Saturday, July 16, 2011

Scope 3 - what it means

I posted this on Infosys Sustainable Tomorrow blog - this is a repost:

Children show a clear understanding of what belongs to them and what doesn't. Similarly with carbon emissions, companies are very clear about what emissions are theirs and what are not theirs. Clearly delineated as what is known as scopes we know what they mean in the carbon emissions reporting parlance.

Scope 1: Emissions I own and emit - direct emissions.

Scope 2 and 3: Emissions that are emitted by others due to services and products used by me - Indirect emissions

The drivers for reporting carbon emissions are many, but the biggest driver is regulatory. Legislations like AB32, EPMRR, UKCRC, NGERs all require organisations to report carbon emissions. What is common amongst mandatory reporting is that they all have to report scope 1 emissions. Emissions trading also require trading emissions which companies own i.e Scope 1.

Voluntary reporting registries/protocol ask for scope 1 and scope 2 (indirect emissions reporting due to electricity and district heating and cooling). Reporting scope 3 is optional.

Hence why should I account for Scope 3 at all when there is no requirement to do so by law or by voluntary registries? What is it that is asking companies to take a look at scope 3 emissions?

What has been increasingly observed is that companies are undertaking investigation of all environmental impacts of any given product or service, over its entire life cycle - commonly referred to as Life Cycle Analysis or LCA. While LCA refers to entire gamut of environmental impacts, the LCA of carbon emissions is the carbon footprint of the product or service.

Scope 3 accounting is gaining importance as companies like Walmart, is nudging its suppliers to engage in deeper sustainable practices. Given that accounting for scope 3 emissions is no cake walk, the premise of scope 3 accounting is that we know that we are responsible for more than what we own. Since scope 3 is no cake walk, companies like Coca Cola, and Inuit are seeking help. What is difficult is the amount of data and management of the same. Scope 3 emissions account for the biggest portion of emissions that a company is responsible for. It is here that a company has the largest scope of reducing its emissions, identifying efficiencies in its processes, logistics, and resource and energy consumption.

While I have observed that over the last few years the number of companies participating in voluntary disclosure has increased manifold, the trend to account for all three scopes is something that will be increasingly adopted. Initiated by sustainability leaders, this movement will nudge companies to embark on the journey of finding out relevant long lost relatives, grandparents and uncles and aunts i.e scope 3 emissions accounting, perhaps reflecting a greater sense of belongingness in the family of emissions. Cherry picking of what activities to report in Scope 3 continues. Comprehensive reporting of scope 3 is still no cakewalk. Atleast now we know the importance of Scope 3 reporting as a means to assess inefficiencies in our supply chain.

It may be little difficult for individuals to understand what scope 3 emissions may mean...however Scope 3 comprises of more than 50% of our carbon footprint. It is here that there is a potential to reduce our emissions. Give a thought to what you buy, what you consume daily. All goods and services we consume are our scope 3 emissions. Therefore shop local, buy what you need, and avoid waste and recycle. Weaving these three mantras in your life will help you keep a tab on your scope 3 emissions.

Infrequent postings continue...but I promise the mind is still bubbling with ideas towards a greener you.