Carbon 101

Decoding Scope 3 Emissions: Essential Strategies for Small Businesses to Thrive

02 Mar 2024


Today, we’re diving into the often overlooked world of Scope 3 emissions. These are not your everyday direct emissions like Scope 1 and 2. These are the elusive ones that  happen all along your value chain. Think about it, from the moment you get your raw materials to when your customers use your products.  We’ll explore how they differ from the starting blocks of many companies’ sustainability journeys – the Scope 1 and 2 emissions.

We’ll delve into what are the biggest carbon culprits in these Scope 3 emissions and why they should be on your radar. Understanding and managing them not only aligns with environmental stewardship but also uncovers hidden benefits. 

However, they’re notoriously tricky to handle – but don’t worry, we’ve got some strategies and tools up our sleeve to simplify the process. Engaging with suppliers plays a crucial role here, and we’ll discuss how to effectively do this. Plus, get inspired by a real-life success story of a company that is making significant strides in measuring and reducing their Scope 3 emissions.

What are Scope 3 Emissions?

Scope 3 emissions, or those tricky ‘indirect emissions’, are a big deal in your company’s carbon footprint. They’re all the emissions linked to your value chain, both the ones coming in (upstream) and going out (downstream). Think of all the items your business buys, the travel, your team’s commute, the shipments, the waste from your day-to-day operations, and what happens to your products after they’re sold.

GHG emissions by Scope 1, 2 and 3.
Carbon emissions by Scope 1, 2 and 3.

How Do They Differ from Scope 1 and 2 Emissions?

Scope 1 and 2 emissions are more straightforward than Scope 3. Scope 1 covers direct emissions from your own sources, like fuel in company vehicles. Scope 2 involves indirect emissions from purchased electricity or heating in your buildings. 

The key difference? You can calculate Scope 1 and 2 emissions using your internal data – it’s what companies often report initially and is required for SECR filings in the UK.  (Interested in SECR? Find out more here). 

Scope 3, on the other hand, requires a wider lens, looking into your entire value chain, which often involves external data and more complex collection and calculations.

Curious about what exactly goes into your carbon footprint? Dive into our comprehensive guide for a complete breakdown of every emission category across Scope 1, 2, and 3. It’s your go-to resource to understand every aspect of your impact

Why Do You Need to be Worried About Scope 3?

Here’s a kicker: Scope 3 is usually over 70% of your emissions pie, according to the UN! They’re the trickier part to pin down compared to Scope 1 and 2, mainly because they’re not directly in your control. But understanding them is key to really grasping your environmental impact.

Comparing scopes 1, 2, and 3 breakdown by country.
Comparing scopes 1, 2, and 3 breakdown by country.

But it’s not just about numbers. Scope 3 is the story of how your business connects and interacts with the wider world. Getting a grip on these emissions means diving into the lifecycle of what you offer, and working with your suppliers and customers to cut down on these emissions.

While smaller companies may currently fall below the UK regulatory thresholds for reporting these emissions (read more about the SECR framework which governs company criteria for reporting) , the trend in regulations is moving towards more comprehensive climate disclosures. Being proactive in managing and reducing Scope 3 emissions can provide a competitive edge for small businesses.

As regulations evolve, companies that have already taken steps to understand and mitigate their Scope 3 emissions will be ahead of the curve. This not only minimizes future compliance risks but also positions these businesses as leaders in sustainability. Adopting such practices early can appeal to a growing market of eco-conscious consumers and partners, further enhancing their competitive advantage. 

It’s a win-win: you boost your sustainability creds and tighten your bonds with the companies you do business with, all while collaboratively pushing towards a lower carbon footprint.

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Unlocking Advantages: The Power of Understanding Your Scope 3 Emissions

Grasping your Scope 3 emissions is a game-changer with three big wins:

  • Spot the Risky Players: Dive into your emissions data and you’ll see which suppliers or activities are cranking up your carbon count. Armed with this intel, you can zero in on the biggest offenders and strategize improvements.
  • Find Your Carbon Cutters: Swapping to or nudging your suppliers towards lower-emission options isn’t just eco-smart—it’s also a savvy business move. Less carbon often means lower costs and streamlined efficiency.
  • Be a Climate Champion: Shout about your Scope 3 reduction efforts and the importance of sustainability to your brand. Showing off your proactive stance can set you apart from others in your customers and employees’ eyes.

