Scope 3 for small companies: where to start without a consultant

Scope 3 has a reputation for being huge and hard. The reputation may fit a large manufacturer. It does not fit a ten-person company with an office, a few flights and a purchase ledger. You can start this week, with records you already have.

What Scope 3 is

The Greenhouse Gas (GHG) Protocol defines Scope 3 as all indirect emissions, not included in Scope 2, that occur in the value chain of the reporting company. In plain words, it is the emissions caused by things you pay for but do not control: what you buy, how people and goods travel, and what happens to your waste.

The standard sets out 15 categories. Eight are upstream and seven are downstream.

• Upstream: purchased goods and services; capital goods; fuel and energy related activities not included in Scope 1 or 2; upstream transportation and distribution; waste generated in operations; business travel; employee commuting; upstream leased assets.
• Downstream: downstream transportation and distribution; processing of sold products; use of sold products; end-of-life treatment of sold products; downstream leased assets; franchises; investments.

Is it required in the UAE?

Not yet. Sources describe Scope 1 and Scope 2 as the current focus, and say Scope 3 is not mandated under the present decree. Several expect it from 2027, but this is not confirmed in law. Starting now gives you a head start, and a year of data to compare against.

Do not try all 15 at once

The GHG Protocol says Scope 3 inventories help identify the largest emission sources in the value chain, which it calls hot spots, and it tells companies to use the principle of relevance when deciding whether to leave an activity out. If you leave something out, the standard says to disclose and justify the exclusion. So the method is simple: pick what is relevant, and write down what you left out and why.

Five places to start

• Purchases. Take the annual total spent on goods and services from your accounts, excluding VAT.
• Business flights. Ask your travel agent for each route taken and by whom, or use your ticket invoices.
• Employee commuting. Run a short staff survey.
• Waste. Use your contractor's invoices or certificates showing the weight collected.
• Water. Your water bills show consumption, and they are already in the folder you keep for electricity.

Three ways to calculate, from best to simplest

The GHG Protocol describes several methods for purchased goods and services. Three matter for a small company.

• Supplier-specific: the supplier gives you product-level emissions data. It is the most precise and needs cooperation.
• Average-data: you use the mass or number of units bought and an average factor per unit of mass or product.
• Spend-based: you use the money spent and an emission factor per unit of money. The GHG Protocol notes this method is used when the others are not feasible.

For a small company, spend-based is where you begin. It needs only your ledger.

The factor comes from environmentally extended input-output (EEIO) data, expressed as kg CO2e per unit of economic value. If your factors come from a different year than your spend, the guidance says inflation data is needed to adjust them.

Commuting without a spreadsheet marathon

The GHG Protocol's guidance on employee commuting says to collect data from employees, for example by survey, and to use a distance-based method where you have distance and mode of transport. If surveying everyone is not practical, it says you can sample a representative group. A first estimate needs only three numbers.

Example with invented numbers: 20 km x 240 days x 10 staff = 48,000 km. You then multiply by an emission factor for the transport mode, which the reporting tool applies.

Flights

The International Civil Aviation Organization (ICAO) publishes a carbon emissions calculator. Its methodology document says the calculator estimates the carbon dioxide produced by a passenger on a flight, using the airports of origin and destination, and applies a cabin class factor. Keep the origin, destination, cabin class and date for every trip.

Be honest about quality

A first Scope 3 figure will be rough. That is acceptable if you label it. Mark each line as measured, estimated or excluded. Next year, replace one estimate with a better source, for example by asking your largest supplier for data. Year by year the figure can improve without a consultant.

A six-step start

• Write down the five categories above and note which records you hold for each.
• Export your purchase ledger total for the calendar year, excluding VAT.
• Send the three-question commuting survey: distance, days, transport mode.
• Collect flight routes from your travel agent.
• Collect waste and water records for the same year.
• List what you excluded and why, in one paragraph.

General information, not legal advice.