Emissions that come from your car are emissions you create. Emissions that come from a company’s manufacturing belong to that company.
Easy to understand. Those are called Scope1 Emissions. They are also called direct emissions. Scope 2 are emissions from generating energy the company (or person) buys, like electricity. Most firms have focused on Scopes 1 and 2 because they have more direct control.
Scope 3 Emissions are more expansive, for the entire value chain. Scope 3 emissions include all sources not within an organization’s scope 1 and 2 boundary. The scope 3 emissions for one organization are the scope 1 and 2 emissions of another organization. Scope 3 emissions often represent the majority of an organization’s total greenhouse gas emissions. (EPA) (EPA image below.)
Here’s an example. “For example, Scope 3 emissions from manufacturing make up about 75 percent of Apple’s overall carbon footprint. Unlike Scope 1 and 2 emissions, which a corporation can reduce through energy-efficiency measures and renewable energy procurement, Scope 3 emissions are out of the company’s direct control, so they are the most difficult to reduce.
What activities can affect Scope 3 Emissions? The EPA notes these as few:
- Upstream Transportation and Distribution
- Downstream Transportation and Distribution
- Waste Generated in Operations
- End-of-life treatment of sold products
- Business Travel
- Employee Commuting
Why do this break down? Addressing Scope 3 Emissions shows a company is serious about cleaning up its act. Individuals – customers, investors, prospective suppliers, for instance – gain objective ways to measure how a company or sector measures up.
It’s time for that. “Some companies are beginning to clean up supply chains that they’ve left to their own devices for decades. They’re questioning how their raw materials are manufactured and, among other things, are moving to develop greener, cleaner ways of making steel or cement and transporting goods.” (Bloomberg)
Scope 3 is about companies flexing muscle. Makes sense.
A challenge will be to establish common and accountable metrics that apply to all companies.