What Are Scope 3 Emissions and How Can Data Centers Address Them?

As data centers take steps to decarbonize, the provisions of the Greenhouse Gas Protocol are increasingly in the spotlight.

First conceived in 1998, this partnership between the World Resources Institute and the World Business Council for Sustainable Development has since developed a set of standards that assist organizations in measuring and mitigating their greenhouse gas emissions. Scope 1 emissions result from activities that an organization has direct control over. These may include emissions from facilities and vehicles. Scope 2 emissions result from the production of energy used by an organization to power its operations.

Scope 3 emissions constitute a more nebulous category. They refer to emissions created by an organization’s partners — from extraction of raw materials to shipment to banking — as well as indirect business activities such as travel. They have proven difficult to measure.

However, they are far from inconsequential. The Carbon Disclosure Project has suggested that up to 75% of an organization’s emissions fall under Scope 3.

Here, InformationWeek plumbs some of the recent literature on the subject and speaks to Pankaj Sharma, EVP of Secure Power at Schneider Electric, who shares his perspective on how data centers can get a tighter focus on their Scope 3 emissions — and begin correcting for them.

How Are Scope 3 Emissions Defined?

The Greenhouse Gas Protocol also refers to Scope 3 emissions as the Corporate Value Chain Standard. Issued in 2011, this standard is aimed at tracking emissions across the supply chain. For data centers this may mean anything from the energy it takes to extract minerals used in computer equipment to the vehicles used by suppliers to transport necessary materials.

Essentially, these emissions are those that are not under the remit of the organization — emissions created by partners and suppliers as well as activities that do not pertain to its direct operations.

Scope 3 lists 15 categories that must be measured to obtain an accurate measure. Among them are purchased goods and services (including raw materials), business travel, employee commuting, leased assets, and end-of-life treatment of products. Scope 3 notes that emissions related to such activities as events and conferences are not specifically included but ought to be measured as well.

In the United States, disclosures of Scope 3 emissions remain voluntary. However, rules proposed by the Securities and Exchange Commission may make them mandatory. That proposition has been highly controversial and is viewed as unduly burdensome by some industry commentators.

How Can Data Centers Measure Their Scope 3 Emissions?

“Scope 3 greenhouse gas (GHG) emissions are significant for data centers and will become a higher percentage of emissions going forward,” Sharma says. “There is no shortage of ‘for profit’ and ‘not for profit’ industry organizations giving guidance for Scope 3 sustainability reporting. However, current guidance isn’t typically data center specific, so it is not as helpful for data center operators.”

In a recent white paper, Schneider Electric narrowed the Scope 3 categories for data center operators to nine:

  • purchased goods and services
  • capital goods
  • fuel and energy related activities
  • upstream transport and shipment
  • waste generated in operations
  • business travel
  • employee commuting
  • upstream leased assets
  • downstream leased assets

Determining emissions even from these more-refined categories can be challenging. For example, transportation emissions may be determined using fuel-based metrics, distance-based metrics, and cost-based metrics. The EPA’s GHG Emission Factors Hub offers tools for determining emissions in each category. The GHG Protocol itself offers a calculator tool. And Schneider Electric has developed a proprietary tool called the Data Center Lifecycle CO2e Calculator that is specific to the needs of data centers.

These tools may be useful to data centers in identifying the data they need in the first place. In some cases, it may not be collected at all until the need is clear. Depending on the category, the data needed to ascertain an accurate estimate of emissions may be quite detailed. But once the necessary factors have been calculated, the process is relatively straightforward. It will, however, need to be modified over time as new factors come into play.

“IT servers are the largest drivers of embodied carbon Scope 3 — by far,” Sharma imparts. “Power systems and cooling systems are about equal, representing about 30% each.”

Pankaj Sharma, Schneider Electric

“The most common roadblock is getting accurate information on their equipment servers — for example, from an environmental product declaration (EPD), which is a document that summarizes the environmental life cycle data of a product or service and is normally valid for five years,” he says. “EPDs help specifiers make product decisions based on that product’s environmental sustainability. This is similar to the nutrition facts label you see on food products that help us decide which food to buy.”

Further, “purchased electricity has a significant Scope 3 component. Each electricity source has pre-combustion, combustion, and transmission and distribution (T&D) emissions. Pre-combustion and T&D are normally allocated to Scope 3 emissions while combustion is allocated to Scope 2 emissions for electricity consumers,” Sharma cautions.

How Can Scope 3 Emissions Be Reduced?

Because they are so challenging to accurately assess, Scope 3 emissions are often the last to be addressed. Gathering necessary data is a major roadblock because it necessitates transparency from partners and suppliers. Assuming that partner organizations are even collecting the data themselves, they may be reluctant to share it. That is rapidly changing, though.

Data center operators are increasingly pressuring their partners to provide Scope 3 data — as well as evidence that they are taking steps to reduce their Scope 3 emissions. A recent PricewaterhouseCoopers report suggests that companies include mandatory carbon reporting in their procurement procedures, offer peer benchmarking that allows bidders on a project to see how they compare to their competitors, and both financially penalize and reward partners for their carbon reduction performance.

Their data can be compared to the Product Standard data generated by the GHG Protocol and assessed accordingly. The Product Standard offers generalized information about a given product or service and can serve as a baseline.

According to the GHG Protocol: “[The standards] allow businesses to identify the biggest ‘hot spots’ in their value chains — the activities that generate the most emissions. This insight allows businesses to focus on achieving the most meaningful reductions, not only from within their operations, but across global value chains. If the standards are successful, product and value chain GHG measurement will become standard business practice and companies all around the globe will have the information they need to effectively reduce emissions.”

Additional frameworks, like the Science Based Target Initiative (SBTi), provide emissions goals that can be compared to the available data. Near-term targets, which are said to be attainable within the next 5–10 years, must address 67% of current Scope 3 emissions. Long-term targets aim for 95% reduction of Scope 3 emissions by 2050.

“Many data center operators have metrics in place for dealing with vendors to supply the EPD data for a significant portion of their products by a certain date, and they will also give preference or only deal with suppliers that have their own approved SBTi targets,” Sharma confides.

What Is the Business Case for Reducing Scope 3 Emissions?

Getting ahead of the game on Scope 3 will position data center operators to adapt quickly as new regulations come into play. Cultivating a suite of partners who are taking similar steps will ultimately facilitate an ecosystem in which harvesting and management of emissions data — and actionable plans for reducing emissions — are standard.

“A digital foundation will allow the organization to automate and centralize data to their partners within the supply chain and eliminate manual data entry errors,” Sharma says. “It also enables real-time comparisons, benchmarking, and use of AI to optimize systems and processes.”

Proactive data centers will be more attractive to customers who are looking to cut the emissions themselves as well.

“Companies that focus on optimizing carbon emissions up and down the value chain from their suppliers and consumers who aren’t under their direct control are in a good position to gain a competitive advantage,” Sharma claims.

Companies that do not prioritize these issues are becoming increasingly unattractive. And those who are innovating in this space and offering more radical reductions through their practices will become more attractive. If a company can say it is only using green data center providers, it will grow its market share. Those data centers will see similar benefits.

What to Read Next:

The Urgency to Reduce Scope 3 Emissions in High Tech

Carbon Labeling and Emission Tracking Takes Hold with Consumers

Special Report: What’s the Environmental Impact of a Data-Driven Organization?