If you haven’t already, it’s time to dig into your Scope 3 GHG accounting and assurance journey.  

Assurance of Scope 3 greenhouse gas (GHG) emissions is crucial in advancing a company’s decarbonization journey through: enhancing organizational credibility, bringing clarity to emissions data throughout the value chain, identifying opportunities for reducing GHG emissions impact, and providing strategic guidance for long-term, sustainable growth.  

Scope 3 provides a challenge for most organizations, but we are sharing some of our assurance readiness learnings, to help facilitate a smoother process for you.  

To efficiently create your inventory and achieve assurance you can take the following steps: 

1. Assess relevancy of each category: As you are required to account for and report on each relevant category, you’ll need to know what that means for your organization.   Certain categories are generally applicable to most organizations. For instance, Category 1 - Purchased Goods and Services and Category 7 - Employee Commuting. 

However, other categories present more complex challenges in calculating their emissions. Categories 8 (Upstream Leased Assets) and 13 (Downstream Leased Assets) may require a closer examination of your real estate portfolio for insights.  

For Category 15 - Investments, it is advisable to review your financial statements. Additionally, for Category 10 - Downstream Processing of Sold Products, it is essential to identify the markets where your products are sold and refined. 

2. Adhere to accepted methodologies: Don’t create your own methodology.  Use the methodologies available to you and already widely accepted (e.g., GHG Protocol).   Once you have selected your methodology, watch out for the tricks.  For example, the GHG Protocol allows many categories of emissions to be calculated with a spend-based methodology; however, certain categories, such as Category 8 - Upstream Leased Assets, do not allow for a spend-based method.  

3. Access high-quality data (where available): Primary data is the best data to use in your inventory because it is typically going to be complete and accurate.  If you find you don’t have access to this data, you CAN use estimations and assumptions when using estimations or assumptions you will need to ensure (and be able to document) that they are reasonable, sourced from or based on reputable sources. Good examples of documentation can be relatively recent (~ within the last 5 years depending on industry) peer-reviewed studies, engineering estimates, or industry averages. 

4. Keep your Audit trail: There are many reasons to document your audit trail.  Picture your colleague leaving the team, would you know how to create the inventory next year?  Additionally, during an assurance engagement you will be asked to prove any material assumptions, estimations and conversions and prove the completeness and accuracy of every component of your emission calculations.  

If seeking assurance, you will also be required to publish your Basis of Reporting along with your assurance report.  This document will include your reporting boundary reference to the criteria you report against (e.g. GHG Protocol), any exclusions, assumptions, estimation methodology, sources of emission/conversion factors, and any other contextual information that is key to users’ understanding of the data.  This is provided so anyone who looks at your Scope 3 inventory will know how you calculated it, so they can decide if they want to trust your reported emissions (another good reason not to create your own methodology)! 

5. Assure your Scope 3 emissions: Because Scope 3 covers a lot of topics and stakeholders seem to want it all, organizations can be uncertain about what to report and assure.  Should you report TOTAL scope 3 emissions or each individual category of emissions or both.  To decide, consider what your organization's Scope 3 emissions targets are or what targets you are planning to track (internally or externally).  You’ll want to tie your assurance to your targets.  Assuring Total Scope 3 emissions requires less resource than assuring multiple individual categories, because the total allows for a focus on the larger categories, with less review of the smaller categories, where, assuring an individual category requires equal focus of review on each category. It is important that when you are assuring TOTAL scope 3 emissions that you are not excluding your most material categories (that is an important omission that you won’t want to hear about during your assurance engagement).   

A well-crafted Scope 3 GHG emissions inventory and independent assurance adds value in several ways: 

  • Enhances credibility and trust – through completeness of emissions data and transparency to key stakeholders including customers, regulators and investors, it helps build stakeholder confidence and strengthens relationships. 
  • Improves risk management – by identifying gaps and weaknesses in data quality and management, enabling better decision making through data accuracy and completeness, with reliable Scope 3 data informing investment and product development decisions. While enabling an accurate representation of organizational and product claims to be made, it helps mitigate greenwashing risks.  
  • Supports regulatory compliance – by preparing organizations for regulations and disclosures requirements including CSRD, pending US State specific regulations and other merging regulations, while also being better placed to prove ESG ratings to access sustainability linked loan financing. 
  • Supports differentiation and competitive advantage – by demonstrating leadership in sustainability to key internal and external stakeholders, while differentiating the company where supply chain environmental performance matters. 
  • Drives real business operational efficiency and cost savings – by uncovering inefficiencies and opportunities for emissions reduction by identifying high impact emission sources where efforts can be prioritized to have greatest impact.  While also improving internal controls and promoting a culture of continuous improvement in emission tracking and reduction. 

 Learn more about ESG and Sustainability Reporting Assurance here.