How can scope 3 calculations be started and what kind of information is needed for conducting them? This blog post explains the process behind scope 3 accounting and provides companies with means to map the greenhouse gas emissions of their own value chain.

Emission calculations can seem a challenging and complex task. For many companies, scope 1 and 2 emissions are still relatively easy to calculate, but the situation changes when the calculations are extended to cover the entire value chain’s scope 3 emissions. Scope 3 accounting can feel difficult and is often postponed, but preparation should be started no later than now, as legislation and stakeholders demand comprehensive emission calculations more often.

With the entry into force of the Corporate Sustainability Reporting Directive (CSRD), scope 3 emission accounting will become mandatory for all companies subject to the directive. The CSRD also changes how emissions from co-owned companies are allocated among different owners. In the future, the company that has operational control over the co-owned company, meaning the power to make daily decisions and manage operations, will account for all emissions in its own emission calculations. Conversely, if the company conducting the calculation owns a part of another company without operational control, the emissions will be included in the scope 3 calculations according to the ownership share.

In addition, emission accounting requirements may also apply to companies not covered by the CSRD. Due to sustainability reporting, larger companies are now surveying their supply chains more closely, and the availability of emission data can be a significant factor in selecting business partners. In such situations, even smaller subcontractors may need to calculate their own emissions, although they are not directly obligated by the CSRD.

Data collection in the background of scope 3 accounting

The calculation of greenhouse gas emissions itself is quick and fairly straightforward once the initial data has been carefully collected and reliable emission factors are used. Data collection is time-consuming, especially when conducting calculations for the first time. Therefore, it is advisable to allocate sufficient time for scope 3 calculations and to start well in advance, rather than a month before the CSRD reporting or when potential business partners inquire about information during competitive bidding.

The company conducting the calculations should start scope 3 calculations by requesting emission data from its own suppliers and service providers. For example, transportation companies typically provide reports detailing the emissions associated with their services. If the company uses travel agency services, emission data for business travel is often available in travel reports. Initial data obtained directly from suppliers facilitate and expedite the emission calculation project. However, verifying the data received from suppliers is advisable to ensure it meets the requirements and has been calculated reliably following standards and correct boundaries.

It is worth asking for emission data from raw material and product suppliers as well, but often the situation is that the information is not available. In such cases, it is important to investigate the types of purchases the company conducting the calculation has made during the reporting year. For material purchases, primary data based on physical quantities is used, such as the number of tons of raw materials purchased and how many new computers and phones were bought for the company. If such detailed quantities are unavailable, euro-based procurement data can be used, but the accuracy of the calculation results may be compromised. Often, euro-based calculations result in significantly higher emissions compared to calculations based on physical quantities.

However, euro-based data has its place in emission calculations, as the company must remember to include all purchased services in the emission calculation, which can easily be overlooked when starting emission calculations. Determining precise emission data for these services, such as purchases involving occupational health, insurance, and IT services, is not as simple. Service procurement has its own emission factors based on consumption data, which are used in calculations.

The alpha and omega of emission accounting are reliable and correctly chosen emission factors. When selecting them, it is important to ensure that the emission factor is up-to-date, covers the correct life cycle stages, and aligns with the intended emission data. The more precise emission data and factors are available, the more accurate the company’s emission calculations will be. Outdated, inaccurate, or solely euro-based emission factors can lead to unreliable results and, at worst, multiply emissions.

How to interpret the results of scope 3 calculations

When interpreting the results of emission calculations, a common question arises about whether a company’s emissions are high or low and how they should be viewed. Making direct comparisons between companies is challenging because a company’s operations and structure significantly influence the amount and distribution of emissions. For example, energy companies typically have high scope 1 emissions, whereas manufacturing companies’ scope 3 emissions are often emphasized. For many companies, scope 3 emissions play a significant role, and it is beneficial to invest in their calculation.

Based on the results, it is also easy to identify the largest emission sources in the company’s operations and to determine what emission reduction measures can be taken to decrease emissions in the future. Each calculation includes assumptions and uncertainties, and reporting these is important for interpreting the results. It is beneficial to strive to minimize uncertainties in the future, which will also enhance the accuracy of the calculations. Starting emission calculations early allows for improvements in data collection and calculation methods before, for example, the first reports required by the CSRD must be published. If data collection practices have been considered in advance, it will significantly ease the workload during the official reporting period.

The comprehensive emissions database and standard-based carbon footprint calculators on the OpenCO2.net platform enable reliable scope 3 calculations. The calculation meets the requirements of both the ESRS E1 standard according to the CSRD and the GHG Protocol standards. Additionally, using the product calculator based on ISO 14067, it is possible to calculate the carbon footprint of products and services if the client company requires such information for their own scope accounting.