Calculation of scope 3 in a carbon footprint : What are the different approaches?

The two main methodologies for calculating the carbon footprint, Bilan Carbone® and the GHG Protocol, categorize greenhouse gas emissions into 3 scopes: Scope 1, Scope 2, and Scope 3.

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Scope 1 includes the direct emissions of the company (for example, the fuel used for company vehicles), Scope 2 includes indirect emissions related to energy (for example, emissions related to electricity consumption), and Scope 3 includes all other indirect emissions.

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In Scope 3, for example, there are purchases of raw materials, purchases of services, and commuting. This scope represents the vast majority of a company's emissions, sometimes up to 95% of total emissions.

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Therefore, taking Scope 3 into account is essential for calculating the total carbon footprint of the company and decarbonizing this scope is a major challenge in the low-carbon transition of businesses. However, it is also the most complex. While data for Scope 1 and Scope 2 emissions is often "simple" to track, this is not the case for Scope 3, where data must be collected from the entire value chain of the company, for activities upstream or downstream of production, including precise data from the company's suppliers.

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How to obtain all the necessary data for calculating Scope 3? There are specific, semi-specific, and generic approaches. What do they mean? Which approach to choose according to the available data? What are the specificities according to the sectors?

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1. Specific, semi-specific, or generic approach?

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Before discussing this topic, a reminder about calculating greenhouse gas emissions.

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The first step is to map the flows of energy, raw materials, waste, and products generated by the company. This is how it is possible to determine what will be taken into account in the carbon footprint calculation and therefore what data needs to be collected.

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The second step is to collect the data in order to convert it into CO2e emissions using emission factors. This data must reflect all the direct and indirect emissions of the company. This is where Scope 1, Scope 2, and Scope 3 come into play.

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Each Scope is divided into subcategories called "emission posts."

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The data collection phase is crucial because the more precise and complete the data, the more accurate the carbon footprint will be. The main challenge in calculating Scope 3 is the ability to collect and use the best possible data. This depends on the level of information available to the company, its ability to collect data, and the importance of the emission post in the company's activities.

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1.1 The specific approach

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This is the ideal approach. The specific approach consists of recovering data specific to the company's suppliers, i.e., specific carbon data. For example, your supplier or transport provider is able to provide you with specific carbon data for the product or service you purchase. The data is materialized as follows: kgCO2e/product.

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Another possibility is the transmission of carbon data that is not specific to the product but to the supplier. If the latter has carried out its carbon footprint and reports it to its turnover, it can provide emissions per euro, and you will know that an average purchase from this supplier will emit so much CO2e: kgCO2e/€ supplier.

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Why is the specific approach ideal? Because it is the most precise. You know exactly what the emissions associated with your purchases of goods and services are. The uncertainty is low, and this greatly reinforces the accuracy of your own carbon footprint.

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"For industrial sector companies, we systematically prioritize the specific approach, especially for inputs to avoid artificially inflating emissions. But this is the most difficult."

Manon Dias, climate and environment consultant at Sami

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This approach is difficult because it requires access to specific carbon data from suppliers. Although more and more companies are calculating their greenhouse gas emissions or carrying out life cycle analyses on their products, either voluntarily or to meet obligations, they are not always able to provide precise data.

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"This is the case, for example, for freight. Carriers are required to calculate the emissions related to the requested transport. And so today all our clients are able to obtain carbon data from their providers for freight."

Manon Dias

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Large companies are often able to provide precise data because they are subject to increasingly strict regulations on emissions. This is the case for the BEGES in France for companies with more than 500 employees. The CSRD, in force since January 1, 2024, will gradually require European companies with more than 250 employees, 25 million euros in assets or 50 million euros in turnover (2 out of 3 thresholds exceeded) to measure their greenhouse gas emissions.

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However, many companies still do not have specific carbon data. It is then necessary to make estimates to get as close as possible to the real emissions.

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1.2 The semi-specific approach

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If the approach with data specific to suppliers is not possible, it is necessary to "go down a level" and opt for a semi-specific approach.

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The challenge here, even if carbon data is not available, is to collect as much information as possible from your suppliers in order to estimate the associated emissions. To do this, it is necessary to go up the value chain and try to obtain information from successive suppliers, starting with those who are closest to you, the first-tier suppliers.

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The question of traceability is essential because the more precise the data obtained, the closer our estimates will be to reality. It is necessary to know as precisely as possible:

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• Scope 1 and 2 emissions of the supplier, especially its energy consumption
• the quantity of materials purchased to produce the goods
• transport data to deliver the product to your supplier
• the country of origin of the products you purchase: so many tons of steel purchased from a supplier in Turkey, India, or Germany

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And repeat this operation by going up the value chain. We then have very precise emission factor databases that will allow us, thanks to the information collected, to associate emissions. The carbon footprint of a ton of steel purchased in India is not the same as a ton of steel in Germany.

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Let's take the example of a textile company that markets a T-shirt. Rather than settling for an average emission factor for the T-shirt, it is necessary to break down the different steps: what is the composition of the garment? Where do the raw materials come from? In which country was the spinning done? In which countries were the manufacturing stages (weaving/knitting, finishing...) carried out? With which suppliers? What is their energy consumption? What mode of transport was used between the different stages and up to delivery?

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"We then use references with average emission factors that correspond to this data. In the absence of supplier-specific data, this is the best we can do."

Manon Dias, climate and environment consultant at Sami

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It will then be possible to associate much more precise emission factors and improve the quality of the estimation of emissions on inputs. However, one of the limits of this approach is that it depends on the quality of the data collected. Not all data is usable or some introduce a lot of uncertainty into the calculation of emissions.

