Subcontractors and suppliers are facing an increasing number of different requirements regarding emissions data. Such data may be requested, for example, for a customer’s sustainability reporting, emissions reduction targets, EcoVadis or CDP assessments, as well as for the preparation of product carbon footprint calculations and environmental product descriptions. It is important for subcontractors to understand what these requests mean in practice and how best to respond to them.
When responding to information requests, you may come across terms and abbreviations that aren’t immediately clear. In this article, we’ll explain what Scope 1 and 2, Scope 3, EPD, DPP, SBTi, EcoVadis, and CDP mean.
What information do customers request from their subcontractors?
Customer inquiries regarding greenhouse gas emissions vary widely. You may encounter questions such as:
- Has the company calculated its Scope 1, 2, and 3 emissions?
- Was the calculation performed in accordance with the GHG Protocol standards?
- What is the product’s carbon footprint?
- Is an EPD available for the product?
- Does the product have a DPP?
- Has the company committed to the SBTi?
- Does the company have an EcoVadis assessment?
- Have greenhouse gas emissions been reported to CDP?
- Has the emission data been verified?
Information requests may relate, for example, to competitive bidding, the customer’s own sustainability goals, or reporting requirements.
Numerous questions raise concerns about whether jumping on a bandwagon without careful consideration will result in the next client requiring reporting through a different system. How can we effectively respond to all these requirements—and find the time to do so? How much expertise and resources will be needed, and how much will all of this cost?
What do Scope 1, 2, and 3 emissions mean?
The easiest approach for a company is to report the greenhouse gas emissions from its own operations, meaning Scope 1 and 2 emissions, when asked to do so. In this case, the company can fulfill its reporting obligations by providing data related to its own energy consumption and direct greenhouse gas emissions. The consumption data for fuels, electricity, and other energy sources needed for the calculation can usually be found on purchase invoices or in the energy management system, if the company has one in place.
Scope 3 calculations are more challenging, as data on the quantities of purchased materials, products, and services, in particular, is not always immediately available. Although the calculation should primarily be based on product masses or unit quantities, in practice it is often necessary to resort to spend-based calculations based on cost data.
Scope 1 and 2 calculations can often be completed in a few days if the source data is readily available. Scope 3 calculations, on the other hand, can take several weeks or even months. That’s why it’s a good idea to get started before anyone asks you to. When performing the calculations, it is advisable to follow the GHG Protocol guidelines. This ensures that the results can also be used for emissions reporting and setting emissions reduction targets.
What do a product’s carbon footprint, LCA, EPD, and DPP mean?
Competitive bidding often focuses on products, which is why information on a product’s carbon footprint is of interest.
A product’s carbon footprint refers to the greenhouse gas emissions generated throughout its life cycle. It can be determined in accordance with the ISO 14067 standard and the applicable product category rules. If a Life Cycle Assessment (LCA) and/or an Environmental Product Declaration (EPD) has been conducted for a product, the product’s climate impacts have also been assessed as part of those processes. In the future, this information may also be available in a Digital Product Passport (DPP).
On several occasions, we have found ourselves in situations where we’ve had to calculate the emissions of products offered by companies on a tight schedule. A product’s carbon footprint can be calculated even in two weeks if the products aren’t too complex and the company has comprehensive data on the raw materials it uses, transportation routes, and energy consumption during production.
In company-level emissions calculations, emissions associated with purchased products and services should also be determined primarily based on primary data. In practice this requires suppliers to provide their customers with product-specific carbon footprint data. In B2B commerce, data based on the “cradle-to-gate” scope is often requested. In the consumer market, however, the focus is more frequently on emissions across the entire life cycle (“cradle-to-grave”).
What is LCA?
LCA (life cycle assessment) refers to the assessment of the environmental impacts of products or services, for example. An LCA assessment takes the entire life cycle of a product into account, from the procurement of raw materials to the disposal of the final product and waste management.
LCA analysis is conducted in accordance with the ISO 14040 and ISO 14044 standards for life cycle assessment. A life cycle assessment includes the following steps:
- the goal and scope definition,
- inventory analysis (LCI)
- impact assessment (LCIA)
- interpretation
LCA follows the same scope as carbon footprint calculations but takes not only greenhouse gas emissions but also other environmental impacts, such as effects on natural resources, water bodies, and human health into account.
