Scope 3 emissions refer to indirect greenhouse gas emissions that occur in a company's value chain. These emissions are a result of activities that are not directly owned or controlled by the company but are associated with its operations. It's important to consider scope 3 emissions because they can account for a significant portion of a company's overall carbon footprint.

Scope 3 is broken down into 15 separate subcategories under the standards. these are outlined below:

Source: Overview of GHG Protocol scopes and emissions across the value chain (Corporate Value Chain (Scope 3) Accounting and Reporting Standard, p.5

For most businesses Scope 3 emissions account for between 80-90% of their overall emissions footprint and as a result generally reperesent their largest opportunity for emission reduction.

You can learn more about scope 3 emissions in our detailed article here.

Reducing emissions isn’t just about protecting the environment—it’s also about reducing costs, enhancing efficiency, and staying compliant with regulations. Begin by accurately measuring your current emissions through detailed data collection and reporting. Understanding your emissions profile allows you to identify reduction opportunities and implement effective strategies.

This is especially important for Scope 3. Scope 3 generally has the lowest accuracy and data quality of any area of an organisations GHG Inventory. This has meant that historically businesses have had to rely on proxy data to estimate emissions from these sources. The issue with this approach however is that it limits your ability to demonstrate a reduction in your emissions because there is a disconnect between the average data and the specific activities of your supply chain. As result collection of primary data becomes critical for many businesses with reduction targets.

The types of Scope 2 reduction opportunities will vary from business to business. By preparing a GHG Inventory you will start to understand where your Scope 2 emissions are coming from which will then inform the possible opportunities that might be available

Not all emission reduction opportunities are created equal. Here’s how to prioritise them:

Look at how much each opportunity can cut your emissions. Focus on the ones with the biggest impact relative to their cost and feasibility.

Evaluate the cost-effectiveness of each initiative, considering the initial investment, operational costs, and potential savings. Go for the options that give you the best bang for your buck.

Consider how practical each opportunity is to implement, including technical, regulatory, and logistical factors. Prioritise solutions that can grow with your organization.

Make sure your emission reduction efforts align with your broader strategic goals, such as sustainability targets, financial performance, and corporate social responsibility commitments.

Engage with stakeholders like employees, customers, investors, and regulators. Projects with strong stakeholder backing are more likely to succeed.

Once you have evaluated the opportunities across each of these dimensions you can then compare them to identify which ones make sense to prioritise. There are many frameworks that can be used to make this decision - your organisation might even have its own guidance.

At Sumday we find the Value vs Effort Matrix as helpful. Basically you want to look at the cost and effort associated with each of the initiatives as well as the potential value in terms of carbon reduction.

To help with further prioritising potential initiatives, tools like Marginal Abatement Cost Curves (MACC) can be useful. The idea with a MACC is to understand the relative cost of reducing greenhouse gas emissions by one tonne across all of the initiatives that a business has available to reduce emissions. From there you can visualise the relative financial impact of each of these reduction opportunities on a continuum.

Projects with a Marginal Abatement Cost of below $0/t of CO2e should deliver a financial saving as a result of implementing the project. Cost is obviously just one consideration and the other factors like those outlined above should also be considered as part of the investment process.

Scope 3 emissions are generally one of the largest contributors to an organisations emissions footprint. Within scope 3 category 1: purchased goods and services is often the largest category. In order to reduce emissions organisations need to first understand the actual emissions of their suppliers and then collaborate on emissions reductions across the value chain.

As opportunities differ from company to company it is important to understand the emission drivers of your business, focus on the largest impact areas and and those where you can generate quick wins.