How do I prioritize scope 3 data collection efforts?

Companies should prioritize data collection efforts on the scope 3 activities that are expected to have the most significant GHG emissions, offer the most significant GHG reduction opportunities, and are most relevant to the company’s business goals. Collecting higher quality data for priority activities allows companies to focus resources on the most significant GHG emissions in the value chain, more effectively set reduction targets, and track and demonstrate GHG reductions over time (covered in chapter 9 of the Scope 3 Standard). 
 

Companies may use a combination of approaches and criteria to identify priority activities. For example, companies may seek higher quality data for all activities that are significant in size, activities that present the most significant risks and opportunities in the value chain, and activities where more accurate data can be easily obtained (Scope 3 Standard, p. 65-66). Companies may choose to rely on relatively less accurate data for activities that are expected to have insignificant emissions or where accurate data is difficult to obtain.  

Prioritizing activities based on the magnitude of GHG emissions 
The most rigorous approach to identifying priority activities is to use initial GHG estimation (or screening) methods to determine which scope 3 activities are expected to be most significant in size. A quantitative approach gives the most accurate understanding of the relative magnitudes of various scope 3 activities. To prioritize activities based on their expected GHG emissions, companies should:

• use initial GHG estimation (or screening) methods to estimate the emissions from each scope 3 activity (e.g., by using industry-average data, environmentally-extended input output data, proxy data, or rough estimates); and
• rank all scope 3 activities from largest to smallest according to their estimated GHG emissions to determine which scope 3 activities have the most significant impact.

Calculation methods for each scope 3 category that can be used for screening are provided in a separate document, Technical Guidance for Calculating Scope 3 Emissions. 
 

Prioritizing activities based on financial spend or revenue 
As an alternative to ranking scope 3 activities based on their estimated GHG emissions, companies may choose to prioritize scope 3 activities based on their relative financial significance. Companies may use a financial spend analysis to rank upstream types of purchased products by their contribution to the company’s total spend or expenditure (for an example, see the AkzoNobel case study, p.67). For downstream emissions, companies may likewise rank types of sold products by their contribution to the company’s total revenue.

Companies should use caution in prioritizing activities based on financial contribution, because spend and revenue may not correlate well with emissions. For example, some activities have a high market value but have relatively low emissions. Conversely, some activities have a low market value but have relatively high emissions. As a result, companies should also prioritize activities that do not contribute significantly to financial spend or revenue but are expected to have a significant GHG impact. 
 

Prioritizing activities based on other criteria 
In addition to prioritizing data collection efforts on activities expected to contribute significantly to total scope 3 emissions or to spend, companies may prioritize any other activities expected to be most relevant for the company or its stakeholders, including activities that:

• the company has influence over;
• contribute to the company’s risk exposure;
• stakeholders deem critical;
• have been identified as significant by sector-specific guidance; or
• meet any additional criteria developed by the company or industry sector (Scope 3 Standard, Chapter 6, Table 6.1 (Criteria for identifying relevant scope 3 activities), p. 61).

To prioritize scope 3 activities, companies may also assess whether any GHG- or energy-intensive materials or activities appear in the value chain of purchased and sold products.

For more information/further reading:  

• Scope 3 Standard, Chapter 7 (Collecting Data)  
• Scope 3 Standard, AkzoNobel case study, p. 67