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A curtain has risen on an opportunity for FMs to conduct their organisation’s multifaceted orchestra of supply chain providers, thereby playing a lead role in Net Zero strategies and having a controlling influence over indirect emissions covered under the GreenHouse Gas Protocol’s Scope 3. Martin Read reports

How an organisation calculates and reports its Scope 3 emissions could be about to offer up a defining moment for facilities management. Easily the most challenging of the Greenhouse Gas Protocol’s three emissions streams, Scope 3 covers indirect emissions created by a company’s supply chain, be they upstream or downstream. The key is that these are emissions not produced by the organisation itself but are made by contracting organisations on the original organisation’s behalf as part of their contracted activity. This makes the contracting organisation indirectly responsible for them. Alas, the measurement and reporting of these emissions is fiendishly complicated.

The problem is a deceptively simple one: for many if not most organisations, the Scope 3 emissions for which they are responsible will be typically a higher proportion of their total emissions than those covered in either Scope 1 or 2. David Picton, who is senior vice-president, ESG and sustainability with EcoOnline Global, told Facilitate that Scope 3 emissions “can be up to 10 or 11 times more than the carbon footprint from direct emissions”. But for Scope 3, where does one form of emission end and another begin? There are so many facets to the supply chain.

“Take the example of an organisation in the entertainment sector,” explains Sunil Shah, director of Acclaro Consultancy, former IWFM Sustainability SIG chair and a key player in the project to develop a Scope 3 FM standard.

“It’s an organisation operating a venue where people go to events. Do you include the emissions that are associated with the general public coming to your site for events activities, or do you not? Such an organisation may say that it has very low emissions because it doesn’t include all of the emissions involved in people travelling to an event. But if you do include it, your admissions are a lot higher.”

“Or how about charging an electric company vehicle from home. Where do those emissions sit? Because actually, it’s your home electricity.”

These overlaps abound, and the minutiae over which supplier operates which form of GHG emitting activity on your organisation’s behalf are legion.

“We’re still in the territory of not being able to compare like for like,” says Shah, “because you can artificially distort what your emissions are by not choosing to include certain things. Allocation of these kinds of emissions needs to be determined so that we have consistency in how they are reported.”

Shah says what’s needed to introduce consistency of reporting is a framework that allows for organisations to declare whether they are including such emissions in their calculations; one that becomes sufficiently embedded within the sector that it allows for benchmarking of service that the market for service provision can broadly accept. But is this even possible? Well, in recent years, we have seen something we can offer as a comparable flurry of activity around government legislation and its fallout: with social value, the National TOMs Framework, which started out as a solution for the Public Services (Social Value) Act 2012, has since evolved into a social value measurement standard with a now well-used module designed specifically for FM. The plan is for a Scope 3 emissions standard that is similarly accepted by all, or at least the vast majority, of market players.

Pushing for boundaries

“One of the key things we have to do for the Scope 3 project is to seek out boundaries for the services we provide,” says Shah. “How do we account for the vehicles a contractor uses for multiple contracts, for example? Where should those documented emissions reside?”

BAM FM’s strategic development director, Reid Cunningham, whose firm is one of several construction and FM providers that are part of the project group behind the nascent Scope 3 standard for FM, talks of a newly identifiable suite of Scope 3 emissions becoming a critical part of future service procurement criteria, incentivising the totality of the facilities service supply chain in a virtuous loop of emissions reduction activity.

“Only when organisations are tracking such emissions and engaging with suppliers to cut carbon can they genuinely claim to be tackling their climate change impacts,” says Alcumus’s Picton. “Otherwise, they could be accused of greenwashing or failing to properly account for their carbon footprints. It is time consuming and expensive, but it is starting to become part of the right to do business.”

In general, service providers are responding (see box), but as ever they can be constrained in their ability to effect change by the attitude of a client, or the basic contractual arithmetic which forms the basis of their relationship. The sense is that a wave of change has already been triggered by the setting of the 2050 Net Zero target, and with it the competitive response from many firms to achieve their own net zero ambitions ahead of time.

Already, some publicly listed property management firms are noting a spike in Scope 3 emissions, with CBRE forced to explain that the rise published in its market report was in no small part down to the better availability year on year of data, allowing for the replacement of estimates with evidence.

Scope 1 and 2 data is relatively easy to source, but with Scope 3 emissions through the supply chain being typically accepted as the majority – and sometimes vast majorityof an organisation’s total emissions, the sense is of a pendulum swinging.

Yet while the focus from those seeking to measure has shifted, Sunil Shah says that organisations need a better incentive to report their Scope 3s.

The government’s procurement rules, through its Procurement Policy Note 06/21 (PPN 06/21), oblige organisations it trades with to have in place a Carbon reduction plan that details their baseline emissions figures and the steps being taken towards Net Zero. Scope 1 and 2 emissions are detailed in these plans, but for Shah too few Scope 3 elements are obligatory, with the plan not obliged to include an organisation’s emissions from purchased goods or from its ‘captive audience’.

“The two biggest areas of carbon impact for a lot of organisations are not included in what the government has put forward as the carbon reduction plan,” says Shah.

EMISSION CONTROL THE ABC OF SCOPES 1, 2 AND 3

The internationally accepted Greenhouse Gas Protocol, from which the three emissions scopes are taken, breaks an organisation’s emissions down into the following:

Scope 1: Direct emissions from the resources that an organisation owns and controls itself.

Scope 2: Indirect emissions from the energy purchased from a supplier.

Scope 3: All other forms of indirect emissions created by a company’s supply chain, whether that be upstream or downstream. The key is that these are emissions not produced by the organisation itself, but are made by third party providers on behalf of that organisation as part of contracted activity, which makes the contracting organisation indirectly responsible for them.

“So what a lot of companies are doing is producing their plan in line with the government’s PPN 06/21, and then saying we don’t have to engage with our supply chain because it’s not part of the PPN 06/21 requirements.

“That’s our biggest challenge; a sector that isn’t necessarily engaged because all this is complex and difficult to do. And who’s telling them they have, amongst all the other things going on in the world?”

SFMI’s Scope 3 Emissions in FM project

Speaking of evidence, SFMI is an industry initiative run by Acclaro Advisory, Shah’s consultancy business. It’s under the SFMI banner that the Scope 3 standard project is being conducted. Last September, the project’s second stage commenced with the SFMI-badged