May 12, 2023

Let’s Call it What it is: Scope 3 is a Mess.

May 12, 2023

Let’s Call it What it is: Scope 3 is a Mess.

May 12, 2023

Let’s Call it What it is: Scope 3 is a Mess.

May 2023

Let’s Call it What it is: Scope 3 is a Mess.

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Let’s Call it What it is: Scope 3 is a Mess.

Don’t get me wrong, measuring Scope 3 emissions well is table-stakes for any organisation that takes sustainability seriously.

But, at the same time, as a way of slicing data, it adds no clarity.

For most organisations, Scope 3 is >95% of emissions today and may well be >99% of emissions in 3-5 years as businesses work to address the ‘quick win’ emission hotspots e.g., electricity use.

This is the equivalent of having a grocery list with one item called ‘stuff’.

Scope 3 sub-categories are usually not actionable for a business. E.g., most companies cannot change how power is transported to them. So the bulk of their focus will go to their purchasing decisions (purchased goods and services being a dominant share of their Scope 3).

On our grocery list, add a sub-category called ‘stuff I can eat’.

Even at a system level, double counting erodes the value of the exercise. Your Scope 3 is someone else’s Scope 1 & 2, but your Scope 3 is actually also someone else’s Scope 3. The only reason that this is not a bigger deal today is that everyone in the industry is aware that numbers across companies are not directly comparable anyway.

On our grocery list, add a classification called ‘stuff I can eat that someone else has already bought’.

This would be intellectually entertaining if we weren’t talking about the fate of the world.

So what do we do about this?

In a nutshell, products and services are a much better way to slice this sort of data than companies. When looking at what goes into making a product, business activities and input materials make more business sense than Scopes. Everything else is just accounting for accounting’s sake.

Momentum is growing.

We anticipate there to be an industry shift to measuring and sharing product baselines over corporate baselines. Standard-setting organisations, most notably PACT, are moving fast on this. With backing from a suite of global companies including P&G, Unilever & Nestle, PACT is setting up frameworks for businesses to calculate and exchange Product Footprints, driving greater accuracy and actionability in emission measurements.

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Saif Hameed, CEO of Altruistiq

Looking to connect with other sustainability professionals? Join the Sustainability Professionals Forum. The forum aims to create a space for exchanging ideas, promoting collaboration and innovation, and educating members about advancements, trends, and technologies.

Industry Insight

How long do you think it'll take (if ever) for sustainability data to have parity of importance with financial data?

To date, sustainability data doesn't have the same level of importance as financial data because it’s not as credible, reliable or robust as financial data. However, two emerging trends suggest that sustainability data can gain a similar kind of parity:

  1. Evolving accuracy & quality of data

Industry observation: Extensive unpacking of emissions data is catalysing a shift towards a new commitment to data quality. Forward-leaning organisations are increasingly considering the calculation methodologies, data sources, assumptions and emission factors used in their emissions measurement process.

2. Standardised monetary conversion of sustainability data

Industry observation: Carbon prices, for instance, are increasingly being tailored to be organisation specific. Rather than relying on external benchmarks and industry averages, such as a carbon tax or offset prices, businesses are aggregating subsidiary numbers, such as the marginal abatement cost of sustainability initiatives to create composite carbon prices, that are more reliable and accurate.

The good news is that these trends are underway. Both elements, developed in conjunction, will give organisations a more reliable cost of taking carbon out of their business.

Policy Pulse | The Latest Sustainability Developments

A breakdown of the key policy updates that you and your company need to know about from the last fortnight.

  1. EU plans legislation to regulate ESG ratings for transparency

The EU Commission is planning to propose a framework for ESG ratings that will make ratings clearer.

There are about 150 ESG rating agencies worldwide, but the market is dominated by a few US and British firms, like MSCI (30%). These agencies aren't regulated in the EU, and each has its own methodology which weights ESG variables differently. This makes it hard to compare ratings and assess their importance. The EU goals for the new law are to:

  • Define ESG ratings
  • Increase transparency and comparability of ESG ratings and methods
  • Limit risks of green- and social-washing
  • Introduce oversight to ESG rating providers, by the European Securities and Markets Authority (ESMA)

2. EPA proposes New Carbon Pollution Standards for fossil fuel-fired power plants to tackle the climate crisis and protect public health

The US Environmental Protection Agency (EPA) has put forward a proposal to drastically cut emissions by setting emission caps on fossil fuel power plants. They project this will avoid up to 617 million tons of CO2 emissions through to 2042, in a sector that creates nearly a quarter of total US emissions. If it overcomes the political opposition spearheaded by Senator Joe Manchin, the law will likely take about a year to finalise following public consultation.

3. The UK Energy Bill returns to Parliament with progressive amendments Having gone through several iterations with multiple energy secretaries, the Energy Bill returns to the House of Commons after some positive amendments in the House of Lords. Many of these changes bring the Bill into line with recommendations put forward by Chris Skidmore’s Net Zero Review. These amendments include changes to:

  • Coal mining: a ban on the opening or licensing of any new coal mines in the UK
  • Flaring: setting a 2025 target for ending routine flaring of methane by oil and gas firms
  • Ofgem: granting Ofgem, the energy regulator, a statutory net-zero remit
  • Hydrogen: The Bill now includes powers for the Government to introduce a new levy on consumer bills to fund the development of hydrogen.
  • Carbon storage: grants the North Sea Transition Authority new powers to regulate the growing carbon storage sector

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Sustainability Trailblazers: How Bloom & Wild is bringing more sustainable flowers to our doorsteps.

  1. Creative uses of ‘waste’ can be the lowest-hanging fruit here (as with many agricultural products).B&W has a ‘TLC kit’ available in the UK which offers customers flowers that ‘with a little bit of tender love and care’ can brighten up their home.
  2. Seasonality trumps locality. As a consumer, the most sustainable flower you can buy is one that’s in season. If you’re buying out of season (Londoners buying roses on Valentine’s Day, this is you), importing it from a place where it’s in season usually has a lower climate impact than growing it locally. Energy emissions of European winter greenhouses outstrip freight emissions of import. B&W champions this dynamic trade-off and acknowledge this trade-off when forecasting and building their bouquet mix,
  3. Better data supports better alignment across stakeholder networks. At B&W this is true internally (where carbon budgets inform product design) and externally (where product and activity level benchmarks guide supplier best practice). This has provided B&W with a range of levers that drive their 7% year-on-year reduction in carbon footprint.

Read Bloom & Wild’s latest impact report here.

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Source: Bloom & Wild website

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