Why should I measure my Scope 3 emissions?

Scope 3 emissions typically account for 90% of a company’s overall carbon footprint; they represent your greatest area of impact, your greatest area for risk, and show you opportunities for reductions in emissions and wider benefits to your organisation.

If you own a car and fill it with petrol to drive from London to Barcelona, it's clear that you’re responsible for those emissions.

But if you take a flight, the plane is owned by an airline, and they fill it with jet fuel. You are still responsible for your share of the flight’s emissions. You decided to pay the airline and create the demand for burning that fuel.

If you don’t account for Scope 3, that switch from a car to a plane would look like you had no emissions from that journey.

Your consumption of goods and services typically represents around 90% of your total emissions. Scope 3 is where you’ll find your biggest risks, your biggest opportunities and be able to multiply your impact on reducing emissions by influencing others.

Why should I measure my Scope 3 emissions?

In simple terms, Scope 1 is the fuel you burn, Scope 2 is any fuel burnt to generate the electricity you use, and Scope 3 is everything else - the fuel burnt to produce and transport everything you buy, from coffee beans to insurance. There are other greenhouse gas sources other than burning fuel, which are also included, but burning fuels are responsible for the majority.

The emissions in your Scope 3 don’t come from you directly, but you are responsible for them. If you didn’t buy that pack of coffee, or that computer or that insurance policy, the proportion of emissions created to produce them wouldn’t exist.

Not accounting for Scope 3 effectively excludes any emissions you outsource to other organisations and countries. If you are responsible for buying something, you are responsible for the emissions created in its production.

A factory manufactures coffee mugs and transports them by lorry to another business, which might be a shop that buys the mugs to sell to its customers. The factory reports the emissions from the gas-heated kiln used to make the mugs and the fuel for their lorry in their Scope 1. The shop reports the factory's Scope 1 as part of its Scope 3 supply chain emissions.

Both the factory and the shop can influence emission reductions. The factory could make its kiln more efficient and could switch to an electric lorry. The shop could buy from another factory that had already made emission reductions or could ask the factory for fewer but larger deliveries to increase efficiency. The shop could ask if the factory can redesign the mugs so they need less time in the kiln.

Is it double-counting to report emissions from my suppliers?

Part of the reason that emissions are split into three Scopes is to show how they relate to each other. Reporting your Scope 3 emissions is not double-counting; the deliberate overlap between client and supplier emissions reflects areas where both can take decarbonisation actions.

Your Scope 1 and 2 emissions are not double-counted in your Scope 3. Your suppliers’ Scope 1 and 2 emissions are part of your Scope 3. And your combined Scope 1, 2 and 3 emissions are part of the Scope 3 emissions for any organisations you supply goods or services to.

The overlap of different scopes – a supplier’s Scope 1 being counted as part of your Scope 3 - is deliberate, to show that both the supplier and the purchaser have responsibility for the emissions and influence to reduce them.

What are the benefits to my business in reporting Scope 3?

Calculating your Scope 3 emissions not only shows your greatest area of emissions, it also represents your greatest area of impact, and your greatest areas for business risk and opportunity within your supply chain.

Cost reductions

Identifying emission hotspots can reveal areas for significant cost reductions, through efficiency, material changes and waste reduction. Your Scope 3 data can help you choose different suppliers, different products and different materials that could lower costs alongside emissions.

Carbon costs

Understanding and reducing the carbon in your supply chain can also reduce costs in a more indirect way, by protecting you from the passed-down costs of carbon taxation. Carbon taxes usually put a price on Scope 1 emissions or fuel use, sometimes only in specific sectors or countries. The increased cost of those Scope 1 emissions is passed on through the supply chain, through increased costs, exactly as the emissions are passed into the Scope 3 emissions of the supply chain. This aligns low-carbon Scope 3 with lower-cost supply chains.

Stakeholder engagement

Investors, stakeholders, employees and customers increasingly want transparent climate reporting and evidence of emission reductions. A survey by KPMG found that 46% of employees want the company they work for to demonstrate a commitment to ESG, with a third actively researching a company’s ESG commitments when looking for a new job.

Competitive advantage

Many of your clients will increasingly be asking for carbon data from their suppliers; they may need to comply with legislation (such as the NHS supplier carbon reduction plans, which are expanding to include all Scope 3 in 2027), or legislation in other areas where they operate (like the EU).

