Learning to Track the Elusive Scope 3 Emissions

Learning to Track the Elusive Scope 3 Emissions

The emerging global standard for companies to measure and track Scope 3 greenhouse gases (GHG) is on schedule for finalization in December.  

Scope 3 emissions often represent the largest area of a company's GHG impacts by far -- up to 75 percent in many cases -- yet a widely supported industry measurement methodology does not exist.  

Initial reactions to the current draft standard vary. Some companies testing the new standard are bullish and plan to implement it, while others are more cautious and taking a wait-and-see approach. Sustainability leaders should continue to track the progress of this standard for this important emissions area in order to determine if it makes business sense to calculate their own Scope 3 emissions.

Defining and measuring the total GHG emissions impact of a company's operations is complex. The World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) classify GHG emissions into three categories: Scope 1 (direct emissions form consumption of fossil fuels), Scope 2 (indirect emissions from purchased electricity and steam), and Scope 3 (the remaining indirect emissions). The standard for measuring Scope 1 and 2 emissions is called the "Corporate Standard" and is utilized by thousands of companies worldwide.

The WRI and WBCSD are leading the process for defining and finalizing a standard for Scope 3 emissions, which is called "Scope 3 (Corporate Value Chain) Accounting and Reporting Standard." The initial draft of this standard was released last fall, with road testing just completed. The draft standard and initial feedback are available online.

The final standard will be released in late December, with a second draft released in September. The groups are also developing a standard for product lifecycle accounting and reporting.

The draft measures emissions from 16 areas, include upstream activities (such as direct emissions from suppliers, product emissions, inbound transportation, and waste) and downstream activities (outbound product transport, product use, and end of life disposal). Employee commuting and business travel are also covered. 

Cynthia Cummis, senior associate at WRI, manages the development of the Scope 3 standard. Thirty-five large companies completed road testing of the Scope 3 standard, based on the initial draft from last year, she said. The feedback has been extensive and helpful.

Companies testing the standard have found it beneficial in identifying and prioritizing carbon "hot spots" or activities that drive the largest emissions.  SC Johnson, a $8 billion global manufacturer of household products such as Windex, participated in the testing and calculated its Scope 3 emissions for 2009. They found the process practical and are considering tracking Scope 3 emissions on a yearly basis, and possibly even adding a Scope 3 corporate reduction goal.

Other companies are taking a wait-and-see approach. Some are waiting for the standard to be finalized, while others do not see a business return in the calculation, especially since Scope 3 calculations require data gathering from many groups.

Since Scope 3 emissions dwarf Scope 1 and 2 emissions, conscientious sustainability leaders need effective tools to identify the activities that drive the largest GHG emissions. The new Scope 3 standard is a promising tool for this. Leaders should monitor the emerging Scope 3 standard and its early lessons to determine if this calculation would benefit their organization.

Paul Baier is vice president of sustainability consulting at Groom Energy and a senior contributor at GreenBiz.com.