What is a Scope 3 GHG Inventory and How Much Do I Need to Worry About It?

What is a Scope 3 GHG Inventory and How Much Do I Need to Worry About It?

Several years ago, the World Resources Institute and the World Business Council on Sustainable Development (WRI/WBCSD) collaborated on a stakeholder process to develop a standardized protocol for voluntary corporate greenhouse gas (GHG) inventories. The resulting WRI/WBCSD GHG Protocol has been widely accepted by the GHG community, and identifies three potential "scopes" for a corporate GHG inventory.

Scope 1 encompasses a company's direct GHG emissions, whether from on-site energy production or other industrial activities. Scope 2 accounts for energy that is purchased from off-site (primarily electricity, but can also include energy like steam). Scope 3 is much broader and can include anything from employee travel, to "upstream" emissions embedded in products purchased or processed by the firm, to “downstream” emissions associated with transporting and disposing of products sold by the firm.

The WRI/WBCSD GHG Protocol considers the quantification of Scope 3 emissions as optional when preparing an overall corporate GHG inventory, as do similar protocols such as the U.S. Environmental Protection Agency's Climate Leaders program. One reason for this is that one company’s Scope 3 emissions are other companies’ Scope 1 or Scope 2 emissions. So if everyone were implementing the full GHG Protocol, it would result in the same emissions being counted a number of times. In addition, a company is not likely to be regulated on its Scope 3 emissions in the future, whereas it might be for its Scope 1 and Scope 2 emissions.

Nevertheless, WRI and others urge companies to quantify their Scope 3 inventory as a means of developing a more comprehensive view of the global warming implications of their activities and of their business model generally. Going through a Scope 3 analysis can also provide considerable insight into where companies might best focus their global warming mitigation efforts. Working through their supply chains, some companies can greatly leverage their mitigation efforts beyond what they would accomplish focusing only on their own Scope 1 and Scope 2 emissions.

In practice, companies approach Scope 3 in very different ways; many select out a few components of Scope 3 to include in their inventory, often including things like corporate travel and employee commuting. Not many companies go to the trouble of carrying out a comprehensive Scope 3 inventory analysis. Often, there is good reason for this caution. First, it can be challenging and expensive to conduct an analytically rigorous Scope 3 analysis. Second, the analysis may generate results a company may not want to see. We’ve carried out Scope 3 inventories that exceed Scope 1 and Scope 2 inventories by more than 30 times! So it can be a real shock to see the numbers. And if carbon neutrality is a company’s objective, a full Scope 3 emissions inventory may simply be too much to include.

So yes, Scope 3 inventories can be very useful to help a company understand the upstream and downstream GHG implications of its corporate activities. But conducting a Scope 3 inventory, while advantageous in this respect, is not a necessary prerequisite to taking action on global warming. Don’t feel obligated to take on your full Scope 3 inventory when making an initial global warming or carbon neutrality commitment. Bite off only as much as you feel you can chew.