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"I have a client who, for some of their inputs, has physical data in m3, and we cannot associate emission factors with it. So, from this data, depending on the density of the materials, we tried to make conversions into kg. But this introduces a high level of complexity and especially uncertainty in the calculation. So the question arises of moving to a 100% monetary approach. The uncertainty related to the data is an important factor to consider."

Manon Dias

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Another important limitation concerns the calculation of Scope 3 downstream emissions, at least for certain emission posts. This is the case, for example, for the use of products sold, the end of life of products sold, or waste. It is still difficult to obtain precise and clear activity data on these posts.

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"For product use, I'll take the example of the cosmetics sector. To estimate emissions related to the use of a product, it is necessary to determine, among other things, how many times the product will be applied, whether it needs to be rinsed, etc. For textiles, how many times will it be worn, will it be ironed, etc. We also sometimes have clients who sell their products through resellers. If the resellers are located in Europe, we can estimate that the products will be used mainly in Europe. But this remains a rough estimate."

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The same is often true for the end of life of products, where it is still very difficult to have a clear picture of what they become. And in these cases, average data is used.

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1.3 The generic approach

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In this case, unlike the previous two approaches, nothing is specified. An average impact data is taken into account. Let's take the example of a company that markets T-shirts: instead of breaking down the garment and looking for the most precise data possible at each step of the value chain, in the generic approach, an average emission data for a T-shirt ready to be marketed is used.

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For the end-of-life post, average data is often used, due to a lack of more precise exploitable data. And because, for lack of anything better, average impact data is used, this generic approach is by far the most uncertain.

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Generic data can be of two types:

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• Physical data: kgCO2e/kg of finished product
• Monetary data: kgCO2e/€ of type of expense

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2. Physical or monetary approach?

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There are two categories of data that can be used to calculate the associated greenhouse gas emissions:

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• Financial data, such as invoices or amounts in currency, are converted into CO2e emissions. This is called the monetary approach.
• Physical data, such as distances traveled (km) or quantities consumed (kWh, kg, tons, etc.), are converted into CO2e emissions. This is called the physical approach.

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The monetary approach allows for quickly and easily calculating emissions related to service expenses, such as purchases of intellectual services, marketing expenses, banking services, and fees. These expenses can be easily integrated, especially by using the Accounting Entries File (FEC) to collect and automatically add these expenses.

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However, the monetary approach is not suitable for all emissions. For example, for emissions related to the life cycle of a product (raw materials, manufacturing, packaging, transport, use, etc.), the company's energy consumption, commuting, and business travel, it is preferable to use the physical approach.

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For example, in the case of commuting, using a monetary ratio based on fuel expenses would result in significant variations in associated emissions due to fluctuations in fuel prices, even if the actual emissions remained unchanged.

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Thus, while both approaches are complementary, the physical approach is often essential for obtaining precise results and reflecting the reality of the company's activities.

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3. An approach by sector

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For certain business sectors, methodological specificities must be taken into account for calculating the different Scope 3 emission posts. It is impossible to list them all here. Two examples:

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Cosmetics

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In the cosmetics sector, there is no environmental display reference. It is therefore impossible to refer to secondary data, i.e., average impact data. For the manufacturing stage, as for upstream and downstream logistics, it is therefore necessary to specify the activity data specific to the suppliers.

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Textile

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For this sector, the composition of the products must be fully specified: the precise data of the raw materials used and their quantities are expected because they vary greatly depending on the products. Moreover, the Impact base allows modeling the emissions associated with several dozen different materials (natural, artificial, or even recycled). This makes it possible to obtain precise estimates of the associated emissions.

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More generally, sectoral considerations exist. For example, for service sector companies, service expenses often represent a significant portion of total emissions. For these expenses, the monetary approach is often privileged today, even if more and more physical data is available to measure emissions more precisely.

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"However, in the service sector, professional and home-to-work travel posts are also often important. And there we never use a monetary approach, it would make no sense. We use specific or semi-specific data. Visitor travel should also be considered. It is more difficult to obtain precise data, but we generally start from assumptions that we build with the client."

Manon Dias, climate and environment consultant at Sami

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In manufacturing sectors, for inputs, freight, or product end-of-life, physical data is almost always used, except in exceptional cases of missing, partial, or nonsensical emission factors.

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4. How to improve Scope 3 data collection?

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First of all, it should be noted that for companies with several tens or hundreds of suppliers, it is often not possible to contact them all. It is therefore necessary to start by identifying the most strategic suppliers, those from whom the company purchases the most inputs, those who, a priori, represent the most important emissions. And it is on these suppliers that the work of collecting the most precise data should initially be concentrated. Before "going down" gradually to the others.

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"It should be kept in mind that for some companies, it may take 2, 3, or 4 carbon assessments before obtaining robust and precise data on the entire value chain. It is necessary to focus on the most important posts at the beginning to reduce uncertainty as much as possible and then refine gradually. This is a time-consuming task."

Manon Dias

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At Sami, to facilitate this data collection work while seeking more precise data, we have developed supplier questionnaires. The company is then able to send them directly to all its suppliers to collect, in the best case, specific carbon data, ACV results, or semi-specific data (e.g., energy consumption) that will allow us to estimate as accurately as possible the emissions related to inputs.

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"I often recommend two actions to our clients. First, that the person in charge of the carbon footprint in the company has a good knowledge of the different services and processes of the company. This makes it possible to facilitate exchanges and accelerate data collection. Then, I advise companies to set up more appropriate data monitoring, in particular by moving away from the logic where only the cost of purchases is recorded in order to know, for example, the weight of inputs. And there, the degree of commitment of the company also plays a big role."

Manon Dias

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