Scope 3 emissions and science-based targets: Your key questions, answered
During an interactive webinar on Thursday (30 May), experts from CDP, Multiplex and Carbon Credentials answered readers' key questions on Scope 3 (indirect) emissions and science-based targets. Here, edie rounds up their answers.
Since the launch of the Science-Based Targets Initiative (SBTi), more than 500 companies from across the world have publicly committed to set approved goals in line with the Paris Agreement. But less than half have had their targets rubber-stamped, with the complex challenge of measuring and reducing Scope 3 emissions often cited as a key barrier.
In association with consultancy Carbon Credentials, edie therefore hosted an hour-long webinar exploring how organisations of all sizes and sectors can close the Scope 3 “reporting gap” on the road to setting ambitious greenhouse gas (GHG) reduction targets, giving readers the chance to have their pressing questions answered in real-time.
Originally broadcast at 1 pm on 30 May and now available on demand, this interactive webinar heard from some of the experts who are sizing up to the challenge of measuring and reducing their company’s own Scope 3 emissions – and those that are advising other organisations on how to do just that.
During the webinar, Multiplex Construction Europe’s sustainability manager Pavan Juttla, CDP’s account manager for supply chain projects Matthew Sumners and Carbon Credentials’ senior consultant Annabell James were asked all manner of questions about value chain emissions, covering topics from data assurance to employee engagement.
Here, edie rounds up their answers in brief – both to the questions that were asked during the hour-long session, and those that we didn’t have time to cover on the day.
Q: How do you avoid double-counting and double-offsetting, especially if you’re in an industry where supply chains are shared, such as retail?
Annabell: “If everyone uses the GHG Protocol as their reporting standard, that should minimise the possibility. It is accepted that there will be double counting within the supply chain, but, at the end of the day, it will still be driving the emission reductions that are needed.”
Pavan: “If you are working jointly as an industry, you need to be transparent about that rather than taking exclusive credit.”
Matthew: “Here at CDP, we have questions related to direct collaboration between suppliers and members, so you can find examples of accounting for joint projects.”
Q: How far down your supply chain should you go?
Matthew: “A lot of our members take what they do at Tier 1 and then evaluate further, step by step, but it is quite difficult to know exactly what to do in the absence of clear guidance.”
Pavan: “There’s a level of confidence in that if you account for Tier 1 and Tier 2 suppliers, they should incorporate emissions further down the chain themselves.”
Q: How can you be sure your data is reliable?
Pavan: “You can approach Scope 3 data assurance in the same way as Scope 1 and 2, in that there are a lot of different standards out there for companies to use. It’s really about tracing your data back to the source and being sure that methodologies and calculation techniques are as good as they can be.
“The initial screening you carry out to determine which Scope 3 emissions are relevant to your business should involve looking at your current data sources, others you have available, and where you need to get to.”
Matthew: “Getting verification and following different ISO standards is a good move – it gives you guidance on how to integrate sustainability.”
Q: How can we engage teams which typically have pressure to focus on the short-term, such as sales departments?
Pavan: “Incorporate the information that you need to capture for energy and carbon as soon as possible and integrate it into financial reporting. This makes it part of business-as-usual, so it doesn’t feel like an add-on.
“Sell the business case to the supply chain department; show the benefits for suppliers in terms of reputation, market competitiveness and any long-term financial savings. This is essential before engaging procurement and finance teams.”
Q: What about emissions generated through the use of your product – particularly if the product is designed to SAVE carbon and energy?
Annabell: “That’s a question which seems to be cropping up a lot at the moment but it’s a bit of a grey area. In terms of accounting, there’s not much you can do presently, but there is always the good story that you can tell in the narrative of your communications around your wider impact.”
Q: How do you create accountability for Scope 3 emissions among senior managers?
Pavan: “Rather than committing to our science-based target then going through the process of setting it, we ran a two-year internal engagement piece with out senior management. I think that worked very well, because we were able to get their buy-in from the very early stages and they were directly involved in the strategy.
“This enabled us to engage our supply chain from the very top, rather than middle management, who are still responsible for the day-to-day progress towards the target.”
Q: Can a carbon price play a role in reducing Scope 3 emissions?
