Overcoming Challenges in Measuring and Setting Scope 3 Emission Targets

The Science Based Targets initiative (SBTi) has published a pivotal discussion paper titled “Aligning Corporate Value Chains to Global Climate Goals.” This paper delves into Scope 3 emissions, which encompass all indirect emissions occurring in a company’s value chain, and how the SBTi Corporate Net Zero Standard may be changed to address some of the most common challenges with Scope 3 emissions management.

Key Challenges in Measuring Scope 3 Emissions:

1. Data Collection Complexity:

   • The vast and fragmented nature of value chains makes gathering accurate data a formidable task.

   • Many suppliers may lack the necessary resources or expertise to provide precise emissions data.

2. Lack of Standardization:

   • Inconsistent methodologies and reporting standards across industries hinder the ability to benchmark and compare Scope 3 emissions effectively.

3. Indirect Control:

   • Companies often have limited influence over their suppliers' practices, making it difficult to implement and enforce emission reduction strategies.

Setting Scope 3 Targets:

1. Ambiguity in Target Setting:

   • Defining realistic and achievable targets requires a deep understanding of the entire value chain, which many companies lack.

2. Resource Intensity:

   • Establishing and maintaining Scope 3 targets demands significant investment in time, money, and personnel.

3. Evolving Regulations:

   • Adapting to changing regulatory environments and guidelines can complicate long-term target setting.

Options Under Consideration

The global ambition to reach net-zero emissions should guide efforts to transform corporate value chains to align with climate goals, and the SBTi believes scope 3 target setting can be a transformative lever for change.

Rather than presenting a clear proposal, this paper presents two options for further discussion, acknowledging that this is an area that requires further exploration:

— An assessment of influence could be used to prioritize which emissions sources should be addressed in the near-term, focusing efforts where companies can most effectively drive change. Under this model, emissions sources that companies have no or limited influence over could be excluded from the target boundary.

— An assessment of influence could be used to determine differentiated interventions. Under this model, companies might be required to address emissions sources which they have reasonable influence over through appropriate interventions (e.g. policies and targets) and to address the impact of emissions sources where companies have no or limited influence through other mechanisms.

Both options proposed carry some risk, particularly due to the subjective nature of determining influence, and therefore the SBTi recommends further exploration to understand if influence can credibly be integrated into the framework.

Next Steps and Timeline:

1. Implementation of Standards and Frameworks:

   • Over the next year, SBTi will focus on refining and promoting standards that help companies set and achieve Scope 3 targets.

2. Engagement and Capacity Building:

   • By mid-2025, SBTi plans to enhance engagement with corporations, providing them with the necessary tools and guidance to manage Scope 3 emissions effectively.

3. Ongoing Research and Development:

   • Continuous research will be conducted to address emerging challenges and improve the accuracy and feasibility of Scope 3 emission reductions.

For more details, read the full discussion paper here. Need an expert opinion about how this will affect your company? Contact us for a quick conversation!