At Enistic, we are committed to providing you with clear, practical guidance for managing your carbon emissions and staying compliant with environmental regulations. In this post, we have compiled expert answers to some of our most frequently asked questions regarding supply chain emissions. Pressure is increasingly growing for businesses to report on their carbon footprint, ensuring productive progress towards corporate sustainability goals and monitoring Scope 1, 2 and 3 emissions is required to track this advancement. For example, oil and gas companies often have a high level of Scope 3 emissions – potentially accounting for 90% of their total emissions due to the oil and gas they produce. Businesses absolutely must reduce their environmental impact in today’s climate, and one of the most important methods to enable this decrease is through reducing your company’s carbon footprint.
In this post, we will answer:
- What are supply chain carbon emissions?
- Why are supply chains are so important?
- How do I calculate emissions from goods and services?
- What is the difference between Scope 1, 2 and 3 emissions?
- What is the spend-based method?
What Are Supply Chains Carbon Emissions?
Supply chain carbon emissions are greenhouse gas emissions produced at every stage of a product’s life, from raw material extraction to delivery and disposal. These scopes include Scope 1, 2 and 3 emissions, with scope 3 representing the largest part of a company’s total.
Recap: Scope 1, 2 and 3 Emissions
Scope 1: These emissions are directly from sources that are directly owned by a company. Examples include: Fuel combustion on site (e.g furnaces and gas boilers), company-owned vehicles burning petrol or diesel, natural gas leaks etc.
Scope 2: These are indirect emissions from the generation of purchased electricity, heating, cooling or steam consumed by the reporting company.
Scope 3: Includes all other indirect emissions that occur in the value chain of a company, both upstream and downstream. These are not from owned or directly controlled sources, but are still linked to company operations.
Why Are Supply Chain Emissions So Important?
Supply chain emissions can account for over 70% of a company’s total emissions, making them crucial for accurate carbon reporting. Reducing these emissions can often lead to cost savings and stronger supplier relationships.
Supply chain emissions are:
- Important for meeting net zero targets, which require balancing emissions with removals to achieve a neutral impact on the climate.
- Supply chain emissions can cause significant environmental and social impact through activities such as raw material extraction, manufacturing, transformation, air and water pollution.
- Mitigating these risks enhances a company’s reputation and attracts investors and an increased employee retention.
What Is The Difference Between Scope 1, 2 and 3 Emissions?
Scope 1: Essentially, these emissions are direct from your individual and organisations’ activities, and are the greenhouse gases emitted when you burn things such as fuel. Scope 1 includes emissions from sources which a company directly owns.
Example: Driving company cars, burning fuel in company boilers or furnaces.
Scope 2: These emissions refer to the emissions generated from electricity, steam or heating which you purchase. Making more renewable energy choices such as solar panels can contribute here in order to reduce your carbon footprint.
Scope 3: These are indirect emissions caused by activities which occur in the supply chain. Specifically, these are things which individuals and companies do on your behalf. There are 15 emission factors within Scope 3:
How Do I Calculate Emissions From Purchased Goods And Services?
To calculate emissions from purchased goods and services, you should use the spend-based, supplier-specific methods to estimate emissions, depending on your data ability.
Start with the spend-based method for high-level view, and improve your accuracy as better data becomes available.
To Summarise…
That was a condensed overview of some of our most frequently asked questions to do with supply chain emissions. Having a greater understanding of these supply chain emissions is essential for your business if you want to reduce your corporate carbon footprint. As this blog has highlighted, these emissions often make up the majority of a business’s carbon footprint, especially Scope 3.
By actively reducing your supply chain emissions, your company can vastly contribute to a healthier, greener planet. If you have any further questions about supply chain emissions, don’t hesitate to get in touch with us.
