Scope 3 emissions typically account for 70-90% of a company’s carbon footprint. Having said this, they are also one of the hardest scopes for companies to track and measure. They can be broad, vague, and time-consuming to calculate accurately. Scope 3 includes all of the indirect emissions that occur throughout a company’s value chain, from purchased goods to end of life treatment. Scope 3 emissions are difficult to monitor as there is a lack of direct control over them. As a result, many suppliers do not measure or report on their scope 3 emissions. Companies often rely on estimates and industry averages instead, which significantly reduces accuracy.
Modern platforms such as Enistic make Scope 3 much more manageable. By using the AI platform, companies can quickly and accurately analyse their supply chain emissions. In this blog, we’ll explore:
- The importance of scope 3 emissions and what they mean
- Spend-based analysis vs activity-based analysis
- The 7 methods for analysing your supply chain
The Importance of Scope 3 Emissions And What They Mean:
Scope 3 emissions include all other indirect emissions that occur in the upstream and downstream activities of an organisation. Scope 3 emissions include:
- Purchased goods and services
- Business travel
- Employee commuting
- Waste disposal
- Use of sold products
- Transportation and distribution (upstream and downstream)
- Investments
- Leased assets and franchises
For most businesses, scope 3 emissions cover a vast amount of their carbon footprint (between 70 and 90%). Reporting on scope 3 emissions is required in order to comply with government environmental regulations and is important to implement into your sustainability strategy.
Spend-Based Analysis vs. Activity Based Analysis
The table above displays the differences between spend-based analysis and activity-based analysis. Essentially, as depicted above, spend-based analysis converts the amount of money spent on goods or services into carbon emissions. It uses economic input-output (EIO) models and industry average emissions factors to make these estimates. Spend-based analysis is quick and easy to implement, requires minimal data and is an ideal baseline for scope 3 analysis. However, the method is less accurate than activity-based methods and can misrepresent low carbon suppliers or niche purchases.
Alternatively, activity-based analysis is a method of calculating greenhouse gas emissions by using detailed data on the actual quantities and types of goods and services purchased, rather than how much was spent. The approach significantly relies on specific emissions factors, primarily derived from Life Cycle Assessments (LCAs) or Environmental Product Declarations (EPDs), in order to provide a more accurate measurement of greenhouse gas emissions. Advantageously, the activity-based analysis is more specific and accurate, reflects product impact and real-world usage, and ideal for high emission and high-priority purchases. Although, the method can be more time consuming and LCAs and EPDs may not always be available.
It is recommended to start with spend-based analysis to efficiently cover suppliers and gain a baseline. Then, you should transition to activity-based analysis for high priority, largely emitting purchases to improve accuracy over time.
7 Ways To Allocate Carbon Factors To Your Suppliers
Modern, up-to-date platforms such as Enistic can make your Scope 3 emissions more manageable. Using the Enistic platform, you can assign carbon factors in 7 effective ways:
1) Smart Match – Enistic AI
By using the power of Enistic’s AI and database, the platform will allow you to match your suppliers and import data. This modern software can go through a decision tree cycle and select the best option to use, as well as the most accurate. This method is by far the simplest and easiest way to calculate suppliers emissions.
2) Referencing Your Suppliers’ LCAs and EPDs
This method is the most accurate way to analyse your supply chain carbon emissions. If your supplier has an LCA or EPD for products and services of which they supply to you, upload this data onto the platform.
3) Asking Your Supplier
The Enistic platform gives your suppliers access to the portal in order to upload their carbon emissions. You can automate reminders and notifications, and the platform will let you know when all has been completed. This method is the most accurate and our team of experts can help you set it up and support you.
This method is likely to increase as more scope 3 emissions get included. However, beware of inconsistent standards, such as inclusion of scope 3 factors.
4) Checking Their Accounts
Often, a lot of large companies will publish figures of their carbon emissions in their annual accounts alongside turnover, and so the data is available on Companies House. Let the platform simply match the data or upload it yourself.
5) Using Data From Similar Companies
This method is normally used when the supplier has not provided their data and it is difficult to find it online. Search a similar company to your supplier on our data base and use representative data to analyse the carbon emissions from your supplier.
6) Using Industry Averages
By using industry averages, you can work out figures such as your average spend. These average figures can be useful if you are struggling to find figures for specific companies. By using our Enistic AI platform, you can analyse your supplier carbon emissions by using industry averages.
Our database is regularly updated and we use the most recent data available. With 20 years of training data, Enistic AI can be more accurate than many published figures.
7) Manual Data Entry
If you already have your supply chain data stored, then you can simply upload it to Enistic. If you prefer, you can create a supplier profile and input data manually. Our support team can help so that the process is as smooth and fast as possible.
Conclusion
Through using modern software such as Enistic, your organisation can easily stay up-to-date and fully compliant with Scope 3 emissions and other environmental regulations. Your business can gain control over its supply chain emissions, drive meaningful sustainability, and stay ahead of regulatory demands by using the Enistic platform.
If you have any further questions about our platform, don’t hesitate to contact us.