Scope 3 emissions and climate reporting: common questions and handy resources for ASRS reporters

Scope 3 emissions are indirect greenhouse gas emissions that occur across an organisation’s value chain but are not included in its scope 1 or scope 2 emissions (direct emissions from owned and controlled sources and indirect emissions from electricity). Scope 3 includes 15 categories covering activities such as purchased goods and services, business travel, transportation, waste, use of sold products and investments.

Under AASB S2, reporting entities are required to consider their entire upstream and downstream value chain and all 15 scope 3 categories when determining their scope 3 emissions and require assurance in year 2 of the legislation.

For many organisations, scope 3 accounts for between 70-90% of emissions. Purchased goods and services make up a significant portion of their scope 3 emissions. Information from suppliers can provide a more representative picture of the emissions associated with an organisation's actual supply chain than generic industry averages.

No - however, reporting entities may request information from suppliers, including SMEs, because that information can support their own scope 3 measurement and reporting. ASIC specifically recognises that reporting entities may seek information from small businesses and other value-chain participants.

Primary data is information obtained from specific activities within an organisation's value chain rather than from general industry averages.

Examples include supplier-specific energy consumption, fuel use, product emissions information, activity data or emission factors relating specifically to the goods or services being purchased.

No – organisations should prioritise suppliers based on their materiality and can consider factors such as emissions significance, spend, strategic importance, availability of information and the organisation's ability to influence the supplier.

Where supplier-specific information is not available, appropriate secondary data and estimation methods can still be used.

The information required will depend on what you are purchasing and how you intend to calculate your scope 3 emissions.

Requests could include:

The GHG Protocol also recommends requesting information on calculation methodologies, data sources and verification when collecting supplier-specific emissions information.

Where possible, information that relates specifically to the product or service purchased will generally be more useful.

For example, a supplier-specific cradle-to-gate emission factor for a particular product can be more representative than allocating a proportion of the supplier's total corporate emissions to your organisation.

Where product-level data is unavailable, broader facility, business-unit or corporate information may still be useful, but an allocation approach may be required.

Its best practice to include the emissions of your suppliers including scopes 1, 2 and 3 (upstream only). However its acknowledged that this is harder to collect, less likely to be accurate and assure and depending on the maturity of suppliers is less likely to be available. It can be a nice to have at this stage with a view to improving over time. 

Ideally, supplier information should cover a period that is reasonably aligned with your own emissions reporting period.

Where periods do not align, determine whether the supplier's information remains sufficiently representative and document any assumptions or adjustments made.

The GHG Protocol recommends that supplier information, to the extent possible, relate to the same time period as the reporting company's scope 3 inventory.

This does not necessarily prevent you from calculating your scope 3 emissions.

Alternative approaches can include using activity data, industry-average emission factors, spend-based factors, proxy data or other appropriate secondary data.

AASB S2 expressly recognises that scope 3 emissions measurement is likely to involve estimates and includes a presumption that scope 3 emissions can generally be estimated using secondary data and industry averages.