Matthew: Putting a price on carbon emissions can lead to a reduction in emissions among many other benefits and expanding carbon pricing could increase reductions especially if implemented effectively. I am no expert in carbon pricing, but creating new revenue streams to help improve emissions reductions could play a role in Scope 3 reductions.”
Q: Are there examples that are relevant to the finance and banking industry?
Annabell: “Scope 3 accounting for the financial and banking industry is evolving. The most significant Scope 3 category tends to be Category 15, Investments. The GHG Protocol provides guidance on calculation of emissions from four types of investment - equity, debt, project finance and managed investments. Emissions from investments should be allocated to the reporting company based on your proportional share of investment in the investee.”
Q: We've seen challenges not so much in collecting [Scope 3 emissions] data, but how we work at reducing carbon footprint and encourage the use of public transport over car usage. We're very driven by workload and needs of the organization over ethical choices. Any ideas on changing culture and encouraging low-carbon choices?
Annabell: “I’d recommend showing employees the impact that their choices have, for, by example, using equivalency calculations to put emission savings into context. Developing a communications programme to reinforce key messages and share knowledge is also key.”
Q: The SBTi only validates science-based targets for corporates. Are you aware of a way that universities can have their SBTs validated?
Matthew: “Currently, the SBTi does not engage with cities, local governments, public sector institutions, educational institutions or non-profits. We hope to expand our focus in the future but, in the meantime, the initiative encourages all these stakeholders to consider science-based target-setting methods and other resources listed on the SBTi website and adapt them for their use, whenever possible.”
Q: We measure Scope 1 & 2 emissions on a quarterly basis, allowing us to make interventions if necessary. What would you recommend with Scope 3, as it is inherently more complex in the calculation?
Annabell: “Some Scope 3 categories can be calculated on a quarterly basis, for example, business travel if data comes directly from travel providers. Other categories can be more difficult. At a minimum we recommend calculating the full Scope 3 footprint on an annual basis.”
Q: How do you normalise Scope 3 carbon? If workload varies in size, should a normalised measure be applied alongside an absolute figure?
Annabell: “Scope 3 emissions can be normalised in the same way as Scope 1 and 2. Choose a relevant metric to your business such as revenue, floor area or production volume.”
Q: How do you account for future building use?
Pavan: “We have used Energy Performance Certificates (EPCs) and Building Regulations United Kingdom Part L (BRUKL) reports to project the carbon emissions of the buildings we deliver over their lifetime. We increase this projection to include the industry-recognised 'performance gap' so that our data reflects building performance, rather than the designed performance.”
Q: How did Multiplex get suppliers to apportion Scope 3 between multiple customers?
Pavan: “We ask our suppliers to report carbon-related information that is strictly associated with our construction projects. We request evidence from them to demonstrate this, such as delivery tickets and onsite progress reports.
“If a supplier does not record such information directly, they may still have an overview of their financial movements between multiple customers and those costs can often be linked to materials, transport, energy and so on. This can then be converted into carbon.”
Q: Who "approves" science-based targets? Where do you submit them?
Matthew: “Companies contact the SBTi group directly about first committing to an SBT and then ultimately submit it for approval. Companies get two years after their commitment date to have their SBT approved by the SBTI. The SBTi is a global team comprised of people from all partner organisations – the UNGC, CDP, WWF and WRI.”
Q: What exactly does Multiplex’s science-based target entail?
Pavan: “Multiplex Europe commits to reduce direct carbon emissions 30% by 2030 from a 2017 base-year. We also commit that key suppliers representing 95% of indirect emissions will set a science-based emission reduction target by 2023.”
Q: Are there any courses which environmental managers can take to learn more about Scope 3 reporting?
Annabell: “The GHG Protocol provides online training on Scope 3. You can find out more here.”
Q: What would be your one top tip for businesses starting their Scope 3 journey?
Matthew: “Have direct engagement with your procurement team and build Scope 3 emissions reductions into your procurement process until it becomes ‘business-as-usual’. Then, review supplier progress year-on-year.”
Pavan: “Start asking your suppliers key questions; they might be early on in their own journey, so you can work together to measure and report emissions. If your effort is collaborative, your industry will be able to get further, quicker.”
Annabel: “Undertake a Scope 3 screening exercise to determine which categories have the biggest impact and map out an action plan from there.”
Watch the webinar on demand by clicking here.