Streamlining Your Journey: Key Strategies for Tackling Scope 3 Emissions

Starting with Scope 3 emissions can be daunting, but remember: perfect shouldn’t be the enemy of good. This is a long-term commitment, and the first step is to start measuring. Here are some ways to get the most impact for your effort when starting:

  1. Engage Internal Stakeholders: Sustainability is a team sport. Educate all relevant departments and employees on carbon literacy to foster understanding, motivation, and participation across your company.
  2. Identify Impactful Suppliers: Assess which suppliers have the largest impact on your business, considering both the financial aspect and the volume of activities. Focusing on these can set a strong foundation.
  3. Target the Top Few: Kick off with a manageable number, like 20 suppliers in the first year. Plan to expand your focus each year as you become more adept in managing these emissions.
  4. Request Emission Reduction Plans: Ask your suppliers for their emission reduction strategies. While not all may comply, it initiates a crucial conversation.
  5. Apply Pressure Where Needed: For suppliers who are less forthcoming, a gentle push can encourage more transparency and action.

Exploring the less-visible aspects of your business’s carbon footprint is crucial, particularly in that all-important first baseline year. It’s about shining a light on the unseen (your blind spots) and zeroing in on the big hitters (your hotspots) of your emissions profile.

At Our Carbon, we’re all about guiding you through these early stages of your sustainability journey. We arm you with a Data Evidence Quality score and an Emissions Factor score, providing a clear picture of how robust and accurate your emissions data really is. 

This isn’t just a one-off; it’s about gearing you up for continuous improvement year after year. Remember, we’re on a journey towards progress, not perfection. Reducing carbon emissions is a marathon, not a sprint, and every step forward counts.

How You Engage Your Suppliers Is Key

Engaging with your suppliers is a critical piece of the Scope 3 puzzle. Making it a collaborative process with goals towards mutual growth can increase their motivation to participate. Here’s some ideas to increase their engagement:

  1. Value for Suppliers: Offer incentives like financial perks for hitting emissions targets or longer contracts or preferred status. It’s about making the process beneficial for them too.
  2. Share the Knowledge: Spread the word about the progress of suppliers who are further along in reducing emissions. This can inspire others in your chain.
  3. Set Clear Expectations: Include Scope 3 goals in your Supplier Code of Conduct, outlining expectations for sharing GHG data. To get them started on their baseline year, you may consider not penalising initial emissions levels.
  4. Educate and Support: Host webinars for suppliers who are just starting out. Guide them towards tools and services that can help in their sustainability journey.

The Measure-to-Manage Approach to Reducing Scope 3 Emissions

Peter Drucker, a legend in the business world, always said “You can’t manage what you don’t measure.” And he’s spot on, especially when we’re talking about shrinking your Scope 3 carbon footprint.

You can’t manage what you don’t measure.

Peter Drucker


The first step? Roll up your sleeves and compile a detailed inventory of all Scope 3 activities. This means getting up close and personal with your suppliers, distributors, and transport methods.

Once you’ve identified all Scope 3 activities, the next vital step is accurately calculating emissions for each. It’s the groundwork for your future emissions tracking and setting ambitious targets to curb those Scope 3 emissions.

This process might require data collection, researching industry-specific emissions factors and ensuring consistency in measurement units. For many, this can be a complex task. 

At Our Carbon, we specialise in helping small businesses navigate this process with precision. Our services include detailed carbon audits, hotspot and blindspot analyses, and coaching tailored to your unique business needs. We’re here to guide you on your sustainability journey, making carbon accounting approachable and actionable. Learn more about how we can help at Our Carbon.

