Traversing the Primary Data Chasm: Understanding Scope 3 Data Types
For businesses with long-tail supply chains and upstream emissions, primary source data on Scope 3 is essential for reduction efforts.
In our last blog on getting primary data on Scope 3 emissions, we discussed the spend and quantity-based approach to carbon accounting, which calculates emissions by applying industry-level estimates to procurement data rather than using primary measurements. While this approach provides initial insights for businesses beginning their emissions reduction journey, the most significant improvements come from working with primary data on emissions from specific goods and services.
So, What Does Primary Data on Scope 3 Emissions Look Like and Why Does it Matter?
Primary data on Scope 3 emissions falls into three levels of specificity:
- Supplier emissions footprint – Overall emissions data from suppliers
- Supplier facility-specific emissions – Data from individual factories, farms, or production sites
- Supplier product-level carbon emissions – Data for specific products
Greater specificity in emissions calculations provides more reliable data tied to actual business activities rather than estimates. This precision is crucial for accurate Scope 3 reporting. When product-level emissions are calculated using advanced measurement approaches, including AI and algorithmic tools, companies can verify their claimed emissions reductions and ensure regulatory compliance.
Scope 3 Primary Data Approach vs. Spend & Quantity Approach
Spend and Quantity-based Approaches
Spend-based or quantity-based emission factors are high level, representing the average emissions per dollar spent on products. The data is easy to source and can be pulled directly from accounting software, which almost every company has.
However, the ability to identify, analyse, and monitor emissions reduction efforts related to purchased products is limited if a business uses spend-based accounting methods exclusively. Spend-based methods encourage businesses to use a “buy less” method to reduce emissions, which often doesn’t harmonise well with wider business goals. We want to buy smart, not buy less.
Hybrid Calculation Methods
Hybrid calculation methods use top-level emissions data provided by suppliers and allocate it to their products. This approach works best when suppliers have a limited range of similar products, offering more accuracy than spend-based methods. However, it can mislead when products in the same category have significantly different environmental impacts – for example, plastic products made from recycled versus virgin materials.
Supplier-Specific Methods
The supplier-specific method delivers the most precise and accurate supply chain emissions data, representing the gold standard in carbon accounting. However, it requires extensive supplier engagement and data collection. Since many suppliers lack the capability to provide detailed emissions data, companies often must invest in supporting their suppliers’ product footprinting capabilities—a complex and costly process. As a result, hybrid calculation methods frequently serve as a more practical intermediate solution.
Building Scope 3 Data into your Business
A good example of a company that has excelled in this space is Ikea. Ikea’s sustainability team was one of the first to approach the Scope 3 emissions problem. They collect data from both their tier 1 suppliers and tier 2 to gain a more multi-dimensional picture of their Scope 3 emissions. They’ve laid the supplier engagement foundations to enable their suppliers, and their suppliers’ suppliers, to provide accurate calculations of the emissions associated with producing and transporting their products.
The key is their thorough supplier engagement strategy, as reducing Scope 3 emissions is a team effort. In our next article in this series, we’ll talk about how you can support your suppliers to join you on the emissions reductions journey by outlining various tools, incentives, and other approaches that we call the supplier engagement win-win.
