Comprehensive GHG emissions guidance for Scope 1, Scope 2, and Scope 3 data collection for the outdoor industry

Why is addressing greenhouse gas (GHG) emissions important? 

Most corporate activities cause greenhouse gas (GHG) emissions. GHGs include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs) perfluorocarbons (PFCs), sulphur hexafluoride (SF6), nitrogen trifluoride (NF3), and water vapour which trap heat in the Earth’s atmosphere and contribute to accelerating climate change. 

GHGs and their impact on climate change

Global Warming Potential (GWP) indicates the effectiveness of GHGs to retain the heat in the planet’s atmosphere over a certain time. Emissions can have a bigger or a smaller impact depending on their type. For example, over a 100-year-long period, methane is 28 times more potent than carbon dioxide. On the other hand, nitrous oxide is nearly 310 times more potent than carbon dioxide during the same comparison period. CO2 is the primary anthropogenic greenhouse gas that primarily results from the combustion of fossil fuels. It accounted for 64% of the human contribution to the greenhouse effect in 2019 and 71.6% in 2022 according to the European Commission’s 2023 report. In the last decades, following the Industrial Revolution and the world population rise, GHG emissions increased from 4 billion tonnes in 1850 to 54.59 billion tonnes in 2021 (source). Higher concentrations of gases lead to an increase in the global mean temperature. Berkeley Earth’s analysis estimated this increase in 2023 to be higher by 1.54±0.06°C compared to the average temperature in pre-industrial 1850. 

Elevated levels of greenhouse gas emissions accelerate the greenhouse effect, which affects precipitation patterns, increases the frequency and intensity of extreme weather events, increases sea levels, and disturbes the ecosystems. In addition to posing serious risks to human health, food safety, biodiversity, migration patterns, political stability, and overall resource scarcity, environmental uncertainty can also cause economic repercussions.

Understanding GHG Emissions

The EU’s regulatory framework is constantly changing to decrease the effects of climate change and detrimental corporate effects. Member States’ national energy and climate strategies are influenced by the European Climate Law, which is a component of the European Green Deal for the Union to meet its goal of lowering net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels.

Corporate Carbon Footprint 

The Corporate Carbon Footprint (CCF) includes all emissions directly or indirectly caused by the company’s activities and it corresponds to the use of energy, products, and services. Calculating the CCF shows outdoor companies what their emissions hotspots are and how to set climate goals and plan reduction strategies.CCF is usually calculated annually and for a full calendar year. 

Benefits of calculating Corporate Carbon Footprint

There are several advantages to monitoring and quantifying GHG emissions:

• Mitigating risks: identifying and addressing possible risks connected with supply chain disruption and climate change.
• Regulatory compliance: Being prepared for and adhering to changes in regulations governing carbon emission limits.
• Increasing cost efficiency: Implementing energy-saving strategies and improving energy efficiency can lead to financial savings.
• Gaining a competitive advantage: Setting yourself apart from rivals by attempting to reduce your carbon impact.
• Improving supply chain sustainability: Strengthening the supply chain by finding improvement opportunities and encouraging suppliers to minimise emissions.
• Showing corporate dedication: Attracting and maintaining employees from younger generations who care about the environment.
• Long-term success: Ensuring resilience by actively striving to reduce environmental impact, which helps organisations adapt and create resilience to change.

Calculating a Corporate Carbon Footprint

Two standards are most commonly used when calculating carbon emissions: GHG Protocol and ISO 14064. These guide and standardise the company’s data collection, management, analysis, and reporting of GHG emissions. 

At kindred, we use the GHG Protocol for calculating corporate emissions for outdoor brands. It is believed to be more comprehensive than other protocols because it proposes sector-specific standards, presents calculation techniques, explains reporting systems, and offers instructions for converting activities into measurable inventories.  Furthermore, platforms and programmes that require obligatory reporting, such as CDP, GRI, and SBTi, utilise and reference the GHG Protocol more frequently. In addition to corporate emissions, the GHG Protocol offers guidance for value chain emissions, product emissions, and project emissions. The GHG protocol uses three scopes (Scope 1, Scope 2, and Scope 3) to classify emissions connected to business operations. 