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Ready for the scoop on slicing emissions across 13 categories in Scope 3? Here they are:

  1. Purchased Goods and Services: Think green when you shop. Opt for materials with a smaller carbon footprint, like recycled raw materials. Less is more – buy less, waste less.
  2. Capital Goods: It’s all about smart buying. Choose long-lasting materials and energy-efficient machinery. Collaboration with suppliers who practise green methods is key.
  3. Fuel and Energy-Related Activities: Embrace energy-efficient technologies and swap out carbon-heavy fuels for alternatives like landfill gas.
  4. Business Travel: Go digital where possible. If travel’s a must, pick shorter, less carbon-intensive routes. Carbon offsets can balance out unavoidable emissions.
  5. Employee Commuting: Encourage public transport, biking, or carpooling. Some companies even offer green commuting incentives.
  6. Upstream and Downstream Transportation & Distribution: Ship smarter, not harder. Consolidate shipments and consider electric vehicles for lower emissions.
  7. Waste Generated Operations: Aim high in recycling and waste segregation. Some waste materials can even bring in revenue!
  8. Upstream and Downstream Leased Assets: Get savvy with shared spaces. Use sub-meters for accurate emissions data and work together for better energy efficiency.
  9. Use of Sold Products: Design energy-efficient products. Lower energy use equals lower emissions.
  10. End of Life Treatment of Sold Products: Design with recycling in mind. Longer-lasting products mean less waste and emissions.
  11. Processing of Sold Goods: Efficient design is your friend. Lower lifecycle emissions start here.
  12. Franchises: Measure, reduce, recycle. Embrace renewable energy and sustainable practices at every step.
  13. Investments: Keep an eye on green tech and initiatives. Investing in decarbonization can shape your investment strategies towards a greener future.

From Theory to Reality: A Business’s Triumph in Managing Scope 3 Emissions

Active-IQ, a leading educational qualifications provider.
Active IQ, a leading educational qualifications provider.

Active IQ, a UK leader in the health and fitness training realm, is all about empowering the industry with top-notch qualifications. But they’re not just about fitness; they’re champions of syncing a healthy population with a thriving planet. Fueled by an internal passion for environmental wellness, Active IQ took a bold leap in 2022. They embarked on a journey to confront and measure their carbon footprint, meticulously analysing their 2019 baseline against their 2021 activities. 

Their results, as detailed in their full case study, highlight the effectiveness of their strategies:

  1. Key Emissions Sources: A whopping 72% of Active IQ’s emissions came from Scope 3. They identified that the largest emissions within their Scope 3 were from their stock additions (production of training manuals, clothing, etc.), business travel (flights, rail, etc.), employee commuting​​​​ and downstream transportation. This discovery was crucial as it allowed them to target specific areas for significant emission reductions. Active-IQ carbon emissions, provided by Our Carbon.
  2. Tangible Results: By focusing on these major emission sources, Active IQ was able to reduce their carbon footprint by 50%, from 187 tonnes Co2e in 2019 to 91 tonnes CO2e in 2021. With an ambitious target to reach carbon neutrality by 2025, Active IQ is pushing urgently towards its sustainability goal. Scope 3 carbon culprits for Active-IQ.
  3. Empowering Through Education:  Partnering with Our Carbon, they’ve initiated employee carbon literacy workshops that do more than just inform their team about emissions – they ignite a spark of sustainability innovation in every role. It’s about understanding the ‘why’ and the ‘how’ of carbon emissions in their daily tasks. But why stop there? They’re extending this wave of empowerment to their vast network of over 500 suppliers, from printers to educators, trainers to freelancers. This pioneering workshop aims to spread knowledge through their supply chain, nudging every link towards lower emission options.
  4. Rallying Their Community: Active IQ’s approach didn’t stop with their own direct links. Their Healthy People, Healthy Planet initiative was a call for collective action across their industry. Their resulting award for Social Responsibility Award of the Year isn’t just an accolade. It’s proof that when businesses commit to sustainability, they make a real impact.
Active-IQ Wins Social Responsibility Award of the Year.
Active IQ Wins Social Responsibility Award of the Year.

In the spirit of Active IQ’s inspiring journey, it’s clear that embarking on a sustainability path is not just a choice but a necessity for forward-thinking businesses. If you’re ready to explore sustainability for your company, remember, you don’t have to navigate it alone. Our Carbon is here to be your guide and coach. With our expertise in meticulous carbon calculations and our commitment to making sustainability accessible for small businesses, we’re here to help you bounce around ideas, set achievable goals, and make tangible progress on your sustainability journey​​​​.

Reach out to us. Happy to brainstorm ideas.

Whether you’re just starting to map out your carbon footprint or looking to dive deeper into carbon reduction strategies, Our Carbon offers the tools, knowledge, and support you need. 

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