Understanding Scope 3 emissions: The ‘invisible’ carbon footprint

Scoping the Scopes

For those who work with emissions quantification daily, the classification of emissions as Scope 1, 2 and 3 is fairly routine. For company owners, however, this can often seem a little ‘muddy’. 

A simple introduction to the ‘Scopes’ is that Scope 1 emissions are the ‘direct’ greenhouse gas emissions that occur from sources that are controlled or owned by a company - such as  emissions from fuel combustion in boilers, furnaces and vehicles (this includes company vehicles and facilities, for example). Scope 2 emissions are ‘indirect’ GHG emissions associated with the purchase of electricity, steam, heat or cooling (for most companies this will be just electricity). 

Scope 3 emissions represent indirect emissions produced throughout a company's value chain. Your value chain is the series of consecutive steps that go into the creation, delivery and use of your products and services. The value chain is made up of two components: The steps upstream i.e. the supply chain, and steps downstream of your company i.e. after you have delivered your products. Unlike Scope 1 emissions and Scope 2 emissions, these emissions arise from activities that are not under a company's operational control. 

(Read more about Scope 3 emissions here.)

A pragmatic approach to managing them

It's impossible to measure and manage every single area of your Scope 3 emissions, and doing so could result in very little pay-off for the effort invested. Instead, it’s more sensible to identify which areas are  most ‘material’ (or, put another way - the areas that will hold the biggest payoffs if they are reduced).  

Cogo’s journey

Cogo’s journey into reducing our Scope 3 emissions started by identifying the most significant sources (materiality) within our value chain, and by asking just two simple questions:

• “What do we deliver?”
• “How do we deliver it?”

Cogo is a sustainability fintech company - we sell carbon footprint management products that enable individuals and companies to measure, understand and reduce their impact on the climate. We do this by partnering with some of the world's largest banks to integrate leading carbon-tracking functionality into their banking apps. All of these products are delivered via the cloud - it is critical to how we deliver our digital solutions.

The aim to minimise emissions linked to our computing footprint was an obvious one; but also a tough one. ‘Greenwashing’ could have seen us write these emissions off by stating that “Our job is ‘done’ by using 100% cloud computing and no physical data centres” - but we knew we could do better. 

Our cloud computing services provider is Amazon Web Services (AWS); and the reality is that our data usage will keep on increasing as we grow our company. AWS provides some support in this area, but we wanted to dig deeper and understand what our options are to improve. Feeling stumped, we contacted  SilverLining, a sustainable IT specialist, to help us measure this part of our footprint accurately and most importantly, to identify levers we could pull to reduce these emissions.

> First - measure!

SilverLining advised that providers like AWS, Microsoft and Google all provide raw customer usage data via their billing APIs. By combining this with open source cloud-compute energy models and emission factors for electricity, it’s possible to arrive at a measurement around carbon impact. 

To generate the report, Cogo created a new account for SilverLining in their SSO, and granted Read Only access to its AWS API. SilverLining’s software read the last 12 months of usage data and generated detailed energy and carbon charts for all of our infrastructure. 

> Next - manage!

This analysis revealed some large carbon spikes and system mis-configurations and at least six ‘easy wins’, including optimising our test environment use, at a potential reduction of 27% of our total cloud footprint. We were also able to identify which aspects of our architecture are energy efficient, and which ones are energy hogs. 

The engagement has since led to a stand-alone cloud-computing impact offering by SilverLining; and importantly, significant reductions in Scope 3 emissions for Cogo through a set of small, simple actions with big results. 

What if Cloud Computing isn’t a hotspot for my company?

If that sounds like you don’t worry, you  might also consider looking into:

Collaborating with suppliers to encourage emission reductions throughout the supply chain by sharing best practices, and collaborating on sustainable procurement strategies.

Redesign products and services to consider or reduce emissions such as using more sustainable materials, improving energy efficiency or designing products for easier recycling or repurposing.

Encouraging responsible product use by educating customers around  responsible consumption behaviours. 

Supporting transportation efficiency by working with logistics providers to optimise transportation routes, reduce empty trips and encourage the use of low-carbon transport modes.

For Cogo, managing Scope 3 emissions was a no-brainer and just another way of striving to ‘walk the talk’.  And along the way we discovered that it isn’t as arduous as you might think.