For Sustainability Managers, tackling Scope 3 emissions is one of the most pressing and complex challenges. Unlike Scope 1 and Scope 2 emissions, which focus on direct and energy-related emissions, Scope 3 emissions encompass the broader value chain, from the extraction of raw materials to the use of sold products. Given the value chain as a significant contributor to global emissions, addressing Scope 3 emissions is critical to achieving corporate sustainability goals and aligning with global climate targets.
This guide provides actionable steps for measuring and reporting Scope 3 emissions effectively.
1. Understand the Scope 3 Categories Relevant to Your Business
The Greenhouse Gas (GHG) Protocol outlines 15 categories of Scope 3 emissions, but not all will apply to your organisation. For this blog we will focus on the Oil and Gas sector, the most impactful categories typically include:
- Purchased goods and services: This includes goods and materials sourced for operations, such as drilling equipment or chemicals.
- Upstream transportation and distribution: Emissions from transporting crude oil or natural gas to processing facilities.
- Processing of sold products: For example, refining crude oil into usable fuels.
- Use of sold products: Emissions resulting from customers combusting fuels such as gasoline, diesel, or natural gas.
Focusing on the most material categories ensures that your efforts are both impactful and efficient.
2. Leverage Industry-Specific Data and Tools
Accurately quantifying Scope 3 emissions requires robust data. Start by tapping into industry-specific resources such as:
- Emission factors databases: Tools like the EPA’s Emission Factors Hub or IEA’s statistics can help estimate emissions for common activities.
- Collaborative initiatives: Engage with organisations like IPIECA, the Oil and Gas Climate Initiative (OGCI), or the World Business Council for Sustainable Development (WBCSD) for benchmarking data and methodologies.
- Lifecycle assessment (LCA) tools: These can model the environmental impact of products across their life cycle, from extraction to end use.
Consider investing in advanced analytics platforms that streamline data collection and analysis, making it easier to align with reporting standards such as the GHG Protocol or ISO14064.
3. Engage Your Value Chain
Scope 3 emissions originate beyond your direct operations, making value chain collaboration essential. Steps to engage your value chain include:
- Supplier engagement: Work with suppliers to understand their emissions and encourage them to adopt sustainable practices.
- Customer collaboration: Help end-users transition to lower-carbon alternatives, such as renewable energy sources or carbon capture technologies.
- Transparency: Foster open communication with stakeholders to build trust and align on common sustainability goals.
4. Set Ambitious but Achievable Targets
The Science-Based Targets initiative (SBTi) provides guidance on setting Scope 3 reduction targets aligned with a 1.5°C trajectory. Consider:
- Establishing interim milestones to demonstrate progress.
- Prioritising reductions in categories with the highest emissions.
- Leveraging offsets or carbon credits only as a last resort, focusing instead on transformative reductions.
5. Report Transparently and Consistently
Transparent reporting not only demonstrates accountability but also strengthens stakeholder confidence. Best practices include:
- Adopt a recognised framework: Align your reporting with standards such as CDP, GRI, or the TCFD recommendations.
- Disclose methodology and assumptions: Clearly outline how emissions were calculated, including any limitations or data gaps.
- Provide year-on-year comparisons: Showcase progress over time to highlight improvements and areas needing attention.
2025, the year you accurately measure Scope 3
Measuring and reporting Scope 3 emissions in any sector is undoubtedly complex, but it’s also an opportunity to lead the industry toward a more sustainable future. By focusing on the most material categories, leveraging robust tools, collaborating with the value chain, and committing to transparent reporting, sustainability managers can make meaningful strides in reducing emissions and driving positive change.
If your organisation is looking for tools or expertise to streamline this process, consider solutions like Rio’s sustainability platform, which helps enterprises effectively measure, manage, and report on emissions across their value chain.
