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Indirect emissions: even those we do not control affect us

RiskClima helps a business conduct surveys among stakeholders in the different stages of the production/supply chain. Combined with access to external data sources RiskClima allows you to identify to a fairly reliable extent the impact of each part of its activities on the proportion of its overall activity's carbon footprint. This knowledge can lead to adoption of improved practices for the company such as to seek out suppliers with lower contributions to the carbon emissions per unit of production.

It is now more and more evident that governments, regulators, investors and banks are increasingly demanding quantitative data and documentation from companies to demonstrate their participation in global efforts to tackle climate change and actively decarbonise.

The Greenhouse Gas Protocol (GHG) defines three (3) broad categories of activities from which greenhouse gases may be emitted, namely Scope 1 (direct emissions), Scope 2 (indirect emissions) and Scope 3 (indirect emissions from the supply chain/production of goods and services). These categories are fully integrated into all commitments to report metrics on climate change and the effort to reduce greenhouse gas emissions. It should be noted that when we refer to greenhouse gases, we are not only referring to carbon dioxide, but to a range of chemical compounds that have the same impact on climate such as methane, water vapour, nitrogen dioxide and so on.

So while the categories relating to Direct (Scope 1) and Indirect (Scope 2) GHG emissions seem to be becoming more comprehensible and more feasible, in terms of targets and reductions, for businesses, there is nevertheless a great deal of confusion about the commitments to reduce indirect emissions under Scope 3. Scope 3 refers to the amount of gases produced along a company's supply chain, i.e. it includes emissions from its downstream suppliers or upstream customers, but also in the life cycle of its products. In contrast to Scope 1 and Scope 2 emissions, which are respectively produced directly by the business activity or indirectly through the energy market, Scope 3 emissions may also be linked to activities not directly related to the main activity, such as the transportation of staff and goods, the purchase/sale of goods and services, business travel and so on.

The measurement of Field 3 emissions is particularly difficult as it requires simultaneous cooperation with suppliers and customers

In fact, Field 3 can potentially account for the largest share of a company's total emissions to the atmosphere, up to 80% of the total. Measuring these emissions is particularly difficult as it requires simultaneous cooperation with suppliers and customers, but also the commitment of all to a common goal and a continuous effort for change. For this reason, the reporting of data and metrics for Scope 3 in most companies today is either underestimated or often not included.


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