2022 CDP Scope 3 Update

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CDP, an international nonprofit that helps companies and cities disclose their environmental impact, has recently updated its disclosure criteria for Scope 3 emissions. The updated Scope 3 criteria is important to consider for companies that aim to get on the distinguished “A-list” of the CDP reporting protocol.

In the past, companies needed to disclose at least 70% of both Scope 1 and Scope 2 total GHG emissions. Now, with the new CDP update that takes effect in 2022, companies need to disclose at least 70% of Scope 1, Scope 2, and at least one Scope 3 category emissions.

CDP is requiring companies that want to be industry leaders in sustainability to report more on their Scope 3 emission sources from everything it takes to make and consume the company’s products. The GHG Protocol’s Value Chain (Scope 3) Standard defines Scope 3 emissions as all the indirect emissions in a company’s value chain, except indirect emissions from the generation of purchased or acquired energy used by the reporting company, which are included under Scope 2. Companies who are striving for the CDP “A-list” now need to disclose on emissions indirectly generated by their operations in at least one Scope 3 category:

  • Category 1: Purchased goods and services

  • Category 2: Capital goods

  • Category 3: Fuel-and-energy-related activities (not included in Scopes 1 or 2)

  • Category 4: Upstream transportation and distribution

  • Category 5: Waste generated in operations

  • Category 6: Business travel

  • Category 7: Employee commuting

  • Category 8: Upstream leased assets

  • Category 9: Downstream transportation and distribution

  • Category 10: Processing of sold products

  • Category 11: Use of sold products

  • Category 12: End-of-life treatment of sold products

  • Category 13: Downstream leased assets

  • Category 14: Franchises

  • Category 15: Investments [does not appear to FS]

  • Other (upstream)

  • Other (downstream)

This change in CDP’s disclosure criteria exemplifies the importance of managing Scope 3 emissions to meet the 2015 Paris Agreement between 187 countries to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.

Scope 3 Emissions by Sector

(Source: CDP.NET)

For many sectors, Scope 3 emissions represent the majority of emissions, so it is imperative that companies properly identify, report, and measure all material sources of Scope 3 emissions in their value chain. The GHG Protocol’s criteria for identifying relevant Scope 3 activities can sometimes seem ambiguous in its interpretation. As a result, companies may only measure and report emissions in categories that are easy to calculate, such as business travel, instead of where the majority of their emissions truly occur if they happen to be in categories that are more difficult to calculate. In order to help clarify the categories of Scope 3 emissions that companies should be measuring and trying to mitigate, CDP has published its CDP Technical Note: Relevance of Scope 3 Categories by Sector which identifies the relevant and most sizable Scope 3 categories for each of CDP’s high-impact sectors.

If your company needs help with CDP reporting, KERAMIDA has a team of trained experts who can help. As a CDP Gold Accredited Provider, we can work with you to improve your CDP score with our disclosure review and Roadmap to ‘A’ strategy. For more information, please contact us or call (800) 508-8034 to speak with one of our Sustainability consultants today.

Contact:

Becky Twohey, Ph.D.
Vice President, ESG Strategy, Planning and Reporting
KERAMIDA Inc.

Contact Becky at btwohey@keramida.com