Scope 1: direct emissions from company-controlled activities 

Scope 1 includes emissions directly released into the atmosphere by activities owned or controlled by an organisation. These include:

• Stationary combustion emissions (process emissions) resulting from industrial operations such as welding or the company’s waste or wastewater treatment facilities, or emissions resulting from burning fuel in fossil fuel-burning boilers, furnaces, or generators at business premises
• Fugitive emissions such as refrigerants and natural gas released from appliances, storage tanks, and pipelines
• Mobile combustion emissions from company-owned vehicle fleets

Gathering data from operations within the company’s control is usually relatively easy to collect. The process includes collecting proof of energy consumption (bills for electricity, natural gas, etc.), distances crossed, and the fuel used by company vehicles, as well as AC maintenance bills. 

Scope 2: indirect emissions

Scope 2 includes emissions indirectly released into the atmosphere by activities related to the consumption of purchased or acquired energy. This includes emissions indirectly produced by the business operations when using electricity, steam, heating, or cooling. 

Companies can obtain data for Scope 2 emissions from utility bills that usually state the type and amount of consumed energy. It will also be important to understand what heating or cooling systems are in use and which energy sources they rely on. 

Scope 3: indirect emissions from the value chain

Scope 3 emissions are the emissions of the value chain. They are not under the company’s direct control and are often difficult to determine. To name a few, these include raw material purchases, capital goods use that is in the company’s ownership, waste disposal, business travel, third-party transport of goods, and product use.

Scope 3 consists of 15 categories, stemming from the production of acquired raw materials or components, returns, logistics, etc. They are further divided into upstream and downstream emissions. Upstream emissions (Scope 3.1 – Scope 3.7) occur due to the production of the company’s goods and services. Downstream emissions occur in the use, processing, or disposal of the company’s goods or services.

Scope 3.1 Purchased goods and services

What are they? Purchases of production-related components, parts, and raw materials, and non-production-related goods and services, such as office supplies, office furniture, cloud storage, IT maintenance, and accounting. For outdoor apparel and footwear brands, companies should consider emissions from raw material production, such as fabric and component manufacturing.

Where to collect data? Get in touch with suppliers and carry out surveys with them to examine purchasing information. Find out about the carbon footprint of the acquired goods and services by requesting data. If this is not possible, gather invoices and calculate the carbon footprint from the data on the mass (kg, tonnes of purchased goods) or the spending (€). 

Scope 3.2 Capital Goods

What are they? Emissions resulting from capital goods—such as buildings, machinery, equipment, and facilities—that the reporting company bought or acquired in the reporting year. Scope 3.2 only includes emissions from the production of capital goods; it does not include emissions from the operation of the vehicles or equipment that are already included in Scope 1 (fuel) and Scope 2 (electricity). When it comes to outdoor brands, capital goods emissions would come from manufacturing equipment used for outdoor gear production or construction of manufacturing facilities.

Where to collect data? Similarly to 3.1, see if suppliers have emissions data on the sold product from their own GHG inventory. This may involve data on materials used in the production of capital goods, manufacturing processes, and end-of-life considerations. Otherwise, collect the information on mass, surface, or spending of the goods.  

Scope 3.3  Fuel- and energy-related activities (emissions that are outside of Scope 1 or Scope 2)

What are they? Emissions from processes that are not under the organisation’s control, such as the extraction, production, and transportation of fuels and energy (coal mining, natural gas extraction). It also covers distribution and transmission losses that occur during the production of steam, electricity, heating, and cooling. The outdoor brands would collect data related to the production of fuel used in the transportation of raw materials.

Where to collect data? This data can be collected from energy suppliers, government agencies, or industry databases that feature the emissions associated with the extraction, production, and transportation of fuels and energy.

Scope 3.4 Upstream transportation and distribution

What are they? Emissions occur during the distribution and transportation of goods and services between the company’s tier-1 and the company’s premises or the company’s premises and its customers’ facilities. These can occur in different modes of transport (air, road, rail, marine) as well as originate from the storage of products in distribution facilities, retail centres, and warehouses. The outdoor brands will collect data on fuel use in the transportation of raw materials to its manufacturing locations, as well as the distribution of finished products to retailers.

