions information from external partners or upstream/downstream activities.
- Data gaps: Inconsistent or missing data from third-party suppliers can result in underreporting.
- Measurement difficulties: Scope 3 emissions often involve diverse and indirect sources, making accurate measurement more difficult.
- Resource constraints: Companies may lack the necessary tools, expertise, or resources to fully track and report all Scope 3 emissions.
- Voluntary nature: Reporting on Scope 3 emissions is often voluntary, leading to less rigorous tracking compared to mandatory Scope 1 and 2 emissions reporting.
Different businesses also use a range of different assumptions, which means that it is difficult to compare the scope 3 emissions between companies. This can impact our understanding of a company’s emissions in the context of other companies. Of course, there is incentive to under-report, which is why regulations are increasingly coming in to address this issue.
At Connect Earth, we use machine learning to standardise the scope 3 emissions of companies to close this information gap for consumers, so that they can make truly informed choices about their purchases.
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About Connect Earth:
Founded in 2021, Connect Earth is a London-based environmental data company that democratises easy access to sustainability data. With its carbon tracking API technology, Connect Earth is on a mission to empower consumers and SMEs to make sustainable choices and bridge the gap between intent, knowledge and action. Connect Earth supports financial institutions in offering their customers transparent insight into the climate impact of their spending.
Reach out if you think Connect Earth can help your business.
