Simplifying Scope 3 Carbon Accounting: A Crawl-Walk-Run Approach for Consumer Companies

For consumer companies beginning their sustainability journey, Scope 3 carbon accounting can feel like scaling Mount Everest. With new regulations, investor pressures, and customer expectations around climate action, the challenge of measuring and managing value chain emissions might seem overwhelming. But here's the good news: you don't have to tackle everything at once.

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Understanding the Basics: Why Carbon Accounting Matters

Before diving into how to approach carbon accounting, let's understand why it's crucial for your business:

• Regulatory Compliance: With new regulations like the EU CSRD and California Climate Corporate Data Accountability Act (requiring emissions disclosure for companies with over $1B in revenue), carbon accounting is becoming mandatory for many companies.
• Investor Requirements: Major investors now consider climate risk in their decisions, with frameworks like CDP requiring detailed emissions data.
• Consumer Expectations: Today's customers demand environmental transparency and meaningful climate action from their favorite brands.
• Business Innovation: Understanding your emissions hotspots drives smarter decisions about product design, supplier selection, and operational efficiency.

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Breaking Down the Scopes: A Comprehensive Guide

Carbon emissions are categorized into three scopes, each representing different aspects of your company's carbon footprint:

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Scope 1: Direct Emissions

These are emissions that your company directly controls:

• Factory operations and manufacturing processes
• Company-owned vehicles and fleet
• On-site fuel combustion
• Refrigeration and air conditioning systems
• Any other direct emissions from owned or controlled sources

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For consumer companies, especially those in food and beverage, Scope 1 might include emissions from:

• Production facility energy use
• Cooking or processing equipment
• Cold storage systems
• Company delivery vehicles

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Scope 2: Indirect Energy Emissions

These emissions come from purchased energy:

• Electricity used in facilities and operations
• Purchased steam or heating
• Purchased cooling
• Other forms of purchased energy

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Companies can reduce Scope 2 emissions by:

• Switching to renewable energy providers
• Installing on-site solar or other renewable energy systems
• Implementing energy efficiency measures
• Purchasing renewable energy certificates (RECs)

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Scope 3: Value Chain Emissions

This is typically the largest source of emissions for consumer companies, often accounting for 95% of total emissions. Scope 3 includes:

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Upstream Activities:

• Purchased goods and services (raw materials, packaging, etc.)
• Transportation and distribution of inputs
• Business travel
• Employee commuting
• Waste generated in operations
• Leased assets and facilities

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Downstream Activities:

• Transportation and distribution of products
• Product use by customers
• End-of-life treatment of sold products
• Franchises and investments
• Leased assets

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For food and beverage companies, agricultural emissions often dominate Scope 3, while apparel companies might see their largest impacts in raw material production and manufacturing.

The Crawl-Walk-Run Approach to Scope 3 Carbon Accounting

At Planet FWD, we've developed a pragmatic methodology that meets you where you are and helps you scale your Scope 3 measurement efforts effectively:

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Crawl: Start with the Basics

• Begin by measuring Scope 3 emissions using spend-based data
• Get a quick but reliable estimate of your carbon footprint
• Identify major emissions hotspots in your value chain
• Build internal support and understanding of carbon accounting
• Focus on collecting data for your largest suppliers and categories

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Walk: Increase Accuracy

• Incorporate mass allocation-based data into your calculations
• Begin engaging with key suppliers
• Develop more detailed insights into your emissions sources
• Start setting specific reduction targets
• Implement basic supplier engagement programs
• Begin collecting primary data for key emissions sources

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Run: Achieve Maximum Precision

• Utilize LCA-based data and supplier-specific information
• Implement comprehensive supplier engagement programs
• Calculate a precise picture of your full footprint
• Drive targeted reduction initiatives
• Develop advanced reduction strategies with suppliers
• Track and report progress against science-based targets

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Common Challenges and How to Overcome Them

The biggest hurdle in Scope 3 carbon accounting is often data collection. Companies struggle with:

• Gathering accurate supplier data
• Managing complex spreadsheets
• Keeping up with evolving regulations
• Coordinating across departments
• Allocating emissions across different products and categories
• Ensuring consistency in measurement approaches

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How Planet FWD Can Help

Our decarbonization software is specifically designed to help consumer companies navigate these challenges:

• Flexible Methodology: Support for spend-based, mass allocation, and LCA-based calculations
• Industry-Specific Expertise: Deep knowledge of complex supply chains found for consumer businesses
• Supplier Engagement Tools: Easy-to-use platforms for gathering and improving value chain data
• Regulatory Compliance: Streamlined reporting for both mandatory and voluntary frameworks
• Customized Support: Expert guidance tailored to your industry and company needs

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Getting Started

Remember, the perfect shouldn't be the enemy of the good when it comes to Scope 3 carbon accounting. Starting with a spend-based approach allows you to begin your journey while building the foundation for more sophisticated measurements in the future.

Think of Scope 3 carbon accounting as a marathon, not a sprint. The key is to start somewhere and continuously improve your approach over time. The Crawl-Walk-Run methodology ensures you're building a strong foundation while making steady progress toward your sustainability goals.

Ready to begin your Scope 3 carbon accounting journey? Let's talk about how Planet FWD can help you move from "crawl" to "run" at a pace that works for your organization. Contact our team today to learn more about our tailored solutions for consumer companies.

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Planet FWD is the leading decarbonization platform for consumer companies, helping brands measure, reduce, and report their Scope 3 emissions with confidence.

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