Scope 3 greenhouse gas emissions are non-energy related indirect GHG emissions that occur in a company’s value chain: i.e. that are induced by upstream and downstream operations and activities outside the organisational boundary of the legal entity.
Scope 3 is divided into 15 categories.
Category 3.1 - Purchased goods and services
GHG emissions related to this category result from the extraction, production, and transportation of goods and services purchased or acquired by the reporting company in the reporting year, not otherwise included in categories 3.2 to 3.8.
Purchased goods
Product-related emissions are estimated via a monetary approach, using the carbon intensity of the supplier or of the sector of activity, or by using product-specific monetary emission factors.
Accuracy can be improved by implementing an activity-based approach, using other metrics and flows (quantity, tons, litres, etc. of purchased products; raw materials used to manufacture the product; energy used in the industrial process; life cycle assessments; etc.).
Consumable purchases
Emissions related to consumable purchases are automatically computed via a monetary approach: monetary ratios of food purchases, paper, plastic, metals, etc. are included in Greenly's database.
Accuracy can be improved via an activity-based approach (by specifying the quantities consumed). An activity-based approach will be implemented in priority for the most important sources of GHG emissions.
Once the emissions have been computed via an activity-based approach, automation is ensured by estimating a consumable-specific monetary emissions factor.
Raw material purchases
Emissions related to the production of raw materials are computed using Life Cycle Assessments (LCAs). These emissions are then divided by the price of the raw material, a monetary emission factor is estimated and calculations can be automated.
However, for the purchase of raw material, it is preferable to use an activity-based approach and multiply physical quantities and flows (kg/lbs, liter/gallon, etc.) by activity EFs.
Greenly plans to connect to business management software products via APIs (e.g. SAP) to automatically collect the most up-to date activity-based data.
Purchased services
As activity-based data resulting from activities and operations of service companies are very diverse, monetary emission factors are used to estimate total emissions related to these activities. Emissions are computed by multiplying the amounts spent by a monetary emission factor (in kgCO2e/€).
These emission factors are computed using two methods:Carbon intensity of the service provider. When the service provider report and disclose their GHG emissions publicly or share data directly with Greenly (via Greenly Corporate Impact or Supplier Engagement), total emissions are divided by the company's turnover and a monetary ratio is computed.
Carbon intensity of a business sector. For companies that do not publish a GHG assessment, the carbon intensity of the business sector is used instead. This method is widely used for MSMEs, who do not often share information on their environmental impact. The data used comes from studies carried out by Greenly or from public databases. The accuracy can then be improved by engaging service providers in the process or by using other metrics (e.g. number of FTE).
Focus on digital services
Total GHG emissions induced by digital services are estimated via a monetary approach, using either the carbon intensity of the service provider or the one of the sector (data centre, IT licence, SaaS, video conferencing, web advertising, etc.).
Accuracy can be improved by carrying out an activity-based study. Greenly has become a true expert in this field and can compute the carbon impact of digital products, particularly the one of data centres, with great accuracy. Indeed, a specific study can be done using the type of storage, cloud computing and processing power, the amount of data transfers, etc. and the country where resources and data centres are located.
Category 3.2 - Capital goods
GHG emissions related to this category result from the extraction, production, and transportation of capital goods purchased or acquired by the reporting company in the reporting year (buildings and other infrastructures, vehicles, machinery, IT equipment, furniture, etc.).
Building
Construction
Emissions related to the construction of a building are estimated by using an average kgCO2e per square meter (or square foot) ratio for each building type (office, housing, data centre, warehouse, etc.). These ratios are estimated via emission factors that are provided by public agencies and bodies.Renovation
Renovation-related emissions are accounted for using a monetary approach. A more in-depth study can be carried out to gain in accuracy (e.g. component analysis).
IT equipment
IT-related emissions are computed via an activity-based approach using data provided by the organisation (IT equipment inventory). Average emission factors by type of equipment, the latest life cycle assessments published by manufacturers (Apple, Dell, Lenovo, Boavizta), etc. are included in Greenly's database. Therefore, a high level of accuracy can be obtained for IT equipment GHG emissions.Vehicle fleet
Emissions related to the manufacturing of vehicles are computed based on the number and type of vehicles used.
Accuracy can be improved when manufacturers publish life cycle assessments of their vehicles.Furniture
Furniture-related GHG emissions generally account for a very small part of the reporting company's total emissions. Therefore, to estimate these emissions, a kgCO2e per employee ratio is used.
Accuracy can be improved by collecting and using additional data.
Category 3.3 - Fuel- and energy-related activities not included in Scope 1 or Scope 2
GHG emissions related to this category result from the extraction, production, and transportation of fuels and energy purchased or acquired by the reporting company in the reporting year, not already accounted for in scope 1 or scope 2: i.e. upstream emissions of purchased fuels; upstream emissions of purchased electricity; transmission and distribution losses; generation of purchased electricity that is sold to end users).
GHG emissions are computed using emissions factors published by the International Energy Agency.
Category 3.4 - Upstream transport and distribution
GHG emissions related to this category result from:
Transportation and distribution of products purchased by the reporting company in the reporting year between a company’s tier 1 suppliers and its own operations (in vehicles and facilities not owned or controlled by the reporting company)
Third-party transportation and distribution services purchased by the reporting company in the reporting year (either directly or through an intermediary), including inbound logistics, outbound logistics (e.g., of sold products), and third-party transportation and distribution between a company’s own facilities
Transportation and distribution of products sold by the reporting company in the reporting year when the cost of transportation is borne by the reporting company.
