More and more different emission data is required from small and medium-sized enterprises (SMEs) already in the bidding phase. Emission data is often inquired by large companies, as the tightening regulation requires them to report their greenhouse gas emissions. In addition, large companies participate in voluntary initiatives and may demand the same from their subcontractors. In competitive tenders, companies may face requirements and abbreviations that do not explain themselves. Read what scope 1 & 2, scope 3, EPD, SBTi, CDP and Ecovadis mean.

Recently, a clear trend has been noticeable that large companies have begun asking their suppliers and subcontractors for emission data. The main reason for this is the constantly tightening EU regulation: CSRD requires large companies to investigate the emissions of their own supply chains more accurately than before. This reflects in SMEs quotations.

Some SMEs have already done a lot for the climate, but some have not started their climate work yet. Sometimes the awakening comes as a shock reaction when a question related to greenhouse gas emissions comes up in an important competitive tendering. If the calculation has not been conducted before, the rush might catch you off guard.

We have faced several projects where the company has been required to report its own greenhouse gas emissions in the bidding phase. Different actors ask for various information, each using their own forms. Someone asks about the corporate-level calculation, and another about the product carbon footprint, LCA or EPD. In addition, the company may be required to set a Science Based Target or report emissions via CDP or Ecovadis.

These abbreviations can cause confusion and concern that if you select to use one system in a hurry, will the next customer require reporting using another system. How to properly react and fullfill all these demands? How much expertise and resources are needed, and how much will it all cost?

Below we explain the different emission calculation requirements that are typically demanded of subcontractors and suppliers.

Company’s greenhouse gas emission calculation (scope 1 & 2 and scope 3)

If company only needs to report emissions generated by its own operations, scope 1 and 2, it is the easiest way out. In this case, the company gets over by reporting the information related to its own energy consumption and direct greenhouse gas emissions. Usually, the fuel, electricity and energy consumption related data needed in calculations can be found in purchase invoices or the energy management system if the company uses one.

Scope 3 calculation is already more demanding and especially the information related to the amount of purchased materials, products and services is not always available. Even though the calculation should be primarily based on the mass or number of products, often information on costs is needed.

Scope 1 & 2 calculations can be completed in a few days if source information is easily available. Instead, scope 3 calculation takes several weeks or even months. Therefore, it is worth to act before someone demands it. Scope 1 & 2 and scope 3 calculations are conducted in accordance with the GHG Protocol standards.

Product carbon footprint, LCA and EPD

As quotations often concern products, products' carbon footprint data might be a non-negotiable issue in order for the quotation to be accepted. Product carbon footprint can be determined according to the ISO 14067 standard and the applicable product category rule (PCR). If a life cycle assessment (LCA) and/or environmental declaration or EPD (Environmental Product Declaration) has been conducted for the product, the product's climate impacts have also been clarified.

Several times we have been in a situation where emission calculation for products provided by SMEs had to be conducted on a rapid schedule. A product carbon footprint calculation can be conducted even in a couple of weeks if the products are not very complex and if the company has comprehensive data on the used raw materials, delivery routes and energy consumption during production.

SBTi, Science Based Target Initiative

Even over 6 000 companies are involved in the Science Based Target Initiative. Especially, many large companies have set themselves a Science Based Target, which means in practice that the company reduces its emissions in line with the Paris Agreement’s 1.5 ⁰C target.

For example, large chains have set emission reduction targets to reduce their own emissions, and in addition, they demand that companies that are part of their supply chains set similar targets. In order for the SME to be ready to set a Science Based Target, it has to at least calculate its scope 1 & 2 emissions and commit to calculating its scope 3 emissions and set the targets for itself.

CDP and Ecovadis

CDP is an international organisation that maintains a worldwide reporting system for environmental information. The purpose is to share information about the environmental impacts organisations have transparently. CDP has a comprehensive form where organisations add information about, for example, their scope 1, scope 2 and scope 3 emissions. CDP scores participating companies using a scale from A to D, and companies that do not fulfil the CDP requirements will get an F score (as failure). Companies and cities that have achieved an A score show environmental leadership.

Ecovadis, on the other hand, is an assessment system for responsibility and it considers in addition to environmental questions also labour and human rights, ethical principles and responsible procurement. Participating companies are scored in each of these sectors and the company gets a corresponding CDP score. This enables benchmarking.

Where should you start?

No matter what the requirements for subcontractors are, standard-based emission calculation is a step in the right direction for all supplier requirements previously presented. We can assist in corporate-level scope 1 & 2 and scope 3 calculations, determining product carbon footprint, identifying the most significant emission sources, setting a Science Based Target and planning emission reduction actions.