As the world faces growing concerns over climate change and the urgent need to reduce greenhouse gas emissions, the focus is shifting beyond a company's direct operations to its entire value chain. 

Scope 3 emissions, which account for the indirect emissions associated with a company's supply chain, transportation, waste, and product use, are now recognized as a critical area for emissions reduction. In fact, recent statistics show that Scope 3 emissions can represent up to 90% of a company's total emissions. The good news is that innovative approaches, such as Scope 3 software development, are emerging as a promising solution to tackle this challenge. 

In this article, we will explore what is scope 3 emissions and how to reduce them using Scope 3 software development, unlocking new opportunities to transition from carbon footprint to carbon neutrality while mitigating the environmental impacts of business operations.

What are Scope 3 emissions and why are they important to address?

What is an example of a scope three carbon emission? 

Scope 3 emissions are indirect greenhouse gas (GHG) emissions that are generated throughout a company's value chain, including emissions from sources such as purchased goods and services, transportation and distribution, waste disposal, and the use and disposal of a company's products. These emissions occur outside of a company's direct operational control, but they are still influenced by the company's activities and decisions.

Why is it important to reduce Scope 3 emissions? Scope 3 emissions are important to address because they often represent a significant portion of a company's total emissions footprint. In fact, for many companies, Scope 3 emissions account for the majority of their overall emissions. Ignoring Scope 3 emissions can result in an incomplete and inadequate approach to addressing climate change.

How to calculate Scope 3 emissions

Here is a brief guidance for calculating Scope 3 emissions:

  1. First, you need to determine the organizational boundaries for which you want to calculate Scope 3 emissions, including suppliers, customers, and other stakeholders in your value chain.
  2. Then, identify the relevant categories of scope 3 emissions from the 15 Scope 3 categories defined by the Greenhouse Gas Protocol's Corporate Value Chain (Scope 3) Accounting and Reporting Standard, such as purchased goods and services, transportation, business travel, employee commuting, and use of sold products.
  3. Collect data on the relevant emission categories, including quantities of goods and services purchased, distances traveled, energy consumption, and other relevant information, from suppliers, customers, and internal sources.
  4. Use emission factors, which are standardized values that estimate the amount of GHG emissions associated with a unit of activity, to calculate emissions for each category.
  5. Multiply the activity data by the corresponding emission factors to calculate emissions for each category. Sum up the emissions from all categories to obtain the total Scope 3 emissions for your organization.

The impact of Scope 3 emissions on the environment and social responsibility

Scope 3 emissions can have a significant impact on the environment and social responsibility in several ways:

  • Climate change: Scope 3 emissions, which include emissions from the use of a company's products and services, transportation, waste disposal, and other value chain activities, can contribute to climate change. Greenhouse gases, such as carbon dioxide, methane, and nitrous oxide, emitted as Scope 3 emissions, can trap heat in the atmosphere and contribute to global warming, leading to adverse impacts on the environment, including extreme weather events, sea level rise, and ecosystem disruptions.
  • Air and water pollution: Many Scope 3 emissions, such as emissions from transportation and manufacturing processes, can also contribute to air and water pollution. For example, emissions from combustion of fossil fuels in transportation can lead to air pollution, while discharges from industrial processes can pollute water bodies, negatively impacting air and water quality and the health of ecosystems, wildlife, and human populations.
  • Resource depletion: Some Scope 3 emissions are related to the extraction and use of natural resources, such as fossil fuels, minerals, and water. Over-extraction or inefficient use of resources can deplete finite resources, disrupt ecosystems, and negatively impact local communities that rely on these resources for their livelihoods. 
  • Social responsibility: Companies have a social responsibility to address the indirect impacts of their operations on communities and stakeholders throughout their value chain. Scope 3 emissions can affect communities near a company's operations, along its supply chain, or those impacted by the use of its products and services. These impacts can include health and safety risks for workers, displacement of vulnerable communities, social disruptions, and other negative social consequences. Addressing Scope 3 emissions is an important part of fulfilling a company's social responsibility to minimize its negative impacts and contribute to sustainable development.

The unique challenges that manufacturing, construction, and energy industries face in reducing Scope 3 emissions

The manufacturing, construction, and energy industries face unique challenges when it comes to reducing Scope 3 emissions. These challenges can vary depending on the specific characteristics of each industry, but some common ones include:

Complex supply chains

Manufacturing, construction, and energy industries often have extensive and complex supply chains, involving numerous suppliers, subcontractors, and partners. Managing and reducing Scope 3 emissions from these supply chains can be challenging, as it requires coordination and collaboration among multiple stakeholders. Ensuring transparency and traceability of emissions across the entire supply chain can be difficult, as suppliers may be located in different geographic regions with varying levels of Scope 3 emissions reporting mandatory standards and capabilities.

High dependence on fossil fuels

These industries often have a high dependence on fossil fuels for their operations, including the use of coal, oil, and natural gas. Combustion of these fossil fuels releases greenhouse gases, contributing to Scope 3 emissions. Transitioning to low-carbon or renewable energy sources can be a complex and costly process, involving technological, infrastructural, and financial considerations.

