Grappling with Scope 3
"You cannot get through a single day without having an impact on the world around you. What you do makes a difference, and you have to decide what kind of difference you want to make" - Jane Goodall
Depending on your industry, despite fully disclosing their Scope 1 and Scope 2 emissions, many organizations are underreporting their emissions. Why might that be, it is because many organizations are not reporting Scope 3 emissions. We often view Scope 3 emissions as optional or even not relevant. But let’s think about that for a moment….
Scope 2 emissions, typically the electricity you use isn’t actually produced by you; it is produced offsite for you or even because of your demand. Yet, when you send an employee on a work trip when you specify the construction of a development when you purchase from another company, are the emissions also not being emitted for you or because of your demand? In fact, for some organizations with a small real estate footprint, Scope 3 emissions may represent their most significant category of emissions.
In many of my other articles, I have pointed out the challenges in reaching net-zero emissions, and Scope 3 is another one of those hurdles. You might consider these emissions as financed emissions, as you are paying someone else to emit for something you need.
When organizations fail to report their Scope 3 emissions, investors and other stakeholders have no way of knowing the extent of the climate impact of an organization or what that company is doing about it. It’s one thing to make a claim that you intend to reduce your impact, but it is hard to state you are reducing your impact if you are not counting all of your impact.
Enter the importance of Scope 3 emissions. I should note while reporting Scope 3 is voluntary under the Greenhouse Gas Protocol; there are signs this may be changing. In the UK, for example, there are now required reporting for certain industries.
To understand the importance of Scope 3 emissions, we need to step back and think about the impact of our organizations. I sometimes call this your shadow, as the decisions you make regarding your own operations impact many other organizations up and down the value chain.
The textbook example is Walmart, which began asking suppliers a series of questions about their impact. While basic, it resulted in those suppliers to ask themselves - why?Why is Walmart asking this, and more importantly, should we be asking these questions of ourselves? The very first question, “Have you measured your corporate greenhouse gasses?”
How many of us have asked that question of our suppliers? In ongoing operations and especially in the development of new assets, these are essential questions that can tell you a lot about who you are doing business with. They can also say a lot to your investors and stakeholders about how diligent you are in who you do business with.
That is the shadow of our industry; through our influence, we can drive change in our supply chains. That change benefits us, as it can reduce our own impact. Ever heard of Embodied Carbon? While this blog focuses on the 39% of emissions that come from the built environment, only roughly 29% of those are operational - the remaining 10% are embodied. Carbon emissions that result from the materials we are using. Be that the intense heat to produce concrete or the process used to make carpet. We have choices - we can choose low embodied carbon materials, or we can not pay attention to embodied carbon levels of the materials we specify; both choices have consequences.
The general objection to Scope 3 emission inclusion is the complexity of these emissions. Unlike Scope 1 - what was burnt on-site, or even Scope 2 - what was burnt offsite, but due to your demand, Scope 3 requires a bit of a decision tree.
Let’s take, for example, business travel. This is not your employees' commute, a separate Scope 3 emissions, but rather these are employees traveling to meet the business needs of your organization. That decision tree looks something like this:
To boil that down, through screening, we are determining if the emission source itself contributes significantly and what data is available to measure it. In this specific example, there are three ways to measure the emissions, depending on what data is available:
Fuel-based method, which involves determining the amount of fuel consumed during the business travel. This would require insight into the transportation provider's Scope 1 and Scope 2 emissions and applying the correct emission factors for those fuels.
The distance-based method involves determining the distance and mode of the business trip and then applying the appropriate emission factor for the mode used.
Spend-based method, which involves determining the amount of money spent on each mode of business travel and applying secondary emission factors.
By determining what data is available and the method used to calculate the impact, the organization can then set in place strategies to reduce the impact of that travel. Strategies can include many approaches, from policies around what modes and methods of transportation are acceptable to offsetting travel through REC programs.
Other examples of upstream Scope 3 emissions may include:
Upstream leased assets
Capital goods
Upstream transportation and distribution
Employe commuting
Fuel-and-energy related activities
Waste generated in operations
Purchased goods and services
and of course business travel
Examples of downstream Scope 3 emissions may include:
Franchises
Processing of sold products
Downstream leased assets
Investments
End of life treatment of sold products
Downstream transportation and distribution
Use of sold products
For Real Estate Specifically, our emissions per category tend to be Purchased goods, services, and capital goods, use of sold products, and franchises for some entities. From an industry-wide perspective, other minor emission sources include waste generation, business travel, and employee commuting - again dependant on the organization.
For a deeper dive into your organization’s Scope 3 emissions, I recommend Conservice’s GHG Scoping Excercise. This is a consulting exercise in which our GHG specialists will work one-on-one with your organization to really drill into the specifics that apply to you.
You can help reduce the impact of the built environment by sharing this blog with your peers. Together we can impact the 39% of greenhouse gasses attributed to the built environment. It starts with awareness, and we succeed with teamwork.
Stay well!
Chris Laughman is the ThirtyNine Blog author, a blog dedicated to reducing the impact of the built environment. When not blogging, Chris is helping the real estate industry minimize energy and water impact as the Vice President of Sustainability for Conservice, the Utility Experts. Whether Multifamily, Single Family, Student Housing, Commercial, or Military, we simplify utility billing and expense management by doing it for you. Our insight into your utility consumption provides an opportunity to identify risks. Leveraging innovation and experience, we ignite solutions with tangible impacts and track performance to ensure the trendline stays laser-focused on the goal. At Conservice, we have developed a true bill-to-boardroom solution to help truly make a difference. We have before us a tremendous opportunity. Standing shoulder to shoulder, we will get this done. Contact me at claughman@conservice.com for more information.
Follow us at:
Twitter: @BlogThirtynine
Instagram: ThirtyNine_Blog