Getting to grips with Scope 3 emissions – a Q&A with Sam Eager
In the lead-up to net zero targets in the UK and EU, most businesses are familiar with the concept of measuring their carbon emissions, to some extent. The CSRD stipulates that relevant categories in scope 3 emissions must be calculated and reported on. It is now a priority that stakeholders receive information about Scope 3 categories that are materially relevant to the undertaking.
A recent survey found that only two-thirds of businesses in the EU are prioritising calculating their Scope 3 emissions, so as part of our CSRD Navigator report, we’ve interviewed our Senior Sustainability Data Consultant on all things Scope 3.
How do you recommend companies start measuring their Scope 3 emissions?
Firstly, you should define your organisation boundary, which determines how you’ll account for emissions. You’ll also need to define your reporting period. The reporting period should be one year long, and can be a calendar year, fiscal year, or any other period which makes sense for your organisation. Generally, it makes sense to align your reporting period to a financial year, as sustainability reporting is often driven by financial data.
It will be worthwhile to review the Greenhouse Gas Protocol’s 15 Scope 3 emissions categories. Your organisation may have emissions within categories or sub-categories that you hadn’t previously considered.
What advice do you have for companies who don’t know where to start collecting Scope 3 data?
Utilise your materiality assessment. It will tell you which are the most important emissions categories to your organisation. Focus on these categories initially, adding in fewer material categories later if possible. If you decide to exclude any categories or data sets, ensure that you justify and document this for future reference.
Use a set of emissions factors from reputable sources, such as DEFRA. Many emissions factors require specific activity data (such as distance travelled in km or miles, kWh of electricity purchased or m3 of water used) or spend data (amount spent on various activities) as an input. These constraints will steer the data you’ll need to collect to calculate your scope 3 emissions. Generally, it’s best practice to calculate emissions using activity data, but spend data is often more readily available, especially when emissions are being estimated for the first time.
How would you overcome challenges such as gaps in data sets, or lack of data availability?
Organisations can’t be expected to have recorded data without first having in place relevant processes. So, there are always going to be gaps in sustainability data when it’s being collected for the first time.
If you don’t have complete data sets, you can fill gaps by:
Using estimates – make an educated guess.
Making extrapolations – use data from earlier in the period (e.g., using an average of Q1-3 travel data to estimate for Q4).
Using proxy data – substitute with data from another reporting period (e.g., use last December’s electricity bill if you’re missing one for this year).
If you’re missing an entire dataset, you may be able to use benchmarked averages based on number of employees, floorspace occupied, or other metrics relevant to your organisation to estimate data. More on this below.
How can companies ensure that data is accurate, and increase their accuracy over time?
You can benchmark your utility usage against industry benchmarks. These generally use your floor area to give you an idea of your expected usage. Whilst these numbers are national averages and should be taken with a pinch of salt, it might be worth questioning the accuracy of your own data if it’s well above or below the benchmark.
Review any data you receive, especially from suppliers and landlords:
Does it match what you’d expect?
Can you benchmark your usage to validate this data?
Can someone in your organisation assess its validity?
Can somebody external to your organisation check the quality of the data you’ve collected?
How does it compare to other organisations?
Put processes in place to ensure that high-quality data is being collected at the time it’s produced. This will minimise data loss and make data collection much easier, avoiding an end-of-year scramble. This might include asking employees to record their commute distance and vehicle, having your finance team record spend in certain categories when invoices are processed, or ensuring all utility bills are filed systematically. The end goal would be to have sustainability data collection embedded within your operations, so that you can monitor your emissions in real time.
What other recommendations do you have for companies looking to start measuring their Scope 3 emissions?
Look at what other organisations have done.
This could be your competitors, other local businesses, or larger organisations that you’re hoping to emulate. Take inspiration from the good things that they’ve done and analyse where they might have missed elements. Scope 3 emissions estimations are always evolving, so it’s a good idea to stay on top of industry trends.
Engage with industry bodies.
Many publish guidance on standards and sustainability for their members. Some may even have requirements upon you or publish sector-specific emissions factors for your use. Ask your representative what help they can offer or consider becoming a member of a body that aligns with your values and sector. The Science-Based Targets Initiative, is a great one to consider aligning yourself with!
If you haven’t already started measuring your scope 3 emissions, the time to start is now! It may seem daunting, but the best thing to do is just to make a start. If you’d like support collecting your data, calculating your emissions, or setting reduction targets – we can help. Get in touch with our experts who are happy to chat about all things carbon.
Want to find out more about the CSRD reporting requirements? Download the full report