The importance of measuring indirect greenhouse emissions (Scope 3) for a sustainable business

Scope 3 emissions refers to the indirect release of greenhouse gases resulting from a company’s activities but are not directly tied to the production or provision of its products and services. This includes emissions from the company’s supply chain, transportation and product usage.

With the first domestic companies having already submitted their analyses for Scopes 1 and 2 in accordance with the requirements of Greece’s new Climate Law, the “green” air has already begun to appear in terms of collection and publication of data. By the term Scope 1, we refer to the direct greenhouse gas emissions of a company (e.g. fuel consumption for heating, vehicles, coolant leaks) and by the term Scope 2 to the indirect emissions from electricity.

While the Climate Act marks a significant stride towards sustainability, it’s just the beginning. Greece has not only synchronized its long-term strategy with that of Europe but has also set clear goals for achieving NetZero by 2050. This commitment signals that additional measures and provisions will undoubtedly be introduced to expedite de-carbonization and achieve these goals.

The Climate Law’s provisions, applicable to companies under its purview, focus solely on Scopes 1 and 2, leaving a crucial gap for other emissions. In addition to Scopes 1 and 2, Scope 3 emissions also play a decisive role. The percentage of Scope 3 emissions varies depending on the economic sector to which a company belongs. For instance, in the food sector (e.g. supermarket chains and restaurants), Scope 3 emissions can account for 50-90% of the total, while for financial Institutions (e.g. banks and investment companies), it may exceed 95%.

Measuring Scope 3 emissions sends a powerful message of responsibility and commitment on the part of the business. It makes clear that the company is cognizant of its overall impact on the environment and is willing to implement measures to minimize it, thereby influencing the behavior of both suppliers and customers. A business dedicated to addressing Scope 3 emissions not only fosters trust but also establishes the foundation for building long-term relationships with its stakeholders.

Cutting down on Scope 3 emissions not only benefits the environment but also contributes to the economic development of the company. Reviewing and improving the supply chain can result in more efficient and cost-effective processes. Even though Greece does not currently mandate the measurement of Scope 3, it should be a priority for any company aiming for sustainable development. By actively contributing to environmental protection and improving company image, measuring Scope 3 emissions becomes an investment that proactively supports integrated business development.

The European Regulation on Sustainability and Corporate Social Responsibility (CSRD – Corporate Sustainability Reporting Directive) requires a thorough assessment of Scope 3 emissions. The Regulation calls on companies to disclose information about climate change along with associated risks and opportunities encompassing Scope 1, 2 and 3 emissions. In any case, the European Sustainability Reporting Standards (ESRS) and, more specifically, Climate Change (ESRSE1) stress not only the significance of Scope 1 and 2 emissions but also highlight the crucial role of Scope 3 emissions. It is stated that calculating Scope3 emissions significantly contributes to understanding the emissions coming from the supply chain, making it a pivotal element in transitioning businesses towards a more sustainable future.

Within the above framework, initiatives aimed at setting specific goals for companies and organizations are gaining ground worldwide. For example, the Science-Based Targets Initiative (SBTi) requires participants to calculate and set targets for Scope 3 emissions as well.

In conclusion, by including Scope 3 emissions, companies display their full ecological footprint, taking into account the impact of their activities across the entire value chain. In a rapidly evolving and competitive business environment, measuring Scope 3 is increasingly becoming crucial for a company’s adaptation to the challenges of the climate future.