Scope 3 emissions: Measurement & reduction strategies

“Unlocking the full potential of Scope 3 assessment is crucial to achieving a credible decarbonisation strategy and enhancing sustainability performance.” 

Scope 3 emissions account for indirect carbon emissions occurring throughout a company’s value chain. These emissions are not directly controlled by the company but contribute most significantly to its total carbon footprint, often surpassing Scope 1 and 2 emissions.  

Addressing Scope 3 is essential due to its relevance across sectors, where understanding and managing these emissions unlocks benefits such as cost reduction, risk mitigation amid evolving regulations, improved stakeholder trust, and enhanced corporate reputation. Importantly, measuring and reducing Scope 3 strengthens resilience to supply chain disruptions and climate policy changes. 

How and what to measure 

Scope 3 measurement relies on robust data collection from a variety of sources including supplier reports, internal invoices, and operational records. These are combined with emission factors from trusted databases such as DEFRA, the Greenhouse Gas Protocol, and Ecoinvent. 

Measurement approaches differ in accuracy and resource demand: 

• Spend-based estimates: The simplest, relying on financial spend data; useful for initial screening but less precise. 

• Activity-based calculations: Use activity metrics like quantities or distances travelled, offering improved accuracy. 

• Supplier-specific data: Direct emissions data from suppliers, often derived from product carbon footprints or life cycle assessments; the most precise but resource-intensive. 

Prioritising material and emission-intensive categories is crucial. Typically, purchased goods and services make up the bulk of emissions and warrant focused attention. Consider where your company can exert influence and what regulatory or stakeholder risks exist to prioritise reporting efforts effectively. 

Best practice includes assigning a small, dedicated team for data collection, clearly documenting data sources and assumptions, ensuring consistent units, and regularly verifying data quality to support audit and target-setting processes (1). 

Why good data collection matters 

Reliable data collection is foundational to a credible Scope 3 emissions assessment and the overall success of decarbonisation efforts. Key reasons it matters include: 

• Audit and verification: High-quality data enables credible audits, builds stakeholder trust, and complies with regulatory or investor requirements. 

• Accuracy and continuous tracking: Consistent data gathering allows tracking emissions year-over-year, identifying hotspots, and measuring improvements precisely. 

• Target setting: Science Based Targets initiative (SBTi) requires robust data to approve reduction targets. Poor data quality weakens target credibility and achievement, and may even lead to a denial of target setting. 

• ESG ratings and investor confidence: Companies with reliable emissions data perform better in ESG ratings, impacting capital access and reputation. 

Without strong data foundations, target setting and reporting become unreliable, disrupting a company’s net-zero sustainability journey. 

Common pitfalls to avoid 

Many organisations face typical pitfalls, including: 

• Overlooking important Scope 3 categories like downstream use and end of life treatment of sold products  

• Over-relying on spend-based data without progressing to activity or supplier-specific data 

• Insufficient supplier engagement, resulting in poor data quality and missed collaborative opportunities 

A staged approach starting with a spend-based screening, moving toward activity-based metrics, and proactively engaging suppliers is most effective for comprehensive, accurate reporting. 

Reduction strategies for scope 3 emissions 

Effective reduction of Scope 3 emissions demands coordinated actions across the value chain: 

• Supplier engagement: Set clear targets and collaborate on low-carbon materials, incentivising improvements through recognition and contractual terms. 

• Product design: Embrace circularity by enhancing product longevity, repairability, recyclability, and substituting low-carbon or recycled materials. 

• Energy procurement and logistics: Support renewable energy adoption, optimise routes and shipment consolidation, reduce air travel, and transition to electrified fleets. 

• Digital tools: Implement dashboards and emissions tracking tools to monitor progress and prioritise decarbonisation actions effectively. 

Q&A highlights 

How do you handle missing data points in Scope 3 measurement? 

When primary data is missing, we use default emission factors and proxy data to provide reasonable estimates. For example, employee commuting emissions can be estimated using surveys that gather data on transport modes, commuting distances, and frequency. Sensitivity analyses can then supplement this, helping to understand the impact of these assumptions and enhance estimate reliability. This approach offers a practical solution while working towards higher data quality in future reporting cycles. 

