Scope 3 Emissions

JULY 2023 Power of 3: why Scope 3 emissions matter What are Scope 3 emissions? In simple terms, they are the greenhouse gas emissions generated across a company’s value chain – both before and after its own operations. They include the emissions produced by suppliers as well as those generated by customers when using the company’s products or services. Though complex, measuring and managing Scope 3 emissions is – in our view – essential if net zero by 2050 is to be achieved. The good news? Solutions exist. Marie Rupp KEY TAKEAWAYS Senior Sustainability • Tackling Scope 3 emissions is necessary for all stakeholders to move the economy further Analyst towards net zero. • Mounting pressure from regulators and other stakeholders should help corporates to better understand and address their Scope 3 emissions. • The complex cascading system of emissions throughout the layers of the economy brings challenges as well as solutions. • Financed emissions are those linked to investment activities, and asset managers should look at e昀케cient ways to manage these as part of their net-zero commitments. Jingying Han US President Theodore Roosevelt famously How are the di昀昀erent types of emissions Sustainability Analyst said that “nothing worth having was ever categorised? The Greenhouse Gas Protocol achieved without e昀昀ort” – an axiom that Standard classi昀椀es a company’s greenhouse gas could be applied to the measurement and (GHG) emissions into three scopes (see Exhibit 1). management of Scope 3 emissions. This will Scope 1 emissions are the direct emissions from undeniably involve hard work on the part of a company’s owned or controlled activities, while stakeholders but will pay dividends on the way. Scope 2 emissions are indirectly generated from purchased energy consumed by a company. ALLIANZGI.COM