Corporate sustainability reporting largely focuses on how business operations impact the environment. As the effects of climate change become more apparent, greenhouse gas (GHG) emissions data helps translate business activities into climate impact. Regulators are likely to implement more rules around mandatory disclosure of emissions data that quantifies the climate impacts of business operations and supply chains.
GHG emissions are classified into 3 different “scopes” or categories meant to indicate who “owns” the emissions as well as the level of control that a company has over emissions-generating activities.
Businesses have long been focused on measuring and managing emissions from their own operations and energy use—known officially as Scope 1 and Scope 2 emissions.
In recent years, many companies have broadened their focus to include emissions related to what goes on beyond their own organizational boundaries, such as the manufacturing of their raw materials and the disposal of their products, which fall into Scope 3. Voluntary sustainability reporting frameworks, such as CDP, strongly encourage reporting companies to account for the majority of Scope 3 emissions. Regulators, too, have taken a major interest in these Scope 3 emissions and have united around a defined methodology for companies to account for them.
What Are Scope 3 Emissions?
Scope 3 refers to any greenhouse gas (GHG) emissions resulting from assets and activities that aren’t owned by the reporting organization—for example, the machinery operated by a supplier or the recycling habits of a customer.
For most businesses, Scope 3 emissions are the biggest. In fact, Deloitte estimates that they account for more than 70% of a typical company’s carbon footprint.
This is important to consider, especially given the relative difficulty of measuring and managing these emissions: because they are primarily driven by decisions made outside the organization, effectively tracking them means closely monitoring activities up and down the value chain, from vendors to consumers. And within Scope 3 Emissions, waste is widely considered the most difficult and stubborn category to track due to the plethora of material types—each with their own emissions factors based on volume and weights—and multiple hauling companies for single locations (each with their own invoice formats).
What Is Required of Reporting Organizations?
The GHG Protocol defines 15 categories of Scope 3 emissions. To meet the standards put forward, an organization must report on every category relevant to its value chain.
The EPA provides helpful guidance on reporting:
1. Determine Relevant Scope 3 Categories
The first step is to identify which of the 15 categories are relevant to the reporting organization, based on criteria that include:
- Sector guidance
2. Estimate GHG Emissions
The GHG Emission Factors Hub outlines key emission factors for a number of Scope 3 categories and provides calculation methods for each. The GHG Protocol also offers Scope 3 Calculation Guidance, with multiple methods for each Scope 3 category based on level of specificity and available data.
3. Improve and Expand Over Time
As more—and more sufficient—data become available, organizations will be able to improve the accuracy of their measurements, as well as expand their reporting to include additional categories of emissions.
Improvement may mean moving secondary sources of data to primary ones and/or using a combination of calculation methods to deliver more accurate results. Expansion may mean estimating the emissions of relevant, but data-light, categories until more complete data becomes available.
What Are Some Tips for Meeting Upcoming Requirements?
Here are some tips to help you prepare for these looming regulations:
1. Start Now
The SEC’s proposals may take on modifications before enactment. However, the intent will nevertheless remain the same: to ensure consistent, accurate information on emissions across a company’s value chain. Deadlines are approaching, so it’s best to get going. For example, from February 2025 disclosures on Scope 3 emissions and emissions intensity will be required for large organizations.
2. Partner with an Expert
Not all organizations have the expertise to handle Scope 3 on their own. Look for a partner with a strong record of carbon accounting, financial reporting, and supply chain management, taking into account the ability to provide assurance around Scope 3 accounting processes and disclosures.
3. Use Technology
The volume of data required to meet the proposed requirements exceeds what humans alone can manage. The right technology can equip your organization to generate the most and best insights while getting the highest return on your investment.
How Can Rubicon Help?
In addition to providing a spectrum of digital solutions to help companies and governments optimize their waste and recycling, Rubicon supports customers in their Scope 3 reporting through our RUBICONConnect portal:
EPA GHG Emission Factors Hub
Rubicon provides customers with their Scope 3 Category 5 Waste Generated in Operations emissions using the GHG Emission Factors Hub’s waste emissions factors. This total represents the carbon emissions from the disposal and treatment of waste generated in each customer’s owned or controlled operations. The carbon emissions are used to support voluntary reporting under the GHG Protocol Corporate Accounting and Reporting Standard, and can help businesses comply with potential mandatory reporting requirements
As businesses look to set emissions reduction targets that include Scope 3 emissions, Rubicon’s subject matter experts can help to identify strategies that will result in reductions in emissions associated with disposal of waste and recycling. Additionally, as Rubicon customers look to reduce waste, advanced sustainable materials management programs can lead to reductions in other Scope 3 categories related to supply chain and purchasing
Learn more about Rubicon’s Scope 3 reporting solution (PDF).