Where to collect data? This information can be in many different forms, such as the amount, price, and quantity of fuel used, the amount of fugitive emissions (from AC and refrigeration systems), the distance travelled, and the weight of the items that were purchased.

Scope 3.5 Waste generated in operations

What are they? Emissions caused by the organisation’s third-party treatment of hazardous and non-hazardous waste. These treatments are various, from incineration, to landfill disposal, to recovery for recycling, to composting, to wastewater treatment. Depending on the waste type, the following greenhouse gases may be generated: CO2, CH4, and HFCs. In the case of outdoor brands, this category would account for manufacturing waste from apparel and footwear production as well as packaging waste.

Where to collect data? You would need to collect emissions data from waste treatment companies, or know waste types and quantities that are discarded every month. 

Scope 3.6 Business travel

What are they? Emissions from all forms of business travel of employees for meetings, conferences, events, etc. and by air, land, railway, and other. In the outdoor industry, this category might account for different types of business travel – employees travelling for supplier audits or for industry events and conferences.

Where to collect data? The company should collect the data on the amount of fuel consumed during business travel, distance travelled, and the mode of transport per trip. Alternatively, if the previous data is not available, the company can list the amount of money spent on each mode of business travel.

Scope 3.7 Employee commuting

What are they? Emissions from personal cars, public transit, and other means of transportation that the employees use to commute to and from work. Companies can choose to include the emissions from remote working if their employees don’t commute to work. Outdoor brands would account for daily commute of office and manufacturing facility employees.

Where to collect data? The companies could gather the data on the quantity of fuel used in commuting, or otherwise collect information on the distance crossed and the means used for commuting. 

Scope 3.8 Upstream leased assets

What are they? Emissions resulting from the reporting company’s (lessee) use of leased assets. These pertain to the reporting firm’s emissions not currently covered in scope 1 or scope 2. If your business does not lease assets, this category does not apply to you. For the outdoor business, we would collect data on energy consumed in leased production facilities and warehouses for storage and distribution.

Where to collect data? Gather information on fuel and energy use of leased assets, or obtain the scope 1 and scope 2 emissions from the lessor.

Scope 3.9 Downstream transportation and distribution

What are they? Emissions that arise from transporting and distributing the company’s sold products in facilities and vehicles that the reporting firm does not own or control. Companies that  operate retail stores should also include the customers’ commute to and from the store. Outdoor businesses would collect information on shipping products to retailers and distributors and transportation of products from retailers to consumers.

Where to collect data? The issues with data quality and availability correspond to this category. Category 3.4, upstream transportation and distribution data could be easier to obtain than the transportation data of the downstream clients and transportation companies. If there are any gaps in the data, your company can still get information from published port-to-port travel lengths, online calculators, and publications from the government, academia, or business.

Scope 3.10 Processing of sold products

What are they? Emissions that originate from processing of intermediate goods by the manufacturer and after the reporting company has sold them. This category of emissions doesn’t apply to companies that sell directly to the end users as their products do not undergo the intermediate processing phase. The outdoor brands would not account for this category if they sell a finished product.

Where to collect data? Companies to which these categories apply should try to obtain data on the quantity of consumed fuel and energy, as well as the amount of waste created by the third party during processing. Alternatively, they might collect information on the average emissions per process or product.

Scope 3.11 Use of sold products

What are they? Emissions emitted throughout the use phase of the company’s products across their lifecycle by both end consumers and business customers. These include indirect and direct fuel and electricity usage, as well as the emission of additional GHGs during the product use. The outdoor brand would account for energy consumption related to washing and caring for outdoor apparel or energy used for maintaining outdoor footwear.

Where to collect data? It is important to consider how the use phase looks like, assume the number of times the product is used throughout its lifetime, and determine the amount of the sold product. It is also vital to understand how much fuel or electricity is utilised during the product’s operation, as well as anticipate any possible leaks. 