To read more tailored insights, download our scope 3 guide now!

Why is verification important in emissions data? 

Verification is crucial because it builds credibility for your carbon footprint assessment. It ensures compliance with established standards like CDP reporting and provides confidence to stakeholders that the emissions data is accurate and robust. Furthermore, verifications can support the efforts to set science-based targets, which require transparent and auditable data. 

What is the role of the Science Based Targets initiative (SBTi) in Scope 3 emissions management? 

The Science Based Targets initiative offers a framework for setting ambitious, science-aligned emissions reduction targets. For SBTi approval, companies are required to have high-quality Scope 3 data to demonstrate credible baseline emissions and track progress. This standardisation helps companies validate their decarbonisation strategies and communicate their commitments confidently. 

How can companies improve supplier engagement for better data accuracy? 

Proactively engaging suppliers through clear communication of expectations, providing support and resources for emissions data collection, and incentivising participation can significantly improve data quality. Collaborative platforms or supplier workshops can also foster transparency and facilitate consistent data reporting, helping to bridge gaps and improve overall Scope 3 measurement. 

What digital tools can support Scope 3 data collection and management? 

Digital platforms, such as carbon accounting software and supply chain emissions tracking tools, can automate and streamline the data collection processes. These tools can integrate supplier data, apply emission factors systematically, and provide dashboards to visualise hotspots and reduction progress, enhancing accuracy and decision-making efficiency. 

Case studies 

Request 
A tier-one aerospace supplier sought comprehensive guidance to assess all 15 Scope 3 categories, moving beyond spend-based estimates to more accurate, activity-based data. Their aim was to identify hotspots and achieve ambitious reductions and supplier engagement targets. 

Challenge 
Data was fragmented, fragmented and often inconsistent across systems, relying heavily on broad spend-based calculations. Supplier reporting maturity was low and engagement was limited. Internal silos and competing priorities complicated alignment on Scope 3 goals. 

Solution 
Nexio Projects conducted a full Scope 3 assessment, focusing on hotspots such as purchased goods, capital goods, and transportation. Activity-based data collection and digital tracking aligned with the Greenhouse Gas Protocol, EcoVadis, and CDP disclosure requirements enhanced data accuracy. This improved the company’s SBTi validation and ESG rating scores, while enabling hidden reduction opportunities and setting targets for a 25% absolute reduction and 70% supplier engagement by 2028. 

Request 
A steel, polymer, and paper distributor wanted a credible decarbonisation roadmap. The client’s portfolio was emission-intensive, with complex global sourcing and increasing regulatory scrutiny. 

Challenge 
The company faced complex supply chains with heavy reliance on supplier decarbonisation progress, diverse sourcing geographies, and evolving regulations. Validating a Net Zero pathway and SBTi-compliant targets was a significant challenge. 

Solution 
Nexio Projects undertook comprehensive supply chain analyses, considering emissions drivers across sourcing countries and circular economy opportunities. Multiple decarbonisation scenarios were modelled, covering business-as-usual to Net Zero ambitions. A detailed reduction roadmap with short- and long-term SBTi-aligned targets was created, addressing stakeholder demands and regulatory obligations while supporting internal strategy execution. 

See our case studies to hear more about our clients. 

How can we help? 

Nexio Projects is a leading sustainability consultancy recognised among the top boutique ESG and sustainability strategy firms worldwide by Verdantix. We guide organisations from regulatory and strategic reporting through to hands-on implementation of decarbonisation strategies. 

Our climate experts specialise in Net Zero and decarbonisation consulting, helping set credible emission reduction targets aligned with the Science Based Targets initiative (SBTi). As trusted ESG consultants and sustainability experts, we provide tailored ESG advisory and decarbonisation consultancy to drive impactful carbon management strategies. 

Book a free consultation now to take the next step in your climate journey with Nexio Projects’ expert support. 

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References 

(1) GHG Protocol (2023) Corporate Value Chain (Scope 3) Accounting and Reporting Standard, World Resources Institute.