Provision of Scope 3 calculation tools

The world requires the business to report and disclose Scope 3 GHG emissions from their supply chains through the Carbon Disclosure Project (CDP: a project in which institutional investors collaborate to require companies to disclose their climate change strategies and greenhouse gas emissions). LCA Promotion Consortium will provide Scope 3 calculation tools to help companies meet these needs.

Planned activities of LCA Promotion Consortium

Activities of LCA Promotion Consortium

●Release of Scope 3 calculation tools (Version adapted to IDEA Ver.3.3)  (April 2023)

●Release of Scope 3 calculation tools (Version adapted to IDEA Ver.3.2)  (April 2022)

●Release of Scope 3 calculation tools (Version adapted to IDEA Ver.3.1)  (September 2021)

●Release of Scope 3 calculation tools (Version adapted to IDEA Ver.2.3)  (July 2020)

What is Scope 3?

Supply chain emissions and Scope 3 emissions

Supply chain emissions and Scope 3 emissions
Supply chain emissions are the sum of GHG emissions related to the company’s activities, not just those of the business itself. In other words, supply chain emissions are GHG emissions generated from the entire flow of business activities, including raw material procurement, manufacturing, logistics, sales, and disposal. Supply chain emissions are the sum of Scope 1, Scope 2, and Scope 3 emissions.

Supply chain emissions = Scope 1 emissions + Scope 2 emissions + Scope 3 emissions

Resource: Corporate Value Chain (Scope3) Accounting and Reporting Standard (World Resources Institute and WBCSD, 2011)

Scope 1 : Direct emissions of greenhouse gases by the company itself (fuel combustion, industrial processes)

Scope 2 : Indirect emissions from the use of electricity, heat or steam supplied by other companies

Scope 3 : Indirect emissions other than Scope 1 and Scope 2 (emissions of other companies related to the activities of the business)

Scope 3, 15 category classification

The Greenhouse Gas Protocol (GHG Protocol) established by the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI) classifies Scope 3 into the following 15 categories.

Scope 3 category		Examples of related activities
1	Purchased goods and services	Procurement of raw materials, outsourced packaging, and procurement of consumables
2	Capital goods	Expansion of production facilities (if constructed and manufactured over multiple years, record in the final year in which construction/manufacturing is completed)
3	Fuel and energy-related activities (not included in Scope 1 and 2)	Upstream processes of the purchased fuels (mining, refining, etc.) Upstream processes of the purchased electricity (mining and refining of fuels used for power generation, etc.)
4	Upstream transportation and distribution	Procurement logistics, cross-haul logistics, shipping logistics (the company is the shipper)
5	Waste generated in operations	Transportation (*1) and disposal of wastes (excluding valuable items) other than by the company
6	Business travel	Business travel of employee
7	Employee commuting	Employee commuting
8	Upstream leased assets	Operation of the leased assets leased by the company(In the calculation, reporting, and publication system, the majority of cases are not applicable because they are covered in Scope 1 and 2.)
9	Downstream transportation and distribution	Transportation after shipping out of the company, storage in warehouses, and sales at retail stores
10	Processing of sold products	Processing of intermediate products by downstream companies
11	Use of sold products	Use of the　product by the user
12	End-of-life treatment of sold products	Transportation (*2) of the user to dispose the products and disposal of products
13	Downstream leased assets	Operation of the leased assets that the company owns to lease to others
14	Franchises	Activities by the franchisees which are covered in Scope 1 and 2 that the company operates
15	Investments	Management of stock investments, bond investments, and project finance, etc.
Other (optional)		Daily life of employees and consumers

*1 The Scope 3 standard and basic guideline make transportation subject to voluntary calculation.

*2 The Scope 3 standard and basic guideline exclude transportation from calculation, but may be calculated.

Benefits of calculating supply chain emissions

1.Identifying targets for reduction / Raise awareness of reduction
By grasping the overall picture of supply chain emissions (total emissions and emission rates for each source), you can identify priority targets for reduction. The characteristics of these targets can also provide hints for formulating long-term environmental impact reduction strategies and business strategies.

2.Reduction synergy effects through collaboration with other parties
By strengthening cooperation with other parties in the supply chain for environmental activities, we can increase the number of options to reduce environmental impacts, further CO2 emissions. Some companies may request their (potential) counterparts to report their supply chain emissions as part of their CSR activities. In this case, calculating supply chain emissions can lead to new business opportunities.

Information disclosure
As part of corporate information disclosure, companies can clarify their corporate value as an environmentally responsible company by posting their supply chain emissions in their corporate reports and websites. Companies’ reporting and management supply chain emissions are attracting attention both in Japan and abroad as evaluation criteria when rating firms. Corporate reporting can also improve their social credibility among investors and other stakeholders globally, thus leading to new business opportunities.

＊Ministry of the Environment, Green Value Chain Platform,<http://www.env.go.jp/earth/ondanka/supply_chain/gvc/index.html>,(refer to 2021-04-27)

Relationship between Scope 3 and IDEA

IDEA provides the emission unit data necessary for calculating Scope 3 emissions. IDEA is often cited in the latest version of the Ministry of the Environment’s Green Value Chain Platform, which currently provides a database of emission unit data for calculating Scope 3 (Ministry of the Environment DB).