As leaders in sustainable logistics, VesselBot understands the critical importance of managing Scope 3 emissions.
Decoding Scope 3: The Hidden Giant of Corporate Emissions
The Greenhouse Gas (GHG) Protocol is a collaboration of businesses, NGOs, and governments that creates standardized reporting to reduce carbon emissions. The Protocol categorizes emissions into three scopes for the most accurate and categorized reporting purposes.
Scope 1: Direct emissions from the reporting company.
Scope 2: Indirect emissions from energy consumed by the reporting company.
Scope 3: Indirect emissions from sources not owned or controlled by the reporting organization but resulting from the organization's activities. Scope 3 emissions often represent about 75% of a company’s total greenhouse gas emissions and are divided into upstream and downstream categories.
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Upstream emissions include those related to purchased goods and services, such as the emissions generated during the production and transportation of these products before they reach the company.
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Downstream emissions encompass the transportation and distribution of products and the management of products at their end-of-life, including disposal and recycling.
One significant factor we must consider is that one organization's Scope 3 emissions are typically the Scope 1 and 2 emissions of another organization. Thus, collaboration among companies and providers will be mandatory.
To better understand Scope 3 emissions, let's consider a practical example:
Imagine that you run a company that produces cars. First, you must purchase raw materials for production, such as steel & wires, glass & electrical parts. Then, you must transport all these materials to your factory by moving them from other locations. Furthermore, your employees must work on assembly and probably travel to introduce the new car to customers and suppliers. Once a customer buys a car and uses it to travel, it produces CO2.
Additionally, after some years, they might want to change the car, so it would be disposed. All the above emissions created by the products fall under Scope 3. It makes sense that it represents the bulk of an organization's emissions.
Now that we understand what Scope 3 emissions are let's explore why they matter to businesses.
3 Compelling Reasons to Prioritize Scope 3 Emissions
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Improve the product and increase sales: Consumer behavior is increasingly shifting toward sustainable products, turning a once niche market into a mainstream demand. A recent PwC survey shows that "consumers are willing to pay a 9.7% sustainability premium, even as cost-of-living and inflationary concerns weigh."This evolution creates a delicate balance for companies as brands must remain relevant and affordable, while adapting to consumers' growing awareness and expanding options. Therefore, businesses must educate and evolve to ensure long-term, mutually beneficial relationships.Ultimately, this shift in consumer behavior significantly impacts shareholders, fueling a heightened demand for responsible and sustainable business practices. This demand is not just a trend but a force reshaping the corporate ESG landscape.
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Comply with legislation: With consumers increasingly focused on sustainability and new regulations applying pressure on companies globally, the need to disclose emissions, especially Scope 3, is becoming more urgent. Organizations, stakeholders, and consumers now widely recognize that transparency in environmental impact reporting is not optional but a mandatory requirement. Given this new regulatory environment, companies that proactively commit to accurate and transparent emission reporting can reap significant benefits. By aligning their strategies with sustainability, these forward-looking organizations not only establish themselves as pioneers but also seize unique opportunities in a rapidly evolving landscape.
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Influence the Supply Chain: Because Scope 3 emissions for one organization are often the Scope 1 and 2 emissions of another, you can achieve mutual benefits and set a strong example of corporate social responsibility (CSR) by assisting your supply chain partners in implementing sustainable programs. Optimizing your suppliers to be "high performance" in sustainability allows them to improve their environmental impact.
Harnessing Primary Data: The "VesselBot" Approach to Scope 3 Measurement
The Power of Primary Data
According to the GHG Protocol, "primary data includes data provided by suppliers or other value chain partners related to specific activities in the reporting company’s value chain. Such data may take the form of primary activity data or emissions data calculated by suppliers that are specific to suppliers’ activities."
This approach offers several key advantages:
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Supply Chain Visibility: By accurately measuring and monitoring emissions data, companies gain insights into their logistical operations' environmental impact, allowing them to identify improvement opportunities. With this level of visibility, logistics professionals can make informed decisions to enhance overall sustainability. Additionally, having transparent emissions data can strengthen relationships with suppliers, customers, and stakeholders who prioritize sustainability, ultimately contributing to a competitive advantage in the market.
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Insights and Understanding of your Actual Environmental Footprint: This level of accuracy allows companies to prioritize efforts and resources towards areas with the highest impact, thus maximizing the effectiveness of sustainability initiatives.
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Company Reputation Assurance: Utilizing primary data safeguards your company's reputation by ensuring accuracy and transparency in reporting environmental performance. As corporate sustainability is increasingly scrutinized, businesses must avoid allegations of greenwashing by providing credible and auditable data on their emissions. By collecting primary data and reporting it accurately, companies can demonstrate their commitment to sustainability and build trust with customers, stakeholders, regulators, and investors.
As the world advances towards a more sustainable future, the significance of accurate emissions data cannot be overstated. By prioritizing collecting and applying high-quality primary data, companies can achieve precision and understanding that surpasses what other models/methodologies can provide.
At VesselBot, we've pioneered the use of primary data to provide unparalleled accuracy in emissions reporting. By adopting this approach, companies can not only fulfill their sustainability objectives but also gain a competitive advantage in an increasingly eco-conscious market.
To learn more about how VesselBot can help your company leverage primary data for precise emissions, visit our website or contact us today.