Long gone are the days when a company’s sustainability ranking was determined solely by the impact of its own actions. Companies that cannot provide relevant Scope 3 data in public reporting face the possibility of criticism from stakeholders for providing an incomplete picture of their total environmental impact. A company’s Scope 3 emissions account for 65 to 95 percent of its total CO2 footprint, but recent data findings from Capgemini Research Institute’s Net Zero research show that only 22 percent of companies measure Scope 3 data today. This means that most companies overlook their carbon footprints, while ignoring the business value potential from emissions data.
Complexity of objective 3
A company’s carbon footprint includes Scope 1, 2 and 3 greenhouse gas emissions. Scope 3 emissions result from activities not directly owned or controlled by the organization, including activities from suppliers, distributors, partners, and customers. They are divided into 15 categories.
Focusing on measuring and reducing emissions and changes, but some valid Scope 3 measures:
• Avoid unnecessary business travel and inefficient modes of transport
• Switch to low emission fuels and vehicles
• Produce more energy efficient products
• Design durable, recyclable materials.
While sharing Scope 3 emissions information has so far been optional for most businesses, both US and EU regulators are now pushing for increased transparency, and companies will increasingly face new regulatory requirements. Furthermore, companies are realizing the business potential that sustainable value chains, operations and products can deliver. Research firm Capgemini’s findings show that 85 percent of companies recognize the business value of emissions data, but it is underutilized: 45 percent of companies only use the data for reporting purposes.
„Without accurate data and the skills to use it, you won’t struggle to report the right numbers, but it’s impossible to make predictions for the future and move your business toward net zero.”
The Scope 3 dilemma is about solving a big data challenge
Scope 3 emissions come from external parties, so collecting accurate and reliable data can be particularly challenging. Without accurate data and the skills to use it, companies struggle not only to report accurate numbers, but also to make predictions for the future and steer the business toward net-zero goals. So, Scope 3 is a big data challenge: asking the right questions and providing the right answers requires reliable emissions data. But how to start? Here are three data foundation strategies that will get things moving in the Scope 3 space.
Emissions data collection: Start by identifying hotspots
When a company defines net-zero goals, it usually has already developed an understanding of the most carbon-intensive parts of the value chain. For example, for a manufacturing company, such a hotspot could be logistics. The data collection strategy for Scope 3 is a project linked to the sustainability strategy. It describes what data is needed, where to collect it, and what to measure. With Scope 3, organizations should always aim to obtain source data when available. In practice, this means approaching suppliers and partners and asking for emissions data assigned to the products and services purchased. In some cases, when actual data is not accessible, another way of estimating operational data should be agreed upon.
As with all data these days, a smart approach must be used. So instead of collecting everything, focus on what data is actually needed to understand where the company is and make predictions for the future.
Establishing a shared single source of emissions data
Next is a hub for ingesting and storing data. Data comes in different formats and structures, and a common emissions data model can help make sense of it. Major cloud-platform providers such as Microsoft, Snowflake and AWS have already built accelerators into their stacks to support Scope 3 emissions data collection, modeling and analysis. One advantage of these cloud platforms is that they have better data collection and data sharing capabilities outside the organization. Finally, Scope 3 is about sharing across the data ecosystem. If the data is in one place, this single source of truth can be used for many purposes, such as carbon accounting, reporting or analysis.
Let the data lead the people
Calculating and reporting Scope 3 emissions is still considered the most straightforward piece of the puzzle. As a company begins to build analytical models, it becomes difficult to predict what situations or advanced AI will be used – for example digital twins. The tricky part is how to get people to trust the data and make decisions based on it. The data-driven sustainability game is ultimately about people, culture and the right skills. For example, in the manufacturing sector, R&D and procurement teams are at the center of change. These groups decide what kind of products to make, what materials and processes to use, and where to buy from. If these teams have knowledge of net-zero goals, understand their role in achieving them, and have access to data, tools and insights, change can happen.
Emissions data literacy is a standard that encompasses people, tools and processes. Similarly, to financial data literacy, emissions data and related skills are essential tools for tomorrow’s leaders. Clearly, one of the toughest components in the race to net-zero is in the Scope 3. Despite this big data challenge, here’s good news: By adopting a data-driven approach — starting with three basic strategies — a business can take a leap toward a net-zero future, building data management capabilities and data mastery.
Findings
Be smart about data collection
For Scope 3, find hotspots, collect what’s really needed, and always target critical data.
Establish a single source of truth
Collect and store this data in a central location and manage it on top of a common sustainability data model.
Support and education
Invest in a net-zero future and equip teams with the skills and tools to understand and use emissions data for business decisions.
Interesting to read?
Capgemini’s innovation launch, Data Driven Innovation Review | Wave 5 consists of 19 articles authored by leading Capgemini and partner experts on inspiring new ways to leverage data and AI beyond conventional environments. Explore articles on contingency, poker-like data, the circular economy, or the data mesh. In addition, many articles work with key technology partners AWS, Courage, Databricks And Dataiku. Find all previous waves here.
