VERGE 22 presenation for session: How to Calculate Scope 3 Emissions.

1. HOW TO CALCULATE
SCOPE 3
EMISSIONS

2. AGENDA
• Introduction & Welcome (20 minutes)
• Level Setting: About Emissions and Accounting (15 minutes)
• Foundational Panel (20 minutes)
• Break (20 minutes)
• Introducing Topics (18 minutes)
• Table Top Conversations (60 minutes)
• Closing Reflections (15 minutes)

3. Chatham House Rules
Participants are free to use the information received, but
neither the identity nor the affiliation of the speaker(s), nor
that of any other participant, may be revealed.

4. Why are you here?
- Write down reflection on note card
- Turn to neighbor and share
- Swap cards. Share with room

5. UNDERSTANDING
EMISSIONS ACCOUNTING
Simon Fischweicher
Head of Corporations and Supply Chains, North America
CDP
Levelsetting

6. Simon Fischweicher
Head of Corporations and Supply Chains
CDP North America
Scope 3 Tutorial
GreenBiz VERGE

7. CDP is a global environmental impact non-profit working to secure a thriving
economy that works for people and planet.
7
About CDP
CDP | @CDP
Information is the fundamental basis for action. We help investors, companies and
cities to measure, understand and address their environmental impact.
The world’s economy looks to CDP as the gold standard of environmental
reporting with the most comprehensive dataset on corporate and city action.
We aim to make environmental reporting mainstream and provide detailed
insights to drive action for a climate safe, water secure, deforestation free world.

8. Companies take action to
tackle climate change,
safeguard water resources
and prevent the
destruction of forests.
INVESTORS &
COMPANIES
COMPANIES, incl.
SUPPLIERS
Request
environmental
information
through CDP
Measure
impact to
improve
performance
Companies and suppliers provide data on
environmental impacts, risks, opportunities,
investments and strategies.
Investors and purchasing companies use
CDP to make informed decisions, reward
companies with superior performance and
drive action.
How we work
8

9. GHG Emissions

10. Reductions across all Scopes
◥ Procure renewable energy
◥ Invest in energy efficiency (lighting, HVAC,
insulation)
◥ Update machinery and technology
◥ Company policies / behavior change
◥ Customer engagement
◥ Improve energy efficiency of
products and services
◥ Invest in low carbon products
and services
◥ Supplier engagement
◥ Supplier incentives to set
targets, invest in renewables
and reduce year-on-year
emissions

11. Importance of Scope 3 emissions
11
Scope 3 emissions signify value chain accountability and
engagement opportunities.
◥ Shared responsibility
◥ Stewardship
◥ What gets measured gets managed
◥ Demonstrate leading role in low-carbon
transition
◥ Incentivize suppliers to disclose and act
◥ Address embedded emissions including
methane in fuels and other inputs
supplied
◥ Science-based targets

12. Supply chain emissions exceed operational emissions
12 #CDPSupplyChain | @CDP

13. Evolution of Scope 3 emissions
13
2015
2001
2010 2018
Scope 1, 2 and 3
emissions defined in first
edition of GHG protocol
corporate standard
Launch of the CDP
Supply Chain
program in
recognition of relative
importance of scope 3
supply chain
emissions
Launch of
Science-Based
Target initiative
and signing of the
Paris Agreement
TCFD
recommendations
indicate Scope 3
emissions should be
disclosed, if
appropriate – sector
guidance
2022
Science-Based Targets
initiative releases
Net-Zero standard
requiring net-zero
targets to cover all
value chain emissions
2021
SEC release proposed
rule on climate
disclosure requiring
Scope 3 emissions
where material or
included in a
target—covered by
Safe Harbor provision

14. State of Scope 3 emissions disclosure
14
◥ In 2021, 42% or 5572 companies disclosing to CDP evaluated all 15 categories of scope 3 emissions;
◥ Around 10% of disclosing companies did not evaluate relevancy of any category of Scope 3
emissions;
◥ Only 2% of disclosing companies calculated all 15 categories of Scope 3 emissions;
◥ In U.S., 68% of the S&P500 disclosed on at least one category of Scope 3 emissions;
◥ Leading individual categories for Scope 3 disclosure were Business travel (31%), Waste generated in
Operations (25%) and Purchased Goods & Services (25%)
◥ Use of Sold Products category (40%), accounts for highest gross global scope 3 emissions followed
by Purchased goods & services (30%) among all the scope 3 categories.
◥ But, less than 10% of companies reported on use of sold products
◥ On average about 36.5% of Scope 3 emissions reported used primary data from value chain partners
& suppliers.
◥ Only 30% companies have verified scope 3 emissions.

