Scope 1, 2 and 3
Every single day a series of activities are carried out to run a business -- from manufacturing goods to buying electricity. Most of these activities emit greenhouse gases that contribute to environmental pollution and are classified by the Greenhouse Gas Protocol developed by the World Resource Institute and the World Business Council for Sustainable Development.
The classification consists of:
- Scope 1 Emissions: Direct emissions from fossil fuel consumption, company vehicles, manufacturing plants, refrigerant leaks, etc.
- Scope 2 Emissions: Indirect emissions that come from purchased energy resources such as electricity. These emissions are produced by industries that generate this energy.
- Scope 3 Emissions: All indirect emissions that occur due to tertiary activities of the company such as business travel, outsourced supply chain activities, waste handling, etc.
While Scope 1 and 2 emissions are comparatively easy to address, monitoring scope 3 emissions can pose a challenge due to their indirect nature.
Scope 3 Challenges of Data Gathering
To explain scope 3 emissions in detail, let’s take the example of a label selling a cotton apparel item. While the production of the apparel item might be an on-site operation contributing to scope 1 emissions; there are a lot of other contributory factors in the process. These would include purchasing cotton cloth for the apparel item, purchasing the boxing and packaging materials, and delivering the finished garment to the customer. All of these activities together contribute to scope 3 emissions and can greatly outweigh the damage to the environment created by scope 1 and 2 emissions.
There are specifics about scope 3 emissions that make it hard to address --
1. An Abundance of Scope 3 Data:
The data from all of the activities of all of the suppliers, vendors, and delivery agents can become overwhelming.
While some suppliers might have a system in place to measure emissions, other suppliers might not pay heed to their emission activities. This would require a great amount of estimation from the company reporting their scope 3 emissions based on these unmeasured supply activities.
2. Different Scope 3 Measurement Criteria Used By Different Companies:
Different agents use different measurement criteria and consolidating it all in one place to produce a final Scope 3 report can become a challenging task.
While most businesses today adhere to GHG protocols, some of them lack the diligence to do a thorough analysis. This can present a unique challenge while reporting Scope 3 emissions for businesses that use their service.
For example, in our apparel item scenario, the raw material supplier might be a large industry player dealing in supplying other kinds of raw materials such as leather, metals, etc and might have the data consolidated under one head. This would be difficult to sort for our client who only wants the data for the cotton piece.
3. Too Many Levels of Measurement in Scope 3 Emissions:
While scope 1 and 2 emissions charter clear paths back to the company with direct data, scope 3 emissions’ data can run down to a lot of levels. It also becomes a point of speculation as to how many rungs down the supply chain should the report-gathering go.
Because the supplier’s scope 1 is the operator’s scope 3.
These challenges of data capturing and data sharing can eat up time and resources for a company targeting efficiency in reporting and reducing greenhouse gas emissions.
The next section covers actionable ways to make sense of the mountain of data developed and uncovered while tackling scope 3 emissions.
Making Sense of Data
Data capturing for accurate ESG reporting can consume a lot of time and resources and inhibit efficiency. 3 steps to ensure that data is used effectively to address specific ESG targets are --
1. Collecting data in one place:
A compilation of data as spreadsheets, documents, and even physical reports can slow down your reporting process by days, if not months. For effective data-capturing and sharing, the consolidation of all data in the same format in one place is a must.
It provides easy access to the data and easy comparability.
2. A powerful analysis tool:
It is not sufficient to have all the data consolidated if the analytics are not in place. A powerful tool to make sense of the varied data is just as important as the data itself. Having a powerful tool ensures efficient reporting and clarity-enhancing techniques to turn unstructured data into usable insight.
3. Easy Access to Analysis:
Let’s say all of your data is collected and analyzed for insights. But if this analysis is presented in too technical a format, without easy access to its parameters, it is of little use. It is crucial to have good data, but it is even more crucial to be able to access it.
Collecting, analyzing, and accessing data efficiently can cut down on resource-wastage for your organization, while at the same time enhancing clarity and efficiency in a truly sustainable way.
Sustainable Data Handling Solutions for a Sustainable World
Sustainability pertains to both measurable greenhouse gas emissions as well as unmeasurable resource consumption. While your carbon emissions may be in check, if you’re spending exceeding amounts of human resources or computing power on the reporting, it may be counterproductive.
A truly sustainable platform allows you to collect, analyze and access data in a user-friendly manner without running pillar to post to create your ESG report.
NEMS Panorama is an ESG reporting solution that handles the data for your ESG reporting with ease and efficiency through a powerful toolkit. It is a step towards wholesome sustainability by NEMS AS to create a better world, not just in terms of measuring emissions but also in terms of giving people the ability to analyze sustainability data in a meaningful way. Book a demo today.