Engaging suppliers
Companies should collect energy or emissions data from suppliers and other value chain partners in order to obtain site-specific data for the scope 3 categories and activities defined in their organisational boundary. To do this, they should identify relevant suppliers from which to obtain the GHG data. Suppliers may include contract manufacturers, materials and parts suppliers, capital equipment suppliers, fuel suppliers, third party logistics providers, waste management companies, and other companies that provide goods and services to the reporting company. Companies should first engage tier 1 suppliers i.e companies with which the reporting company has a purchase order for goods and services. Tier 1 suppliers have contractual obligations with the reporting company, so this makes it easier for the reporting company to request for GHG inventory data from them.
A reporting company may have many small tier 1 suppliers that together comprise only a small share of a company’s total activities and spending. Companies may develop their own policies for selecting relevant suppliers to target for primary data collection. For example, a company may select suppliers based on their contribution to its total spend. Companies should use secondary data to calculate emissions from activities where supplier-specific data is not collected or is incomplete.
Significant value chain GHG impacts often lie upstream of a company’s tier 1 suppliers. It is therefore important for a company to seek data from tier 2 suppliers. These are companies with which tier 1 suppliers have a purchase order for goods and services. Companies can try engaging tier 2 suppliers through various ways. For example, they can encourage or require tier 1 suppliers to encourage their own tier 1 suppliers (i.e the reporting company’s tier 2 suppliers) to report the GHG inventories. Reporting companies can also target specific tier 2 suppliers for GHG data requests in cases where tier 2 suppliers are responsible for the majority of GHG emissions associated with a product provided by tier 1 suppliers. For example, a firm that sells food products may work closely with both growers and processors in its supply chain.
In many cases, some suppliers are unable to provide GHG inventory data to the reporting company. To avoid such scenarios in future, companies should encourage suppliers to develop GHG inventories and if possible communicate their efforts to encourage more suppliers to provide GHG emissions data in the public report.
The type of data to be obtained from suppliers varies by scope 3 category. Companies may send questionnaires to each relevant supplier or other value chain partners requesting the following items:
Product life cycle GHG emissions data.
Scope 1 and scope 2 emissions data.
The supplier’s upstream scope 3 emissions and/or types of activities that occur upstream of the supplier.
A description of the methodologies used to quantify emissions and a description of the data sources used, including emission factors and GWP values.
The method(s) used to allocate emissions or information the reporting company would need to allocate emissions.
Whether the data has been assured/verified, and if so, the type of assurance achieved.
Any other relevant information.
When collecting primary data from value chain partners, companies should obtain the most product-specific data available. Product-level data is more precise because it relates to the specific good or service purchased by the reporting company and avoids the need for allocation. If product level is not available, suppliers should try to provide data at the activity-, process- or production line-level. Collecting more granular data is especially important from diversified suppliers that produce a wide variety of products. Nevertheless, data collected at the activity, production line, facility, business unit, or corporate level may require allocation.
Next: Allocating emissions