Scope 3.12 End-of-life treatment of sold products

What are they? Emissions associated with the disposal, recycling, or treatment of products produced and sold by the company at the end of their life cycle. As we cannot say with certainty how all the sold products are discarded, this category relies on assumptions about the end-of-life treatment procedures utilised by customers. For enterprises that sell intermediate items, this category includes accounting for emissions from disposing of the intermediate product at the end of its life, rather than the finished product. While an apparel company would account for the end-of-life of a pair of pants, its supplier, a zipper manufacturer, would simply account for the end-of-life of the zippers sold.  In general, an outdoor brand would take into account recycling programs for old outdoor apparel and footwear and account for disposal methods for worn-out products.

Where to collect data?  Companies are required to gather data on the total quantity of sold items and packaging by the reporting company from the sales point to the end of life after consumption by customers. Compared to data in 3.5 category where the company is aware of the waste  type created in operations and can gather waste treatment data, data necessary to compute 3.9 is more difficult to obtain. Consumer and retailer disposal habits vary by geography. As a result, the company is required to gather data about the quantity of waste that is managed in different ways ( recycling, incineration, or landfilling) as well as the total quantity of sold items and packaging. This includes packaging used to get products to the store (eg. wooden palettes) and any packaging that is discarded before the product is sold.

Scope 3.13 Downstream leased assets

What are they? This category is applicable to lessors, companies that lease assets to others. On the other hand, the companies that operate leased assets from lessors, lessees, account using 3.8 category guidance. In scope 3.13, the reporting company accounts for lessees’ scope 1 and scope 2 emissions, the portion of the year that the asset was leased. For instance, a company would only account for the lessee’s Scope 1 and Scope 2 emissions for the three months that its vehicle was leased during the reporting year. An outdoor company would include leasing retail spaces and warehouse facilities for distribution.

Where to collect data? Similarly to 3.8, the reporting company should gather information on fuel and energy use of leased assets, or obtain the scope 1 and scope 2 emissions from the lessor.

Scope 3.14 Franchises

What are they? This category covers scope 1 or scope 2 emissions from operations relating to franchisees that the reporting company owns or operates, and it applies to your company if you are the franchisor. 3.14 is not considered if you do not have any franchise agreements with other companies. A franchise is a business that has been authorised to provide or sell the reporting company’s goods or services in a specific location. A franchisor in the outdoor industry would account for emissions associated with franchised retail locations and energy use in independently operated stores.

Where to collect data? If possible, the reporting company should collect scope 1 and scope 2 emissions data from each franchisee. If that is not possible, the reporting company should estimate average emissions per franchisee.  

Scope 3.15 Investments

What are they? Emissions from reporting company’s investments, including the financial activities and investments that contribute to emissions in the wider economy. This category most often applies to private and public financial institutions, and might not apply to you as a reporting company. This category includes emissions from different types of investment (equity, debt, project finance, managed investments). In case an outdoor brand has a type of investment, it would be obliged to incorporate sustainability criteria in investment decisions.

Where to collect data? In this case, the reporting company accounts for the proportional part of Scope 1 and Scope 2 emissions of the investments depending on the stake in the investment project. 

Outdoor industry scope breakdown 

Measuring Scope 3 emissions is difficult for retailers due to the complexities of data collection. Those that do account for it do so for the vast majority of categories. By looking at how industry peers handle it, your organisation may assess how its GHG inventory should be structured and what collecting challenges you may face.

Outdoor brands most often account for Scope 3.1 – Scope 3.7, except for those that might not have anything to report on Scope 3.2 during the reporting year. A number of brands report on Scope 3.9 and Scope 3.12. Those that can collect the information on the use of their products, also account for Scope 3.11. Finally, in cases where it is applicable, brands also account for Scope 3.15. The categories that are rarely taken into account when forming the inventory are Scope 3.8, 3.10, 3.13, 3.14, and 3.15. 

Conclusion

It is apparent that industry players must establish ambitious, evidence-based environmental impact reduction objectives to drive genuine change, and they must move quickly to develop a truly resilient business model. 

kindred can assist your outdoor business with calculating your company’s carbon footprint using the GHG protocol, conducting an audit of the carbon footprint calculation, developing methodologies for using the calculation at your company, interpreting results, preparing GHG reports, planning and implementing strategies for emissions reductions, or providing employee training on how to do carbon accounting.