To estimate the GHG emissions linked to this category, a monetary approach is implemented using specific monetary emission factors for each mean of transport.
Accuracy can be improved by implementing an activity-based approach: emissions are computed using the total distance travelled, the weight transported and the type of vehicle and fuel used. Monitoring these emissions can be automated by establishing specific monetary emission factors (computed by using the activity-based data provided by the organisation).
Category 3.5 - Waste generated in operations
GHG emissions related to this category result from the disposal and treatment of waste generated by the reporting company’s operations in the reporting year (in facilities not owned or controlled by the reporting company) (e.g. incineration, compost, landfill, recycling) .
Waste-related emissions are accounted for in different ways. In most cases, these GHG emissions represent a very small part of the organisation's total emissions. Therefore, a kgCO2e per employee ratio is used. Accuracy can be improved by collecting further data: the weight and type of waste generated by the company.
Emissions related to the treatment and disposal of industrial and construction waste are systematically computed by collecting data on the type and weight of waste generated.
Category 3.6 - Business travel
GHG emissions related to this category result from the transportation of employees for business-related activities during the reporting year (in vehicles not owned or operated by the reporting company).
These emissions are computed using the expenses found in the general ledger of the organisation. An activity-based approach can also be implemented to gain in accuracy.
Category 3.7 - Employee commuting
GHG emissions related to this category result from the transportation of employees between their homes and their worksites during the reporting year (in vehicles not owned or operated by the reporting company).
These emissions are estimated using an employee questionnaire sent to all employees of the reporting company.
Category 3.8 - Upstream leased assets
GHG emissions related to this category result from the operation of assets leased by the reporting company in the reporting year and not included in scope 1 and scope 2.
These emissions are computed using the expenses found in the general ledger of the organisation. An activity-based approach can also be implemented to gain in accuracy.
Category 3.9 - Downstream transport and distribution
GHG emissions related to this category result from the transportation and distribution of products sold by the reporting company in the reporting year between the reporting company’s operations and the end consumer (if not paid for by the reporting company), including retail and storage (in vehicles and facilities not owned or controlled by the reporting company).
The reporting company does not directly pay for the transport, hence only an activity-based approach is used to compute these GHG emissions.
Automation is ensured by applying a monthly average and by regularly updating the data used. Greenly plans to connect to business management software products via APIs (e.g. SAP) to automatically collect the most up-to date activity-based data.
Category 3.10 - Processing of sold products
GHG emissions related to this category result from the processing of intermediate products sold in the reporting year by downstream companies (e.g. manufacturers).
Emissions are computed using the average energy consumption needed in the process and the country where the energy is produced and consumed (the carbon intensity of electricity varies depending on the country).
To include these emissions in the SaaS, a more in-depth study needs to be carried out.
Category 3.11 - Use of sold products
GHG emissions related to this category result from the end use of goods and services sold by the reporting company in the reporting year.
Depending on the sold product, different methods exist.
Digital products and websites
Emissions are induced by the power consumption of terminals and networks (cloud computing, data transfers, data centres, storage etc.) used by end-users. These emissions are computed using the total time spent (in hours), the country where the terminals and networks are located (the carbon intensity of electricity varies depending on the country) and the estimated average energy consumption per hour. Network traffic emissions are estimated using the total amount of transferred data. Automation is ensured via a monthly average that is regularly updated.
Energy consuming products
Emissions are induced by the energy consumption of sold products. These emissions are computed using the average energy consumption per product and the country where the energy is produced and consumed (the carbon intensity of electricity varies depending on the country). Automation is ensured via a monthly average that is regularly updated.
Category 3.12 - End-of-life treatment of sold products
GHG emissions related to this category result from waste disposal and treatment of products sold by the reporting company (in the reporting year) at the end of their life.
Emissions related to the treatment and disposal of the sold products are computed by collecting data on the type and weight of waste generated.
Category 3.13 - Downstream leased assets
GHG emissions related to this category result from the operation of assets owned by the reporting company and leased to other entities in the reporting year, not included in scope 1 and scope 2.
These emissions are computed using an activity-based approach can also be implemented to gain in accuracy.
Category 3.14 - Franchises
GHG emissions related to this category result from the operation of franchises in the reporting year, not included in scope 1 and scope 2.
Category 3.15 - Investments
GHG emissions related to this category result from the operation of investments (including equity and debt investments and project finance) in the reporting year, not included in scope 1 or scope 2.
These emissions are not directly accounted for on the SaaS.
However, when relevant, these emissions can be added to the SaaS. Financed-emissions are allocated using the share invested in the company or project.
Other emissions - Visitor and client transport (Optional)
GHG emissions related to this category result from visitors and clients travelling (car, plane, train, etc.) to one of the reporting company's sites.
These emissions are computed using an activity-based approach when relevant (the company provides data on the distance, mean of transport and number of visitors).
Companies may include emissions from customers traveling to and from retail stores in category 3.9 (optional). This logic can also be applied to all customers and not only for retail stores.
Other emissions - Other indirect emissions (Optional)
GHG emissions related to this category result from the reporting company's activities and operations and that still haven't been taken into account in one of the other categories.