There are new, enterprise standards for reporting your sustainability requirements, goals, and expectations.
Just a few years ago, some of these questions weren’t even being asked. Now, you’d better have answers and quantifiable data to back up your claims.
Why do we need to reduce Scope 1, 2, And 3 Emissions?
In the late 1990s voluntary reporting started. Standardization was missing, but rules like the Greenhouse Gas Protocol, dividing emissions into three categories, were developed.
Driven by the awareness of climate change and its impact on our planet, companies report emissions as part of being socially responsible. Consumers now want transparency from the companies they support, pushing businesses to reveal their carbon footprint and reduce it.
Emissions are key to achieving net-zero. To fight climate change, we must balance the greenhouse gases emitted by finding ways to reduce them, leading to a carbon-neutral state.
Companies realize it’s not just good for the environment, but it’s also beneficial economically, as consumers choose eco-friendly products. Businesses are focusing on sustainability to please stakeholders and improve their image. Investors and stakeholders consider environmental, social, and governance factors when evaluating a company’s performance, favoring those with sustainable practices. These companies are more likely to attract socially responsible investors and secure funding for future projects.
Organizations claiming to prioritize sustainability may be asked:
- What is your Scope of Emissions IQ?
- Do you know your Scope 3 Co2 equivalents being produced?
- Do you have a comprehensive plan to which your Board approves?
- How will you execute the plan?
- Which tools will you use to accurately report your progress?
If your organization doesn’t know the answers to these questions right now, it may be time to audit your emission tracking and reporting processes.
These questions aren’t just for industrial producers; every organization has measurable impact on the environment. Regardless of your size, you can also make a measurable impact. Now is the time to reassess your situation, assemble the right team, and refine your Scope 1, 2, and 3 emission performance.
What are Scope 1, 2, and 3 Emissions?
The emission scopes exist to separate what are the active, passive, and associatiave sources of pollution that are produced by the running of an organization, including the ultimate delivery and consumption and disposal of your product/service.
Greenhouse gas (GHG) emissions within a company’s corporate footprint are broken down into Scopes 1, 2, and 3:
Scope 1 – Direct emissions from the company’s operations
Scope 2 – Indirect energy emissions
Scope 3 – Other indirect emissions
Each scope is mutually exclusive. Emissions count in only one category, however, a company’s Scope 3 emissions will include the Scope 1, 2, and 3 emissions of the companies who supply them as well, aggregating the overall impact into a single view.
What are Scope 1 emissions?
Scope 1 emissions are direct emissions from operations that are owned or controlled by the company, including fuels combusted in vehicles or furnaces/boilers, fugitive or vented emissions from process equipment, or process emissions from chemical reactions.
What are Scope 2 emissions?
Scope 2 emissions are emissions from the generation of purchased or acquired electricity, steam, heating, or cooling consumed by your company. The company generating the energy would include the emissions as their Scope 1. You must also represent those emissions in your calculations. The greenhouse gasses generated for the running of your company also belong to you.
What Are Scope 3 Emissions?
Scope 3 emissions are all other indirect emissions (not included in Scope 2) that occur in the value or supply chain of the company both in the products your company incorporates and in the distribution, consumption, and disposal of your products through the end of their life.
Scope 3 emissions are divided into:
- Upstream emissions → indirect emissions related to purchased or acquired goods and services.
- Downstream emissions → indirect emissions related to sold goods and services.
Scope 3 is typically the largest source of emissions for a company (typically over 10 x its scope 1 emissions).
There are 15 categories of Scope 3 emissions, as defined by the Greenhouse Gas Protocol. These are listed below:
- Purchased goods and services
- Capital goods
- Upstream fuel- and energy-related emissions
- Upstream transportation and distribution
- Business travel
- Employee commuting
- Upstream leased assets
- Downstream transportation and distribution
- Processing of sold products
- Use of sold products
- End of life of sold products
- Downstream leased assets
Benefits of Tracking Scope 1, 2, 3 Emissions
You can likely imagine that when assuming responsibility for your entire business operations and those of you suppliers, customers, and distributors the amount of emissions become staggering. Emissions are insidious because they are part of a system we have taken for granted as normal or an acceptable part of doing business. By giving a name to and quantifying our impact, we can make educated decisions about how we run our organizations.
The first, lowest-hanging benefit is the planet and the life it supports, but there are other revenue-impacting and measurable benefits to consider:
- Increasing efficiencies while reducing costs.
- An earned and transparent reputation retains key personnel.
ROI will be further along in the journey but with permanence.
- An open and honest assessment of commitments will solidify an eco-conscious customer base.
- Lower risk on ESG scoring will affect credit ratings
How to Reduce Scope 1, 2, and 3 Emissions
Company reduction of Scope 1 and 2 emissions is more attainable because they have more control over those sources of emissions. The harder issue by far is number 3, because Scope 3 emissions are controlled by others.
How to Reduce Scope 1 Emissions — direct emissions caused by the production of goods/services:
It is imperative to strategically attack and improve efficiencies in processes. There are many existing low-carbon or zero-carbon solutions that you can implement in your internal operations. Shifting to electric or alternative energy vehicles, and building or rebuilding buildings to be more energy efficient are great methods for reducing your Scope 1 emissions.
How to Reduce Scope 2 Emissions — indirect emissions that generate the energy to run the business:
Companies can source electricity from renewable sources, enter into Power Purchase Agreements (PPA), or install renewable energy generation on site.
Where low-carbon solutions are prohibitively expensive or unfeasible, companies should identify opportunities to transition to lower-carbon products and new markets.
Companies can also demonstrate demand for renewable electricity in markets with low supply, by advocating for policy change through initiatives like RE100, whose collective influence and innovation drives change.
How to Reduce Scope 3 Emissions — emissions both upstream and downstream in supply chain and product delivery lifespan:
The mandate is clear and the desire is resolute, but how? You do it through fostering business relationships with likeminded companies and firmly establish your standards.
Develop an internal Preferred Purchasing agreement, wherein, your company adheres to supply chain standards, which are clearly laid out for all vendors. Interview vendors in a competitive process to make sure there is a clear understanding of your company’s sustainability goals. Nurture a relationship with your waste hauler, there may be alternatives to landfilling some throughput materials from manufacturing and warehousing sites.
Companies can design products according to the principle of circularity, to reduce embedded emissions across all phases of the product lifecycle. They should also be mindful of the effect of raw materials and processing to end-product use and disposal.
Ask and incentivize suppliers to disclose their emissions and set net-zero targets, and to do the same with their own suppliers.
Consider integrating carbon emissions intensity data throughout the procurement process, whether that be through product carbon footprints (PCFs) or corporate carbon footprints.
Okapi Provides Emission Tracking Solutions
These are complicated concepts indeed, and if your company is inexperienced with emissions reporting and reduction, it may be beneficial to seek expert guidance. Okapi Environmental Services helps companies navigate through the maze of emission reporting, reimagining, and implementation.
EcoVisor Sustainability Software
Okapi has partnered with Datagration to develop the exclusive EcoVisor dashboard depository to track all emissions across your enterprise. With the unique Unified Date Model (UDM) this software compiles all your data from disparate sources into a singular platform, leaving more time for analysis and action and less time on data entry chores.
If you’d like to know more about our EcoVisor reporting application, a complimentary consultation to discuss ideas for improving your supply chain efforts, or to readjust your scope, set your aim properly to attack Scope 1, Scope, 2, and the ever-elusive Scope 3 emissions, please reach out to our sustainability consultants at Okapi Environmental services. We provide tailored strategies and software for your organization’s sustainability initiatives.