Read more in the April 25 edition of Invert Insights.
A new report titled Scope 3 Decarbonization: Practitioner Challenges highlights potential barriers for scope 3 as reported by 180 global sustainability professionals. The report prepared by Ramboll and conducted for the Voluntary Carbon Markets Integrity Initiative (VCMI) draws on surveys, interviews, and research to pinpoint the most impactful Scope 3 categories, the top barriers to decarbonization, and practical solutions.
The categories of barriers identified fall into three categories: techno-economic barriers to upstream decarbonization, supply chain coordination and emission reporting, and industry-specific barriers
Here are the key highlights of the report:
A combination of cross-sector and industry-specific barriers hinders scope 3 decarbonization. Cross-sector barriers have a broad impact, affecting multiple sectors and influencing larger levels of emissions globally. Some of the most common cross-sector barriers include the limited availability and high costs of low-carbon alternatives, lack of control or influence over indirect suppliers, and challenges related to supplier data. Industry-specific barriers are unique to certain industries due to their distinct supply chains and material categories. For example, the financial services sector struggles with inadequate emissions disclosure by investees, real estate companies face challenges in monitoring tenant energy use, and transportation companies are constrained by the limited availability of carbon-free energy and fuels.
Upstream categories, particularly Purchased Goods and Services (Category 1) and Fuel- and Energy-Related Activities (Category 3), are the most significant contributors to scope 3 emissions. There is a noticeable imbalance between upstream and downstream categories, with greater emphasis placed on addressing upstream emissions. Purchased Goods and Services were especially prominent in North America and Europe, while Fuel- and Energy-Related Activities were more prominent in Asia, Latin America, and the Middle East. The regional variation between Category 1 and Category 3 likely reflects a combination of supply chain positioning, regional energy systems, data maturity, and economic structures.
Many companies have a positive perception of their ability to meet scope 3 targets. Results from the study indicate that 70% of respondents perceive their company’s ability to meet scope 3 targets as either adequate, good, or very good. Over 55% of respondents indicated scope 3 target dates between 2030 and 2040, and the report suggests that the targets could be within reach, provided perceptions accurately reflect the pace and feasibility of implementation and the current state of progress remains on course. Overall, the study reveals that respondents have a relatively positive perception of timelines necessary to implement solutions to address barriers, with a moderate level of constraint.
The report also identifies several key issues that need to be addressed to accelerate scope 3 decarbonization, including:
The potential gaps in knowledge and action. The report highlights a potential knowledge gap in how companies translate high-level ambitions into actionable, scalable strategies. There’s uncertainty in defining solution specifics, which may stem from limited internal expertise or the early stage of many proposed initiatives.
The challenges related to data collection and availability. Scope 3 accounting relies heavily on secondary data, which can be less accurate than primary data. Difficulty in obtaining precise emissions data from suppliers and differences in how suppliers measure and report emissions create inconsistencies in data collection. Similarly, inconsistency and the absence of standardized frameworks complicate the aggregation, comparison, and tracking of emissions data across portfolios.
The resources needed for implementation. Implementation is contingent on factors such as having necessary resources and stakeholder support, and many solutions rely on structural changes beyond the control of individual firms. Financial challenges compound the issue of limited availability of low-carbon alternatives, as even when alternatives exist, their premium pricing makes adoption difficult, especially for companies operating on tight margins. The report also highlights a fragmented landscape of cost and timeline estimates for solutions, with notable uncertainty around implementation feasibility.
The need for collaboration and systemic change. The report underscores that addressing scope 3 emissions requires structured supplier collaboration, data-sharing mandates, and policy-driven solutions. It also calls for a combination of company-level behavioral changes and broader structural shifts, including policy interventions and market mechanisms. The report emphasizes the need for additional research and pathway modelling to refine barrier-specific solutions, establish clearer cost benchmarks, and further evaluate implementation timelines.
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💡 Collecting and reporting on Scope 3 data can be a daunting task for organizations. If we make it easier for companies to collect and report on Scope 3 data, we can expect more organizations to participate. We have already seen a rise in technology tools and services helping to bridge the gap, and we can expect to see more as companies look to automate the process.
💡 The report highlights that many firms are off track on reaching their goals, which opens the door for reliable, high-integrity credits or insets to fill the gap while longer-term solutions are developed. As companies struggle to cut Scope 3 emissions, especially in hard-to-decarbonize areas like purchased goods, transportation, and energy use, they may increasingly look to interventions that reduce or remove carbon beyond or in their value chain as a near-term solution. Reach out to us to learn more about how carbon credits or insets can help you meet your sustainability goals, SBTi targets and get you to decarbonization faster.
