Table of Contents

What Scope 3 Is and Why It’s the Most Challenging

• Scope 1 — includes direct emissions from company operations (e.g., fuel combustion in boilers, vehicles, or production processes).
• Scope 2 — refers to indirect emissions from purchased electricity and heat.
• Scope 3 — encompasses all other emissions occurring outside the organization’s direct control – throughout the product lifecycle logistics, suppliers, and customers.

Common sources of Scope 3 emissions include:

• Purchased goods and services
• Transportation and distribution
• Use of sold products
• Business travel
• Waste from operations
• Investments

Why is Scope 3 the most challenging?

It requires collecting data from dozens, sometimes hundreds, of external partners who may not have their own emission data or provide it in various formats. The lack of standardized reporting and limited transparency often forces companies to rely on estimates, which reduces the credibility of ESG reports.

Methods for Collecting Scope 3 Data

In practice, three approaches are used to collect Scope 3 data:

• Estimation Methods — Based on financial data (e.g., invoices, purchase costs) and general emission factors. While easy to implement, these methods carry a high margin of error, especially across diverse product categories.

• Primary Data Methods — Involve obtaining actual data from suppliers via surveys, APIs, ERP imports, or Life Cycle Assessment (LCA) data. This approach is more accurate but can be time-consuming, particularly without automation.

• Hybrid Approaches — Combine both methods, using primary data wherever possible and estimates for remaining areas. A well-designed Scope 3 reporting system can dynamically update data as it is collected, gradually improving the accuracy of the overall footprint.

Technical Challenges and Their Solutions

Collecting Scope 3 data is not only a matter of methodology but also of organization and technology. Common challenges:

• Inconsistent data from different sources
• Errors in units or conversion factors
• Lack of integration between systems (ERP, CRM, procurement platforms)
• Difficulty verifying supplier-provided data

Technical solutions include:

• Automated data imports from company and supplier systems
• Validation and anomaly alerts to detect discrepancies
• API integration for seamless data exchange
• Audit trails and control reports to track changes

How NEOGAGE Carbon Footprint Supports Scope 3 Reporting

NEOGAGE Carbon Footprint is designed to help companies manage emissions across the entire value chain. Its modular architecture supports both simple data recording and complex integration processes.

Key features supporting Scope 3:

• Survey module — Create and send forms to suppliers with automatic response imports
• Validation mechanisms — Ensure completeness and correctness reducing error risk
• Sensitivity analysis — Quickly identify which data points have the greatest impact on final results
• Flexible conversion factors and indicators — Based on the latest emission databases

By leveraging these functionalities, NEOGAGE Carbon Footprint enables automation, error reduction, and increased reliability of ESG reports while saving valuable reporting time.

Practical Implementation Plan – Step by Step

1. Identify suppliers and map the value chain — Determine which purchase categories contribute most to emissions.
2. Design surveys and data collection processes — Tailor questions to each supplier profile.
3. Validate and correct data — Check consistency and compare with historical data.
4. Correlate with internal data — Combine Scope 3 with Scope 1 and 2 emissions to get a full organizational footprint.
5. Report and plan reduction actions — Analyze results, plan reduction initiatives, and monitor progress.

Summary – Scope 3 as the Source of Greatest Reduction Potential

Accurate Scope 3 reporting is no longer just a regulatory requirement; it is also a competitive advantage. Companies that can manage data across the value chain gain credibility, efficiency, and real impact in reducing emissions.

Automation, supplier integration, and modern tools like NEOGAGE Carbon Footprint allow organizations to move from estimates to actual data creating transparent and reliable ESG reports.

Want to improve Scope 3 reporting in your organization? Contact us to see how NEOGAGE Carbon Footprint can help automate processes and increase data accuracy.