Long project lifecycles 

Manufacturing, construction, and energy projects often have long lifecycles, spanning several years or even decades. This poses challenges in measuring, managing, and reducing Scope 3 emissions over the entire lifecycle of a project, including during the construction phase, operational phase, and end-of-life disposal. Changing technologies, regulatory frameworks, and market conditions can also impact emissions reduction efforts throughout the project lifecycle.

Technical constraints

These industries involve complex and technical processes, which may have limited feasible options for emissions reduction. For example, in some cases, emission-intensive manufacturing processes may have limited alternative technologies available to reduce emissions. Construction projects may have limited choices for low-carbon materials or technologies, depending on local availability and regulations. Energy production may have constraints in integrating intermittent renewable energy sources into the grid, or limitations in implementing carbon capture and storage technologies.

Capital-intensive nature 

These industries often require significant capital investments in equipment, infrastructure, and facilities. Implementing emissions reduction measures may require substantial upfront investments, which can be challenging for companies, particularly smaller enterprises, to finance. Balancing the financial considerations with the need for emissions reduction can be a key challenge in these industries.

An overview of software solutions that can help reduce Scope 3 emissions

Software solutions play a crucial role in helping companies reduce Scope 3 emissions by providing tools and platforms that enable better measurement, management, and reporting of emissions across the entire value chain. 

Here are some examples of Scope 3 software solutions:

  • Supply Chain Emissions Management: Such tools enable companies to track and analyze the emissions associated with their supply chain. These tools help in identifying emissions hotspots, optimizing transportation routes, and making informed decisions on sourcing and procurement to reduce emissions. Examples of such tools include EcoVadis and BREEAM.
  • Energy Management Systems: Energy management systems are software solutions that enable companies to monitor, analyze, and optimize their energy consumption and emissions. These systems can help in identifying energy waste, optimizing energy usage, and integrating renewable energy sources into operations.Among the examples of the most common tools are Schneider Electric's EcoStruxure, Siemens' Navigator, and Johnson Controls' Metasys.
  • Sustainability Performance Management: Such tools help companies track and report on their sustainability goals and progress, including Scope 3 emissions. These tools provide data analytics, Scope 3 emissions reporting, and visualization features that enable companies to measure, manage, and report their emissions reduction efforts effectively. The most well-known examples include Enablon and CSRware.
  • Transportation and Logistics Optimization: These emissions management software solutions can help companies optimize their transportation routes, modes, and operations to reduce emissions associated with transportation. They provide data-driven insights, route optimization, and carbon footprint tracking features that enable companies to minimize their emissions from transportation activities. Examples of such tools include Routeique, OptimoRoute, and Transporeon.
  • Carbon Accounting and Reporting: Carbon accounting and reporting software solutions provide companies with the tools to accurately measure, track, and report their emissions, including Scope 3 emissions, in compliance with industry standards and regulations. They help companies in setting emissions reduction targets, monitoring progress, and reporting on their sustainability performance. Examples of such tools include Carbon Clean Solutions, Carbon Analytics, and Carbon Clear.

The benefits of using software solutions to address Scope 3 emissions

Using carbon emissions management software offers numerous benefits to companies beyond environmental sustainability. 

Here are some of the key benefits:

  1. Cost Savings: They can help companies identify inefficiencies in their operations and supply chain that contribute to Scope 3 emissions. By optimizing transportation routes, reducing waste, improving energy management, and making informed sourcing decisions, companies can achieve cost savings through reduced operational expenses, lower energy consumption, and minimized waste disposal costs.
  2. Improved Efficiency: Software solutions provide data-driven insights and analytics that enable companies to identify areas of improvement in their operations and supply chain. By optimizing processes, reducing waste, and streamlining transportation and logistics, companies can achieve improved operational efficiency, which can lead to increased productivity, reduced lead times, and enhanced competitiveness.
  3. Enhanced Regulatory Compliance: Many countries and regions have established regulations and reporting requirements related to emissions, including Scope 3 emissions. Software solutions help companies accurately measure, track, and report their emissions data, ensuring compliance with regulatory requirements. This helps companies avoid penalties and reputational risks associated with non-compliance and demonstrates their commitment to sustainability and environmental stewardship.
  4. Strategic Decision Making: Software solutions provide companies with data and insights that enable informed decision-making related to emissions reduction strategies. By having accurate and up-to-date emissions data, companies can make data-driven decisions on setting emissions reduction targets, identifying priority areas for action, and evaluating the effectiveness of their sustainability initiatives. 
  5. Stakeholder Engagement: Addressing Scope 3 emissions is not only important from an environmental perspective but also for stakeholder engagement. Customers, investors, and other stakeholders are increasingly interested in a company's sustainability performance, including emissions reduction efforts. Utilizing software solutions to manage and report on Scope 3 emissions can enhance a company's reputation, demonstrate its commitment to sustainability, and attract stakeholders who prioritize environmental responsibility.

