Methodologies to Calculating Scope 3 GHG Emissions

Under the GHG Protocol, there are four primary methodologies for calculating Scope 3 emissions, each suited to specific data availability, industry type, or company preference. Apart from the spend-based method, the other methods are:

• Definition: Estimates emissions by multiplying the amount of money spent on a product or service by an industry-average emissions factor (e.g., CO₂ per dollar/euro spent).
• Example: If a company spends $1,000 on office furniture and the emissions factor for furniture production is 50 kg CO₂ per $1 spent, the calculated emissions would be 50,000 kg CO₂.
• Purpose: Provides a broad estimate based on financial transactions, ideal for initial assessments or when detailed data is unavailable.
• Challenges: It relies on industry averages and doesn't capture specific supplier variations or production efficiencies.

Among the methods listed earlier:

• Spend-based is explicitly its own method.
• It is distinct from the average-data, process-based, supplier-specific, or hybrid methods, which rely on varying degrees of granularity and data accuracy.

• Description: Uses detailed activity data (e.g., kilometers traveled, tons of material purchased) and multiplies it by emission factors specific to the activity.
• Example: Calculating emissions for transportation based on distance traveled and vehicle type or for purchased goods using material-specific emission factors.
• Advantages: High precision and relevance when accurate, granular data is available.
• Challenges: Data-intensive and can be time-consuming to collect detailed information.

• Description: Applies industry or product-specific average emission factors to the quantities of purchased goods or services.
• Example: Using average emission factors for steel production per ton to estimate emissions for a company purchasing steel.
• Advantages: Less data-intensive; good for initial estimates when specific supplier data is unavailable.
• Challenges: Results are less precise and may not capture supplier-specific variations.

• Description: Uses emission factors reported directly by suppliers, reflecting their specific production processes and efficiency.
• Example: Emission data shared by a supplier manufacturing electronic components, verified through third-party assurance.
• Advantages: High accuracy and alignment with real-world data.
• Challenges: Requires strong supplier engagement and trust in data quality and verification.

• Description: Combines elements of the process-based and spend-based approaches, using activity data for some emissions and financial or industry averages for others.
• Example: A company might use process data for major materials while applying spend-based calculations for minor or hard-to-track purchases.
• Advantages: Balances accuracy and practicality by focusing detailed efforts where the largest impacts occur.
• Challenges: May still require significant effort and judgment in allocating methods appropriately.

Selecting the Right Method

• Companies often use a combination of these methods to address the complexity of Scope 3 emissions.
• Method choice depends on data availability, cost, and the importance of accuracy for reporting or compliance.

🔗 Resources for Guidance

• GHG Protocol Scope 3 Calculation Guidance: GHG Protocol Standards
• Science-Based Targets Initiative (SBTi): SBTi Guidance