Having full Scope 1, 2 and 3 emissions will give you a competitive advantage when the availability and quality of your carbon data is part of their tender and procurement decision-making, and allow you to demonstrate reductions which help your customers decarbonise their Scope 3.

Reputation and influence

If you make any claims about your carbon and sustainability actions, but customers can see a high-impact supply chain, you are putting your reputation at risk. Conversely, working on reduction actions across your supply chain gives you many more examples to talk about as part of your sustainability storytelling, which can widen your influence even further.

I don't have control over my suppliers' emissions, so how can I reduce my Scope 3?

You have varying levels of control and influence over different parts of your Scope 3 emissions. In some areas, like business travel and commuting, you may be able to enable your team to make lower-carbon choices.

You may not have direct control over your supplier's emissions, but together with other buyers, you possess immense commercial influence over your supply chain.

You can influence reductions by:

Shifting business travel: Reduce the amount you travel or shift to lower carbon means of transport, such as online meetings and opting for train travel rather than flying.
Enable sustainable employee commuting: Setting up lift-sharing schemes, allowing flexitime to make bus and train commutes easier, and encouraging active travel by bike or walking by providing the facilities your employees need, can all help them have lower-carbon commutes, often saving money as well.
Optimise logistics: For transportation-related categories, move to lower-emission shipping modes, or optimise routes and load factors.
Supplier collaboration: Work with key suppliers to help them measure their own carbon footprints (Scope 1 and 2), set their own science-based targets, and implement efficiency measures. Their reductions automatically become your reductions.
Product/material design: Redesign your products to require fewer resource-intensive materials or switch to inputs with a lower embodied carbon footprint, such as recycled content.
Shift your spend towards suppliers that provide verifiable, low-carbon materials and services.

What legislation and policies affect my carbon footprint reporting?

Regulatory and commercial pressure is quickly moving from voluntary disclosure to mandatory reporting, especially concerning Scope 3. Even if your organisation isn’t required to report Scope 3, it can benefit you to do so.

If you supply any goods or services to a large corporation which is required to report its Scope 3 emissions, being able to supply your full Scope 1, 2 and 3 emissions puts you at a competitive advantage as you are helping their Scope 3 reports to be more reliable.

Reporting requirements are increasingly being passed down supply chains. The following legislation and standards may apply to your supply chain now or in the near future:

UK Sustainability Reporting Standards: The UK government is actively consulting on adopting the International Sustainability Standards Board (ISSB) IFRS S2 climate standards. These global standards mandate the disclosure of Scope 1, 2, and 3 emissions. This signals that mandatory Scope 3 reporting is the likely future for large UK companies.
Public Procurement Notice (PPN 06/21): This UK Government notice already requires businesses tendering for major public sector contracts to demonstrate a carbon reduction plan, which effectively requires Scope 3 reporting to be credible.
EU Corporate Sustainability Reporting Directive (CSRD): This major piece of EU legislation will mandate Scope 3 disclosure for thousands of large companies, including many UK businesses with significant EU operations or listings, with reporting requirements starting as early as 2025.

The SME Sustainability Data Taskforce have published a voluntary standard for SME emissions reporting, which includes Scope 3. This is a voluntary, SME-appropriate data standard that will allow SMEs to measure once and report to multiple stakeholders. (Small World Consulting are part of this task force).

Can I set net-zero targets without including my Scope 3 emissions?

No. All the leading standards for setting carbon reduction and net-zero targets either require Scope 3 or encourage its inclusion.

The SBTi, Science Based Targets Initiative, will not validate targets as being science-based or aiming for net zero if Scope 3 is not included.

CDP submissions that exclude Scope 3 are deemed incomplete and will receive a low score.

The GHG Protocol is the standard that first set out reporting requirements for Scopes 1, 2, and 3, and a full emissions inventory across all three Scopes is expected.

How does SWC calculate Scope 3 emissions in carbon accounts?

At Small World Consulting, we use spend-based accounting to calculate your Scope 3 emissions from your procurement data. We have our own world-leading input-output model, SWC MRIO, which we use to calculate your share of an industry’s emissions based on how much you spent with that industry.

For most purchases from UK-based organisations, we will use the UK as the country of demand, but for purchases from a specific country, we will use that as the country of supply, making your emission calculations far more representative.

We’re also able to substitute any supplier-specific data, for example, your suppliers' Scope 1 and 2 data, again making your Scope 3 emissions more reflective of your actual carbon emissions.