Quantifying and disclosing indirect Scope 3 emissions: an empirical case study

Climate change has evolved into an evident and indisputable threat to society, having increasingly catastrophic consequences with the escalation of global temperatures. This phenomenon is closely associated with the release of greenhouse gases into the atmosphere, prompting companies to take responsibility for their role in environmental impacts. Firms are therefore urged to define measures to both quantify and mitigate such impacts. This thesis delves into the primary methodologies companies employ to calculate emissions and set targets for their reduction, with a particular focus on indirect emissions, known as Scope 3 emissions. These emissions result from a company's relations with third parties along its upstream and downstream value chain, extending beyond its operational boundaries. The thesis explores the theoretical background and the application of the most adopted methodologies for such purposes, namely the GHG Protocol Standard and the Science Based Targets Initiative. A practical case study, supported by a leading sustainability consulting firm, was carried out together with one of the world's leading manufacturers of custom-made furniture to quantify the primary Scope 3 emissions categories related to the company's value chain. The quantification of such emissions plays a pivotal role not only in assessing the indirect environmental impact beyond the company's operations but also in establishing benchmarks against industry peers and targeted emissions mitigation measures. Aligned with the guidelines of the Science Based Target Initiative delineated in Chapter 2, a decarbonization pathway was established, accounting for emissions stemming from raw material procurement, goods transportation, and waste management. This initiative was reinforced by the development of a robust strategy comprising various emissions reduction measures, thereby meeting the requirements set forth by two prominent clients of the company. Moreover, the case study underscores the primary challenges encountered during the Scope 3 data collection and analysis process, primarily attributed to restricted data sharing and supplier engagement throughout the value chain.