Calculation method
Description
Spend-based method
Calculating a firm’s indirect emissions from its purchased goods/services Calculating emissions by identifying fuel types and quantities used, and applying relevant emission factors Calculating emissions through value chain activity analysis and relevant emission factor application
Fuel-based method
Activity-based method
Supplier-specific calculation method
Calculating product-level GHG data from all suppliers
Hybrid method
Calculating using a combination of various Scope 3 methods to include supplier-specific and secondary data
Table 1 Methods of calculating Scope 3 emissions (Terrascope Team, 2023)
Moving beyond estimates Addressing supply chain emissions can often seem like a daunting task for many companies. This is frequently due to their limited visibility into these emissions and the perception that they have little influence over measures to reduce emissions. However, the implementation of supplier engagement targets provides a mechanism to exert influence over decarbonisation efforts within a company’s supply chain, especially when granular emissions data is difficult to obtain or simply not available. These targets are designed to encourage a specific subset of suppliers to set their own science-based targets, encompassing all relevant scopes and categories, in the near future.
It is important to note that emissions from supply chains are, on average, 11.4 times greater than the direct emissions resulting from operations (see Figure 2 ) (Moreno Lopez & Smith, 2023). In the chemical industry, about 77% of emissions stem from the supply chain, with nearly 60% attributed to the production (or extraction) of raw materials (Rycke, 2022). Consequently, a substantial facet of supply chain decarbonisation efforts should zero in on curtailing emissions linked to raw material production. While methods like average emission factors offer initial guidance for screening and pinpointing priority areas, they represent just the starting point. For decarbonisation endeavours to be economically feasible and for pinpointing opportunities, real data and active engagement with suppliers become imperative. Informed decision-making in green supply chain management necessitates incorporating a product’s carbon footprint alongside other pivotal indicators, such as price and quality, into product specifications. Therefore, the initiation of broad-scale decarbonisation efforts across supply chains represents one of the most critical and effective strategies to achieve the global objective of net-zero emissions. Calculating Scope 3 emissions Table 1 provides a broad summary of the various methods used for Scope 3 emissions calculations across the 15 Scope 3 categories defined in the GHG Protocol (see Figure 3 , GHG Protocol, 2013). Consider an example pertaining to Scope 3 – Category 1 (Purchased Goods and Services). For a majority of corporations, employing Environmentally Extended Input Output (EEIO)- based models for calculating this category of
11.4x greater emissions come from supply chains compared to core operations
Moving beyond unreliable estimates to accurate data
Emissions from core operations
60% of emissions stem
from aquiring raw materials
77% of emissions stem from the supply chain
Figure 2 Supply chain emissions
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