15. Thank you!
15

16. HOW TO TRACK
SCOPE 3
Brian Solomon
Senior Carbon Analyst
ENGIE Impact
Levelsetting

17. Scope 3 GHG
Calculation Methods
October 25, 2022
VERGE22 – San Jose, CA

18. Key Benefits
18 | Confidential & Proprietary
Identifying and
Managing Risks
Setting Credible and
Comprehensive Goals
Multiplying Climate Impact
Across Your Value Chain
Which scope 3 GHG
emissions categories are the
most relevant?
Which GHG reduction
activities will make the
greatest relative impact?
Which activities are we
able to scale within our
value chain?
1 2 3

19. Approach
19 | Confidential & Proprietary
Scope 3 emission sources typically represent most of an organization’s GHG
emissions — you can’t manage what you don’t measure
Step One
Initial Screening for Relevance Across
the 15 Scope 3 Categories
• Quantify emissions and identify the most
relevant and significant categories
• Initial Scope 3 reporting/disclosure (e.g., CDP,
internal sustainability reporting)
• Scope 3 emission reduction targets (e.g.,
SBTi)
Step Two
Engage With Value Chain Partners in
Relevant / Significant Categories
• Improve Data Quality: Obtain primary data
specific to value chain activities
• Identify Emission Reduction Opportunities:
Influence value chain partners to quantify and
report/disclose Scope 1, 2, & 3 emissions, and
set targets

20. 15 Scope 3
Categories
20 | Confidential & Proprietary
Downstream Activities
Scope 1
Scope 3
Scope 2
Upstream Activities
Direct
emissions from
owned mobile
and stationary
sources
Indirect emissions
from purchased
energy
Upstream Scope 3 emissions occur as a
result of procuring goods and services in
the value chain while doing business
1 Purchased goods and services
2 Capital goods
3 Fuel- and energy-related activities
4 Upstream transportation and
distribution
5 Waste generated in operations
6 Business travel
7 Employee commuting
8 Upstream leased assets
Downstream Scope 3 emissions occur after a
product or service leaves the organization’s
control / ownership (after the product is sold)
9 Downstream transportation and
distribution
10 Processing of sold products
11 Use of sold products
12 End-of-life treatment of sold products
13 Downstream leased assets
14 Franchises
15 Investments

21. 21 | Confidential & Proprietary
The GHG Protocol’s Technical Guidance provides multiple calculation methods for each
Scope 3 category, ranked in order of specificity to a company’s actual activities
Scope 3
Assessment Phase
Data Fidelity Purpose Basis for GHG Protocol
Calculation Methods
Initial Screening Secondary Data
IS NOT specific to
activities within
organization’s value
chain
•Estimate emissions
•Report/disclose
• Identify relevant/significant categories
• Industry-average emission
factors
• Financial data, proxy data,
and other generic data
Value Chain
Engagement
Primary Data
IS specific to activities
within organization’s
value chain
• Refine inventory quality (collect data
specific to value chain activities)
• Influence value chain partners to
quantify, report/disclose, and set
targets
• Supplier-provided activity
data
• Supplier-calculated
emissions data
Scope 3 Assessment Phase and
Data Fidelity

22. 22 | Confidential & Proprietary Data source: ENGIE Impact analysis
Emissions can be estimated based on
the GHG Protocol’s least specific
calculation method by category (i.e.,
reliance on secondary data).
Results provide the magnitude of
emissions in each category, which can
be ranked to understand the relative
contribution of each.
Total emissions in each Scope 3
category can then be considered along
with other criteria to determine overall
relevance.
• Does the organization have any
influence to reduce emissions?
• Do the emissions represent climate
change related risks and/or
opportunities?
• Is the Scope 3 category deemed
critical by stakeholders?
Initial Scope 3 Quantification:
Screening for Relevance
GHG emissions
sources
of a representative
nonprofit U.S.
health
care system
(2019 data)

23. 23 | Confidential & Proprietary
Scope 3
Category
Category Name Least Specific Most Specific
1 Purchased goods and services Spend-based Average-data Hybrid Supplier-specific
2 Capital goods
Average
spend-based
Average-product Hybrid Supplier-specific
3
Fuel-and-energy-related
activities
Average-data Supplier-specific
4
Upstream transportation (t)
and distribution (d)
Spend-based (t)
Average-date
(d)
Distance-based (t)
Site-specific (d)
Fuel-based (t)
5 Waste generated in operations Average-data Waste-type-specific
Supplier-specifi
c
6 Business travel Spend-based Distance-based Fuel-based
7 Employee commuting Average-data Distance-based Fuel-based
8 Upstream leased assets Average-data Lessor-specific Asset-specific
GHG Protocol Calculation Methods:
Upstream Scope 3 Maturity

24. 24 | Confidential & Proprietary
Considerations for Subsequent
Quantification
For relevant Scope 3 categories representing a more significant contribution to the
overall Scope 3 footprint, engage with key supply chain partners to:
• Communicate: encourages other organizations to quantify, report/disclose, and set targets
• Share Data: more granular data (specific to supply chain activities) will improve accuracy of the Scope 3
inventory
• Identify emissions reduction opportunities
For categories representing a less significant contribution to the overall Scope 3 footprint,
less specific calculation methods may be sufficient.
Select calculation methods that:
• Sufficiently reflect the GHG emissions of each Scope 3 activity
• Serve the decision-making needs of internal and external stakeholders
Consider data availability and quality, and relative effort to apply any given calculation
method