What is EPD?
An EPD (Environmental Product Declaration) is prepared as a life cycle assessment (LCA) covering the entire life cycle of a product. It describes the product’s environmental impacts and includes environmental impacts beyond greenhouse gas emissions, such as impacts on soil and bodies of water. The EPD document for construction products is typically prepared in accordance with the SFS-EN 15804 standard and must undergo third-party verification. After verification, the EPD is valid for five years.
What is a digital product passport (DPP)?
The Digital Product Passport (DPP) is linked to the EU Ecodesign for Sustainable Products Regulation (ESPR, EU 2024/1781), which aims to make products on the EU market more environmentally sustainable.
The Digital Product Passport is an information package about a product available in electronic form, designed to improve traceability and transparency throughout the product’s entire lifecycle. It compiles the product’s lifecycle data and serves as an important tool for communicating information to both consumers and other actors in the product’s value chain. The Ecodesign Regulation aims to reduce products’ greenhouse gas emissions and other environmental impacts, and the digital product passport would make this information, among other things, available to various stakeholders. In practice, the information contained in the digital product passport could in the future be accessed, for example, via a QR code attached to the product or another scannable identifier.
The Ecodesign Regulation specifies product groups for which measures and requirements must be developed among the first. These product groups include, among others, steel and aluminum products, textiles, furniture, tires, cleaning products, paints, and chemicals. Depending on the product group, the digital product passport could include various information requirements related to, for example, the product’s materials, durability, carbon footprint, recyclability, maintenance, and reparability.
How can subcontractors meet SBTi requirements?
The Science Based Targets initiative (SBTi) has established itself as the widely accepted standard for setting climate targets in line with the Paris Agreement. More than 10,000 companies have already set climate targets validated by the SBTi. In particular, many large companies have set science-based climate targets for themselves. In practice, this means that the company will reduce its emissions in a way that is consistent with the 1.5-degree target under the Paris Agreement. In addition to short-term targets, companies are increasingly setting net-zero targets for the longer term.
For example, large retail chains have set emission reduction targets to reduce their own emissions, and they may also require companies in their supply chains to set corresponding targets. When a company sets a science-based target in accordance with the requirements, it must commit to calculating and publishing its Scope 1–3 emissions data annually.
What information do subcontractors report to CDP and EcoVadis?
CDP is an international organization that maintains a global environmental data reporting system. The goal is to transparently share information about organizations’ environmental impacts. CDP has a comprehensive form that organizations use to report data on their Scope 1–3 emissions, for example. CDP rates participating companies on a scale from A to D, and companies that do not meet CDP requirements are given an F rating (for “failure”). The highest scores (A and A-) are awarded to companies that demonstrate strong climate leadership and provide comprehensive reporting on their greenhouse gas emissions.
Ecovadis, on the other hand, is a sustainability assessment system that considers not only environmental issues but also labor and human rights, ethical business practices, and responsible procurement. Participating companies are scored on a scale of 0–100. The top 1 percent of companies achieve platinum status, while the rest are awarded gold, silver, or bronze.
Participation in CDP and EcoVadis supplier assessments can provide competitive advantage and make it easier to respond to customer inquiries.
Where should you start?
Regardless of the requirements set for subcontractors, standards-based emissions accounting is a step in the right direction. Calculating Scope 1–3 emissions lays the foundation for many of the supplier requirements outlined in this article and makes it easier to respond to various information requests from customers.
We can assist with company-level Scope 1–3 calculations, determining a product’s carbon footprint, identifying the most significant sources of emissions, setting SBTi targets, and planning emission reduction measures.
Some companies are already well advanced in their climate work, but others haven’t even started yet. Sometimes the wake-up call comes as a shock when a question about greenhouse gas emissions arises during an important competitive bidding process. If emissions haven’t been calculated before, this usually results in a rushed effort. Therefore, it is better to get started sooner rather than later.
On the OpenCO2net platform, you’ll find tools for calculating emissions in accordance with standards. Our experts can help you interpret the standards, define the scope, and select the correct emission factors. A convenient way to get started with emissions calculations is the “Calculate Yourself and Learn” service. It includes access to OpenCO2net as well as practical assistance and guidance for carrying out the calculations.
