Three data-foundation strategies for scope 3

Long gone are the days when an organization’s sustainability ranking was only judged by the impact of its own actions. Organizations that cannot provide relevant Scope 3 data in public reporting face the likelihood of stakeholders criticizing them for providing an incomplete picture of their total environmental impact. A company’s Scope 3 emissions account for 65 to 95 percent of the total CO2 footprint, but the findings from Capgemini Research Institute’s latest Data for Net Zero research show that only 22 percent of companies are measuring Scope 3 data today. This means that a majority of companies overlook most of their carbon footprints and simultaneously ignore the business value potential from emissions data.

The complexity of Scope 3

A company’s carbon footprint consists of Scope 1, 2, and 3 greenhouse gas emissions. Scope 3 emissions result from activities that are not directly owned or controlled by the company, including those coming from suppliers, distributors, partners, and customers. They are divided into 15 categories.

Measuring and reducing emissions and focus on shifts, but some valid Scope 3 measures are:

• Avoid unnecessary business travel and inefficient modes of transport

• Switch to lower-emission fuels and vehicles

• Manufacture more energy-efficient products

• Design durable, recyclable products.

Although sharing Scope 3 emission information has been optional for most businesses so far, both US and EU regulators are now pushing for increased transparency, and companies will increasingly face new regulatory requirements. Furthermore, companies are also realizing the business potential that sustainable value chains, operations, and products can provide. Findings from the Capgemini Research Institute show that 85 percent of organizations recognize the business value of emissions data, but it remains inadequately used: 45 percent of the companies use the data only for reporting.

“Without accurate data and the skills to use it, you don’t only struggle to report the right numbers, but it also becomes impossible to make predictions for the future and steer your business towards net-zero.”

The Scope 3 dilemma is all about solving a big data challenge

Scope 3 emissions come from external parties, so collecting accurate and reliable data can be particularly challenging. Without accurate data and the skills to use it, organizations not only struggle to report the right numbers but also to make predictions for the future and steer the business toward net-zero targets. So, Scope 3 is a big data challenge: reliable emissions data is needed for both asking the right questions and providing the right answers. But how to get started? Here are three data-foundation strategies that get things moving in the Scope 3 space.

Emissions data collection: start with identifying hotspots

When a company has defined net-zero targets, it usually has already created an understanding of the most carbon-intensive parts of the value chain. For example, to a manufacturing company, such a hotspot might be logistics. A data-collection strategy for Scope 3 is a plan aligned with the sustainability strategy. It describes what data is needed, from where to collect it, and what to measure. With Scope 3, organizations should always aim at getting the source data if available. In practice, this means reaching out to suppliers and partners and asking for emissions data allocated to the products and services purchased. In some cases, when the actual data cannot be accessed, another way to estimate the activity data should be agreed.

As with all data these days, a smart approach should be used. Hence, instead of collecting it all, focus on what data is really needed to understand where the organization is, and make predictions for the future.

Establish a shared single source of emissions data

A hub to ingest and store data in one place is next. The data will come in different formats and structures, and a common emissions data model will help make sense of it. Major cloud-platform providers such as Microsoft, Snowflake, and AWS have already developed accelerators in their stacks to support Scope 3 emissions data collection, modelling, and analytics. One advantage of these cloud platforms is that they tend to have great data collection and sharing capabilities for data outside the organization. In the end, Scope 3 is all about sharing across the data ecosystem. Once the data is in one place, it is possible to use this single source of truth for multiple purposes, such as carbon accounting, reporting, or analytics.

Let data lead the people

Calculating and reporting Scope 3 emissions can still be considered a quite straightforward part of the puzzle. When an organization starts building analytical models, what-if scenarios, or utilizing advanced AI – for example with digital twins – it gets tougher. The tricky part is how to make people trust the data and make decisions based on it. The data-powered sustainability game is, in the end about people, culture, and the right skills. As an example, in the manufacturing industry, R&D and procurement teams are at the heart of change. These teams decide what kind of products to make, materials and processes to use, and from where to buy. When these teams have knowledge of the net-zero targets, understand their role in reaching them, and have access to data, tools, and insights that lead the way, change can happen.

Emissions data literacy is a quality that involves people, tools, and processes. Similarly, to financial data literacy, emissions data and related skills are essential tools for tomorrow’s leaders. It is evident that one of the toughest elements in the race to net-zero lies in Scope 3. Despite this big data challenge, here’s the good news: by adopting a data-powered approach – starting with three foundational strategies – a business can take a leap towards a net-zero future, building data-management capabilities and data mastery along the way.

INNOVATION TAKEAWAYS

BE SMART WITH DATA COLLECTION

For Scope 3, identify hotspots, collect what is really needed, and aim always for the critical data.

ESTABLISH A SINGLE SOURCE OF TRUTH

Collect and store this data in a central place and manage it on top of a common sustainability data model.

SUPPORT AND EDUCATE

Equip teams with the skills and tools to understand and use emissions data for business decisions, investing in a net-zero future.

Interesting read?

Capgemini’s Innovation publication, Data-powered Innovation Review | Wave 5 features 19 such articles crafted by leading Capgemini and partner experts, about looking beyond the usual surroundings and be inspired by new ways to elevate data & AI. Explore the articles on serendipity, data like poker, circular economy, or data mesh. In addition, several articles are in collaboration with key technology partners such AWS, Denodo, Databricks and Dataiku. Find all previous Waves here.