25. Thank You

26. SCOPE 3
TARGET SETTING
Christa Anderson
Director, Climate Science and Carbon Metrics
WWF
Levelsetting

27. CORPORATE GHG ACCOUNTING & TARGET SETTING
27
MEASURE &
ACCOUNT
REPORT REDUCE
EMISSIONS
UPDATE
ANNUALLY
SET A TARGET

28. SBTi Scope 3 near-term target setting criteria summary
28
Percent-based emission reduction
targets
Supplier engagement targets
Scope 3: If a company’s relevant scope 3 emissions are 40% or more of total scope 1, 2, and 3 emissions, a scope 3
target is required.
Boundary: Companies must set one or more emission reduction targets and/or supplier or customer engagement
targets that collectively cover(s) at least two thirds (67%) of total scope 3 emissions considering the minimum boundary
of each scope 3 category
Ambition: Near-term scope 3 targets (covering the entire value chain or individual scope 3 categories) must be aligned
with methods consistent with the level of decarbonization required to keep global temperature increase well-below 2°C
compared to pre-industrial temperatures.
• Absolute contraction
• Physical intensity
convergence (SDA)
• Economic intensity*
• Physical intensity
contraction*
• Near-term targets to drive the adoption of
• science-based emission reduction targets
by their suppliers and/or customers
• Companies’ engagement targets must be
fulfilled within a maximum of 5 years from
the date the company’s target is submitted
to the SBTi for an official validation.

29. FOUNDATIONAL PANEL
SCOPE 3 IN ACTION
Heather Aaron
Global Business Solutions
Director
ENGIE Impact (Moderator)
Fahmida Bangert
Senior Director and Head
of ESG
Intuitive
Scott Tew
Vice-President |
Sustainability & ESG
Trane Technologies
Chris White
Vice President
Manufacturing
Sleep Number

30. 20 MINUTE
BREAK

31. TABLETOP CONVERSATIONS
Methodologies & screening for relevance for companies early on their journey: Brian Solomon, ENGIE Impact
Are you ready for a deep dive? Next steps beyond screening: Heather Aaron, ENGIE Impact
How to engage suppliers: Chris White, Sleep Number
Navigating category challenges: Scott Tew, Trane Technologies
How to set commitments & measure progress: Christa Anderson, WWF
How to overcome missing & incomplete data: Fahmida Bangert, Intuitive
Calculating LCAs & product-level emissions: Simon Fischweicher, CDP
Decarbonizing energy in supply chains: James Riddle, HP Inc.

32. METHODOLOGIES &
SCREENING FOR
RELEVANCE
Topic 1
Brian Solomon, ENGIE Impact

33. Topic 2
NEXT STEPS FOR
COMPANIES
further on their journey
Heather Aaron, ENGIE Impact

34. Topic 3
How to
ENGAGE SUPPLIERS
Chris White, Sleep Number

35. Topic 4
Navigating
CATEGORY
CHALLENGES
Scott Tew, Trane Technologies

36. Topic 5
How to
SET COMMITMENTS &
MEASURE PROGRESS
Christa Anderson, WWF

37. Topic 6
How to overcome
MISSING &
INCOMPLETE
DATA
Fahmida Bangert, Intuitive

38. Topic 7
Calculating
LCAs &
PRODUCT-LEVEL
EMISSIONS
Simon Fischweicher, CDP

39. Topic 8
Decarbonizing
ENERGY IN
SUPPLY CHAINS
James Riddle, HP Inc.

40. ROUND 1
Methodologies & screening for relevance for companies early on their journey: Brian Solomon, ENGIE Impact
Are you ready for a deep dive? Next steps beyond screening: Heather Aaron, ENGIE Impact
How to engage suppliers: Chris White, Sleep Number
Navigating category challenges: Scott Tew, Trane Technologies
How to set commitments & measure progress: Christa Anderson, WWF
How to overcome missing & incomplete data: Fahmida Bangert, Intuitive
Calculating LCAs & product-level emissions: Simon Fischweicher, CDP
Decarbonizing energy in supply chains: James Riddle, HP Inc.

41. WORKING SESSION
GRAB YOUR
BELONGINGS
AND MOVE!

42. ROUND 2
Methodologies & screening for relevance for companies early on their journey: Brian Solomon, ENGIE Impact
Are you ready for a deep dive? Next steps beyond screening: Heather Aaron, ENGIE Impact
How to engage suppliers: Chris White, Sleep Number
Navigating category challenges: Scott Tew, Trane Technologies
How to set commitments & measure progress: Christa Anderson, WWF
How to overcome missing & incomplete data: Fahmida Bangert, Intuitive
Calculating LCAs & product-level emissions: Simon Fischweicher, CDP
Decarbonizing energy in supply chains: James Riddle, HP Inc.

43. Slides are available at:
www.slideshare.net/GreenBiz/presentations

44. CLOSING REFLECTIONS
What have you heard or learned
that you will take back to your job?

45. CLOSING REFLECTIONS
➛ Reflect
➛ Share with your neighbor
➛ Share with room

46. CLOSING REFLECTIONS
REPORT
OUTS

47. THANK
YOU