Glossary
Scope 3
Scope 3 refers to a category of greenhouse gas emissions pertinent to business operations that, despite being indirect emissions, are a result of activities of the company. These emissions arise from sources not owned or directly controlled by the company but occur due to its operational actions.
These may emerge from various operations including activities from company’s business travel, transportation and distribution (both upstream and downstream), waste generated from operation, and energy related activities not included in Scope 1 or 2 such as production of purchased goods or services.
Though indirect, Scope 3 emissions often represent the largest source of greenhouse gas emissions and, in some cases, can amount to many times the emissions from a company’s direct operations. This fact underscores the potential and need for companies to try to influence and reduce these emissions in order to achieve significant greenhouse gas reduction overall. Companies often achieve this by engaging in strategic partnerships with suppliers, or by altering their product design or procurement practices.
Scope 3 is considered a crucial component in evaluating a company’s complete environmental impact as well, as it provides a fuller picture of total emissions related to company activity. By monitoring and reporting on these emissions, companies are able to recognize areas of significant emission reduction potential outside their direct control. It also assists in benchmarking progress, identifying risks and opportunities, and engaging key stakeholders in dialogue around mitigating climate change.
In the context of green and renewable energy, the consideration of Scope 3 emissions has grown increasingly important with many companies investing in greener supply chains to drastically reduce their overall carbon footprint. Carbon accounting methods, including the calculation of Scope 3 emissions, also play a significant role in the transition towards a more sustainable global economy, thereby assisting in combating climate change and promoting eco-friendly practices.