Scope 3: Why Does it Matter to Companies?

May 2, 2022

What are scopes and why are there 3? 

The Greenhouse Gas Protocol distinguishes between three types of emissions that negatively impact our planet. These emissions are typically generated by large-scale companies and industries working in the capitalistic economy and contribute to the global carbon footprint that environmentalists are actively trying to reduce. These three types are called scope 1, scope 2, and scope 3. 

Scope 1 emissions are caused directly by business activities. These include chemicals and waste disposed of in factories and plants incorrectly. 

On the other hand, scope 2 emissions are those that are influenced by the consumption of products. Wasteful electricity consumption is an accurate example of this, because the higher the consumption of electricity is, the more that non-renewable resources of energy are used to generate more supply. 

Scope 3 emissions are common results of actions of company supply chains. Simply put, these are not necessarily company assets or operations that are controlled by the corporation but are factors that influence the company’s value chain. This not only includes how their trusted partners and suppliers function, but business-related travel via airplanes, advertisements, logistics providers, and the disposable of their products once used by consumers. If your employees travel to work, those are also included in these emissions. Moreover, scope 3 includes every possible source of emissions that may not be included in scope 1 and 2.



Since companies have many moving parts, it has been reported by carbon trust that scope 3 emissions make up anywhere between 65-95% of a corporation's carbon footprint. These are often ignored in a company’s approach to going carbon neutral. The refusal to reduce scope 3 emissions makes the impact of corporate sustainability efforts negligible and proves the ignorance to significant opportunities for improvement. 



calculating scope 3 is complicated, but necessary. Company actions must reflect the urgency that the climate crisis has brought upon us. Fortunately, the new GHG Protocol standards grant them strategic thinking foundations that encourage emission reduction and help them identify factors of their chain that generate the highest emissions. This has a multifold positive impact; most big companies have global offices with many large networks with their own scope 3 emissions. These standards also force companies to reflect on whom they build value chain relations with, as all the moving parts of the process have to move together for emission reduction. 


Don’t go by news headlines and articles like ours. Take the time out to read the GHG Protocol and policy documents to truly understand how you and your business can operate better, one step at a time. Corporations like Apple and Walmart drew inspiration from these standards in 2019 and committed to their suppliers using 100% renewable energy and sustainable packaging respectively. 


Measuring scope 3 contributions to a company’s carbon footprint, as discussed earlier, is complicated. The easiest way to use the information corporations already have to make emission reduction decisions is to analyze their data. For example, studying the life cycle of their final product would give a clearer vision into the future, particularly about when their products might be getting disposed of after use by the consumer. This could enhance their ability to act on recycling their production quality and limit excess resource waste. Similarly, providing relevant data to manufacturing plants and other factors of supply chains could help solutions emerge on the spot. This also required collaboration. 


Facing the climate crisis is not one single company’s responsibility and not the responsibility of just the senior leadership of these firms. Talking to, inspiring, and incentivizing emission reduction across the value chain has proven to be a great motivator for employees. Whether it is providing additional benefits to staff that cycle to the office or increased pay for suppliers who strategically implement and reach sustainability targets, collaborating with a corporation’s network is an integral aspect to meeting emission reduction goals. Several large companies have confessed to adding a flair of friendly competition to this endeavor by having different departments participate in weekly milestones and receive incentives upon performing. 

Moreover, collaborating with other companies in the locality is important. Not everyone is going to be at the top of their sustainability game all the time, and considering how time-consuming scope 3 emission calculations are, it would be best to join hands and work on this together. Not only will this quicken the process of reaching tangible solutions, but also reduce the anxiety around making changes to your processes. 

If your company is interested in reducing scope 2 and Scope 3 emissions and needs guidance, reach out to Think RE. We focus on Power Purchase Agreements to reduce the carbon footprint of electricity consumption. Additionally, we specialize in managing measures for reducing scope 2 and scope 3 emissions which are the major emission category from an Off-taker’s point of view.