Excerpt from this story from the Wall Street Journal:
The U.S. Environmental Protection Agency says Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain. Specifically, Scope 3 includes the indirect greenhouse gas (GHG) emissions of a company from all sources, with the exception of direct emissions from an organization’s operations (Scope 1) and indirect emissions from purchased energy (Scope 2).
Scope 3 emissions fall into 15 categories that are divided into two groups: one, referred to as ‘upstream’, focuses on the goods and services a company and its employees consume while doing business; and the other involves the ‘downstream’ GHG emissions of the goods and services that a business produces.
Common Scope 3 emissions are the goods and services a company purchases, the distribution and use of its own products by customers, the disposal of its discharges and waste, and employee commuting or business travel.
Despite engaging in similar activities, companies with different corporate structures can have
different emissions profiles. For example, one retailer might own its own trucking fleet, creating Scope 1 emissions, while another outsources transportation options, creating Scope 3 emissions. Such differences pose a challenge when trying to compare the emissions profiles for companies within the same industry.
While these difficulties exist in Scope 1 & 2 reporting, they are magnified for Scope 3 because of a variety of factors, including the lack of reliable data and lack of validation of that data, the greater variation in methodologies and the fact Scope 3 emissions often dominate a company’s total footprint. For example, Scope 3 emissions may be responsible for as much as 88 percent of the overall emissions from the oil and gas industry, due largely to distributing the end product, the emissions created in their use and disposing the waste.
