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Scope 3 emissions

Reducing Scope 1 & 2 emissions, those under an organisation's direct control, are usually the first target in a company’s carbon reduction strategy. However, Scope 3 emissions, from the organisation's value chain, are over 90% of the total for most companies (see chart below).

It is increasingly important to address Scope 3 emissions for organisations to have a real impact on their overall carbon footprint.

What are Scope 3 emissions?

There are three groups of greenhouse gas emissions, which are known as Scopes by the Greenhouse Gas (GHG) Protocol.

Up until now, most companies have focused on measuring Scope 1 and 2 emissions as these are the emissions for which they have the most control. However, Scope 3 emissions could be the largest source of a company’s emissions and can even account for several times the impact of Scope 1 and 2.

Why are they important?

Scope 3 footprints help investors identify organisations that are well-positioned to:

  • Meet evolving and increasingly stringent climate change legislation
  • Capture growing demand for energy-efficient products
  • Assess where the emission hotspots and resource / energy risks are in their value chain
  • Identify which suppliers are leaders and which are laggards in terms of their sustainability performance
  • incentivize carbon saving, energy efficiency and cost reduction opportunities in their value chain