The Hidden Footprint

Understanding Scope 3 Emissions

90%+

For most companies, over 90% of their carbon footprint is invisible

The Three Scopes of Emissions

🏭

Scope 1

"What we burn"

Direct emissions from owned sources

⚡

Scope 2

"What we buy"

Purchased electricity, heat, steam

🌐

Scope 3

"Everything else"

The entire value chain – upstream and downstream

Scope 3: The Iceberg Beneath

From raw materials to end-of-life disposal

This is where the real impact – and the real opportunity – lies

Upstream: The T-Shirt Journey

🌿 Cotton Farming →

🧶 Thread Spinning →

🧵 Fabric Weaving →

👕 Factory Production

None of this appears in the retailer's direct emissions

Upstream Categories

📦

Purchased Goods

🏗️

Capital Goods

⛽

Fuel & Energy

🚚

Transportation

🗑️

Waste Generated

✈️

Business Travel

🚗

Employee Commuting

🏢

Leased Assets

Downstream: After the Sale

📤 Distribution →

🔄 Customer Use →

♻️ End of Life

For a washing machine, customer electricity use often exceeds manufacturing emissions

Downstream Categories

🚛

Transportation

⚙️

Processing

🔌

Product Use

🔄

End-of-Life

🏬

Leased Assets

🏪

Franchises

💰

Investments

Often the largest source for financial institutions

Why Should We Care?

⚠️ Risks

Supply chain vulnerabilities
Climate-related disruptions
Carbon taxes & regulations
Customer & investor pressure

🚀 Opportunities

Competitive advantage
Attract ESG investment
Build resilient supply chains
Innovation & efficiency gains

"Don't let perfect be the enemy of good"

💷

Spend-Based Method

Quick estimate using procurement spend × emissions factors

Start here →

📊

Activity-Based Method

Precise data from primary supplier information

Mature to this

Progress matters more than precision

Case Study: Apple

Powering suppliers with clean energy

✓ 100% renewable for own facilities

✓ Helping 200+ suppliers transition to renewable energy

✓ Supplier engagement at scale

Case Study: IKEA

From flat-pack to circular economy

1.5M

mattresses recycled annually in the Netherlands alone

Redesigning products for disassembly • Furniture take-back programs

Case Study: Walmart

Project Gigaton: Goal achieved 6 years early

1 Billion

metric tonnes of emissions avoided

Target: 2030 → Achieved: 2024

UK Regulatory Landscape

Current

SECR Framework
Scope 1 & 2 mandatory • Scope 3 encouraged

Coming Soon

ISSB Standards
IFRS S1 & S2 adoption likely

Direction

Voluntary → Mandatory
The writing is on the wall

EU CBAM: The Game Changer

Carbon Border Adjustment Mechanism

Oct 2023 - Dec 2025

Transitional phase

1 January 2026

Definitive regime begins

Sectors: Cement • Iron & Steel • Aluminium • Fertilisers • Electricity • Hydrogen

Penalties: €100 per tonne from 2026

UK CBAM: Following Suit

🗓️ Launch Date: 1 January 2027

📋 Sectors: Same as EU (excluding electricity initially)

🤝 UK-EU Summit May 2025: Mutual exemption discussions

📈 ETS Linking: Formally authorised Nov 2025

~182,000 importers exempted via 50-tonne de minimis threshold

"Every purchase order is a climate decision"

🔍

Supply Chain Transparency

Know where emissions hide

🤝

Supplier Engagement

Collaborate, don't just demand

🌱

Decarbonisation Partnerships

Share the journey together

The Ripple Effect

When one company demands change
→ Suppliers transform to stay competitive
→ Their suppliers transform
→ Positive change ripples globally

That's leverage for climate action

Your Next Steps

1

Map your Scope 3 hotspots
Where are the big numbers?

2

Engage your top 20 suppliers
They likely represent 80% of emissions

3

Set science-based targets
Aligned with Paris Agreement goals