The Carbon Cliff: Scope 3 Emissions and How to Manage Them

How well do you understand your business's carbon footprint? 

It’s a question that you’ll likely have to answer this year, as pressure heats up on all companies to report more detailed metrics on their emissions. Reporting on Scope 3 emissions is already mandatory in Europe, and a global roll-out is just around the corner. 

Whether you're a scale-up with global offices, or a remote-led startup, sooner rather than later, companies in your supply chain will be requesting information regarding your operating emissions. This is part of their commitment to measure Scope 3 emissions -- or those generated via their supply chain.

Recent research from Dublin City University found that a whopping 83% of a company’s total carbon footprint can be traced back to Scope 3 emissions. The pressure is mounting on businesses and to better track these emissions, and soon it will be passed on to their suppliers too.

So how to stay ahead of this massive shift in the business landscape? We spoke to expert Cat Long, co-founder and CEO of Trace, for her advice.

Scope 3 emissions - what are they, and do I really need to worry about them? 

Scope 3 emissions come from a company’s value chain - essentially from any activities except fuel combustion and electricity purchased. These are, by definition, indirect emissions because a company does not have direct control over the activities that generate emissions. As such, they are harder to measure. 

Scope 3 emissions can be split into 2 categories:

• Upstream: those that occur during the production of goods or services that a business purchases or uses, like business travel, employee commuting and purchased goods and services; and
  
  
• Downstream: those that result from the use or disposal of a business's products or services, like electricity consumed when a customer uses a product or emissions associated with its disposal.
  

How do I make sure I don’t get caught out because I don’t understand my startup’s Scope 3 emissions?

Most startups don’t know where to start when it comes to calculating their Scope 3 emissions, so it’s worth getting some help. There are free calculators online which are a good starting point, but in order to accurately understand your emissions, make sure you partner with a company like Trace that uses the GHG Protocol - the global standard for emissions measurement. You’ll need to use a robust framework if your clients or investors ask you to report emissions.

What role does employee engagement play here? How can I motivate my employees to come on the emissions reduction journey with me?

Our research shows that employees contribute on average 25% of a company’s carbon emissions due to their commuting and working from home behaviours and they influence the remaining 75% through procurement, travel and behavioural decisions in the workplace. 

As such, reaching Net Zero emissions is impossible without educating and engaging your staff on the journey, which has the added benefit of making your company a desirable place to work for employees that care about climate.

What are some quick wins or low-hanging fruit that founders can target to make immediate progress in reducing their Scope 3 emissions?

Sadly there’s no silver bullet, but there are some simple processes you can put in place early to keep your Scope 3 emissions under control as you grow.

For example: 

• implement a sustainable travel policy;
• select your key suppliers (like your cloud provider or accountant) based on their sustainability credentials (ideally choose carbon neutral providers or ones with Net Zero targets); and
• try to recycle as much waste as possible - especially electronic waste!
  

Considering the evolving regulatory landscape, how can startups future-proof their carbon accounting and emissions reduction strategies to stay compliant without investing excessive time and resources?

Startups are unlikely to be directly affected by climate regulations, but they will be affected by the implication of being in the supply chain of companies that do need to report their carbon emissions, so it’s important to get ahead and be ready to report your emissions when asked. Luckily there are software solutions that make carbon accounting and reduction streamlined and cost effective… and even fun.

Trace can help you manage and report your emissions. It’s also worth talking to your accountant to help because they have the skills and data access required to do carbon accounting for you. Trace has trained hundreds of accountants to offer carbon accounting as a service using Trace, so there’s help out there!