Best practices for implementing software solutions to reduce Scope 3 emissions

Implementing software solutions to effectively reduce Scope 3 emissions requires careful planning and execution. 

Here are some best practices to consider:

Integration with Existing Processes

When implementing software solutions, it's essential to integrate them seamlessly with existing processes and systems. This includes incorporating emissions tracking and reporting into existing supply chain management, procurement, and operational processes. Such integration ensures that emissions data is captured accurately and consistently, and that it becomes an integral part of the company's decision-making processes.

Employee Engagement

Employee engagement is crucial for the success of any emissions reduction initiative. It's important to involve employees at all levels, from top management to frontline workers, and provide training and education on the importance of Scope 3 emissions reduction and how the software solutions will be used. This helps create a culture of sustainability within the organization and encourages employees to actively participate in emissions reduction efforts.

Monitoring and Reporting

Software solutions should provide robust monitoring and reporting capabilities to track emissions data, measure progress, and report on results. This includes real-time monitoring of emissions data, data visualization, and reporting tools that provide insights into emissions trends, areas of improvement, and progress towards emissions reduction targets. 

Data Accuracy and Validation 

Accurate data is essential for effective emissions management. It's important to ensure that the data inputted into the software solutions is accurate, reliable, and validated. This includes data from various sources, such as suppliers, contractors, and other stakeholders. Data validation and verification processes should be established to ensure data accuracy and integrity, and to identify and address any data gaps or discrepancies.

Continuous Improvement 

Emissions reduction is an ongoing process that requires continuous improvement. Software solutions should be flexible and scalable to adapt to changing business requirements, technological advancements, and evolving emissions reduction goals. Regular reviews and updates of the software solutions and emissions reduction strategies should be conducted to identify areas for improvement and implement necessary changes.

Examples of organizations that have successfully reduced their Scope 3 

Several organizations have successfully reduced their Scope 3 emissions using software solutions. Here are a few examples:

    1. Unilever

Unilever, a multinational consumer goods company, uses Sustainable Living Plan (SLP) Tracker, a digital tool that helps them measure, monitor, and report on their sustainability performance, including emissions reduction efforts. This has enabled Unilever to set ambitious targets, engage suppliers, and drive emissions reductions across their value chain.

    1. Walmart

Walmart, a global retail giant, has utilized software solutions to track and reduce its Scope 3 emissions. They have implemented their Sustainability Index, a tool that collects data from suppliers on their sustainability performance, including emissions reduction efforts. 

  1. IKEA

IKEA, a global home furnishing company, has implemented a Sustainable Product Requirements (SPR) tool, which helps them assess and improve the environmental performance of their products, including emissions reduction. This has allowed IKEA to drive sustainability improvements in their product design and sourcing processes, resulting in reduced emissions.

Future trends and innovations in software solutions for reducing Scope 3 emissions

As organizations continue to prioritize sustainability and tackle Scope 3 emissions, software solutions are expected to play a crucial role in driving innovation and enabling effective emissions reduction strategies. 

Here are some future trends and innovations to watch for in software solutions for reducing Scope 3 emissions:

  1. Advanced Data Analytics: Software solutions will continue to advance in their ability to collect, analyze, and interpret large volumes of data from various sources to provide valuable insights for emissions reduction. Advanced data analytics techniques, such as machine learning and artificial intelligence, will be increasingly used to identify emissions hotspots, optimize supply chain operations, and uncover new opportunities for emissions reductions.
  2. Blockchain Technology: Blockchain technology has the potential to revolutionize supply chain transparency and traceability, which can be instrumental in reducing Scope 3 emissions. By leveraging blockchain, organizations can create secure and transparent systems for tracking emissions across their supply chain, verifying emission reduction claims, and incentivizing sustainability initiatives.
  3. Internet of Things (IoT): The integration of IoT devices with software solutions can enable real-time monitoring and management of emissions-intensive processes, equipment, and transportation. IoT sensors can collect and transmit data on energy consumption, emissions, and other environmental factors, allowing organizations to optimize operations, identify inefficiencies, and make data-driven decisions for emissions reduction.
  4. Enhanced Reporting and Compliance: Software solutions will continue to evolve to meet the increasing demand for accurate and transparent reporting of emissions data, as well as compliance with evolving sustainability regulations and standards. Enhanced reporting features, such as standardized emissions reporting templates, automated data collection, and verification tools, will streamline the reporting process and enable organizations to demonstrate their commitment to emissions reduction.
  5. Integration of Social and Human Rights Factors: As sustainability efforts expand beyond environmental considerations, future software solutions for Scope 3 emissions reduction are expected to integrate social and human rights factors into their assessment and management processes. This may include features such as tracking and managing social impacts, labor practices, and human rights violations in supply chains to ensure holistic sustainability management.

Find out how to reduce Scope 3 emissions with Apiko

If you're interested in learning more about how our Scope 3 software solutions can help reduce emissions in your organization, we encourage you to contact our team today to schedule a demo and see how we can work together to achieve your sustainability goals and create a more environmentally-friendly future. Contact us now to learn more.