What are supplier-specific emissions factors?
The GHG Protocol’s Scope 3 Standard encourages companies to use supplier-specific emissions data whenever possible, as it can significantly improve the accuracy of Scope 3 inventories. In practice, this means gathering direct emissions information from each supplier—especially for major spend categories like purchased goods and services (Category 1)—and then substituting this supplier-specific factor in place of more generic, average emission factors. Doing so requires robust data collection processes, supplier engagement, and sometimes third-party verification. Below is an in-depth explanation of how the GHG Protocol addresses supplier-specific emission factors, the advantages and challenges, and practical tips for implementation.
1. What the Scope 3 Standard Says About Emission Factors
Encouragement of Primary vs. Secondary Data
Primary Data: Data that is collected directly from the source—for instance, a supplier’s direct emissions from manufacturing a product or service. Primary data is typically more accurate and tailored to specific supplier operations.
Secondary Data: Often used when primary data is unavailable. Secondary data can include industry-average emission factors, input–output databases, or life-cycle assessment (LCA) databases.
The Scope 3 Standard explicitly encourages the use of primary (i.e., supplier-specific) data whenever feasible because it yields a more accurate reflection of your value chain’s real-world emissions. Secondary data is still acceptable when primary data can’t be obtained, but the standard stresses transparency about data sources and methods.
The Hierarchy of Emission Factors
Within the Scope 3 Standard, there’s an implied hierarchy of data quality:
Supplier-Specific (Primary)
Average, Region/Process-Specific (Secondary, somewhat tailored)
Industry-Average (Secondary, more general)
Economic Input-Output (IO) Factors (Secondary, least specific)
The standard recommends prioritizing direct, supplier-specific data (top of the hierarchy) because it reflects the actual emissions intensity of the supplier’s operations.
2. Where Supplier-Specific Emission Factors Are Most Relevant
The GHG Protocol’s Scope 3 Standard divides upstream and downstream emissions into 15 categories. Supplier-specific emission factors are typically most crucial for:
Category 1: Purchased Goods & Services
Category 2: Capital Goods
Category 4: Upstream Transportation & Distribution
Category 9: Downstream Transportation & Distribution (if it’s performed by a third party)
For Category 1 (Purchased Goods & Services) in particular, using supplier-specific data can substantially alter your reported footprint, especially if the materials or products you purchase represent a large share of your upstream emissions. If your suppliers have made strides in using renewable energy, energy-efficient technology, or other low-carbon processes, that’s only captured accurately if you obtain direct data from them.
3. Practical Guidance from the Standard
Data Collection Methods
Supplier Surveys: The standard often suggests sending standardized data collection templates to suppliers to gather energy usage, greenhouse gas emissions, or other relevant process data.
Preferred Supplier Programs: Some companies create frameworks (like Apple’s Supplier Clean Energy Program) that not only gather data but actively encourage suppliers to reduce their emissions—elevating the importance of supplier-specific factors.
Contractual Requirements: Large purchasers might require carbon reporting or renewable energy procurement as part of the supplier contract.
Allocation and Attribution
A key challenge the standard addresses is allocation. If a supplier produces goods for multiple customers, the supplier’s total footprint has to be allocated among different clients. The standard suggests using factors like mass, economic value, or manufacturing time to proportionately allocate the emissions to each purchaser. This process must be clearly documented.
Data Quality Assessment
The Scope 3 Standard requires you to assess and disclose data quality. This includes aspects such as:
Completeness: Does the supplier’s data cover all relevant processes and sub-suppliers?
Consistency: Does the supplier apply consistent boundaries and methodologies year over year?
Accuracy: Is the data verified or audited?
Transparency: Do you understand how the data was derived (e.g., direct measurement, modeling)?
Higher data quality not only improves the trustworthiness of your final Scope 3 numbers but also makes it more defensible when reporting to stakeholders and third-party frameworks (CDP, SBTi, etc.).
4. Challenges and Considerations
Supplier Engagement and Capacity
Awareness: Many suppliers may lack the internal expertise or resources to calculate their emissions or to track renewable energy purchases in a standardized way.
Data Consistency: Different suppliers may use different accounting methods, creating apples-and-oranges comparisons unless you standardize the approach.
Verification Complexity
Third-Party Assurance: To bolster credibility, companies often require third-party assurance of supplier-reported data. This increases overhead costs and complexity.
Traceability: If suppliers claim renewable energy (like RECs or PPAs), the brand owner must ensure these certificates are valid and properly allocated to the product or process in question.
Multiple Supplier Tiers
Tier 1 vs. Tier 2 or Tier 3: Even if Tier 1 suppliers provide robust data, what about Tier 2 or Tier 3 suppliers? The standard acknowledges that collecting data further upstream (or downstream) grows progressively more difficult. Companies often focus first on Tier 1 or high-impact suppliers before expanding.
5. Examples in Practice
Apple’s Supplier Engagement
Supplier Clean Energy: Apple has a well-developed system to collect data and push suppliers to adopt renewable energy. As a result, Apple can use supplier-specific emission factors that reflect lower-carbon energy sources in the production of Apple components.
Walmart’s Project Gigaton
Supplier Scorecards: Walmart uses an online platform where suppliers submit detailed emissions data, enabling more accurate “supplier-specific factors” for reporting Walmart’s upstream purchased goods and services emissions.
Microsoft’s Supplier Decarbonization
Supplier Data Collection: Microsoft’s procurement contracts often contain language requiring carbon disclosure. This real-world data is used in Microsoft’s Scope 3 calculation, effectively applying “supplier-specific emission factors.”
6. Implementation Tips
Start with High-Impact Suppliers: Identify the top suppliers that contribute the largest share of upstream emissions or represent the biggest spend categories, and focus on collecting robust data from them first.
Establish Standardized Data Templates: Provide uniform data-reporting tools that clearly define boundaries, timeframe, and methodology. This helps ensure data consistency across multiple suppliers.
Offer Training and Resources: Build capacity among suppliers. Provide them with tools or training on how to measure and report GHG emissions (and how to procure renewable energy effectively).
Require Third-Party Verification: For critical suppliers or those representing a large portion of your Scope 3 footprint, ask for third-party-verified emissions data or environmental certifications.
Integrate Into Procurement Strategy: Tie supplier-specific emission reporting to procurement scorecards or performance evaluations. Reward suppliers that deliver verified lower-carbon solutions.
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