Best Practices in Scope 3 Emissions Accounting
Applying best practices in emissions accounting will uncover opportunities for health sector organizations to drive down emissions throughout their value chains, so that health sector organizations can prioritize those opportunities for implementation across the near- or long-term. GHG Protocol provides the most widely used standard for Scope 3 emissions accounting, known as the Corporate Value Chain (Scope 3) Standard6, and associated guidance documents. The U.S. Environmental Protection Agency (EPA) has also developed generalized Scope 3 Inventory Guidance and supporting emissions factors7, while Practice Greenhealth provides industry-specific resources for sustainable healthcare, including a GHG toolkit and guidance documents for measuring key Scope 3 emissions categories8.
The most relevant Scope 3 emissions categories for health sector organizations include:
- Category 1: Purchased goods and services, which includes purchased medical devices, pharmaceuticals, and food and beverages
- Category 3: Upstream fuel and energy related emissions from the production of fuel and energy
- Category 5: Transportation, processing, and/or decomposition of waste generated in operations
- Category 6: Transportation of employees for business-related activities (business travel)
- Category 7: Transportation of employees between their homes and their worksites (employee commuting)
Figure 3: Scope 3 Calculation Process
These Scope 3 categories are likely to be the most critical to health sector organizations’ business goals and most significant in terms of emissions. They may also offer the greatest opportunities for reductions. However, the most relevant categories will vary by organization or facility based on the specific operational and value chain circumstances, so health sector organizations should complete their own Scope 3 screening and materiality assessment to define Scope 3 reporting boundaries. This section outlines the methodologies and processes relevant to health sector organizations for accurate measurement of their Scope 3 emissions to facilitate continuous improvement, support GHG reduction efforts, and communicate their success.
Establishing a Robust Scope 3 Accounting Framework
The first step in effective Scope 3 emissions accounting involves a comprehensive review of emission sources across the health sector value chain and development of initial high-level emissions estimates across all Scope 3 categories, known as a Scope 3 screening exercise. These initial estimates are most commonly developed using spend-based data and industry average emissions factors from Environmentally Extended Input-Output (EEIO) models. These industry averages are estimated based on broad economy-wide data sets, but provide a starting place for understanding the relative significance of each Scope 3 category for a specific health sector organization.
Following this screening, a Scope 3 boundary should be set. Using a materiality assessment, health sector organizations can identify and prioritize the Scope 3 categories that should be included in their inventory for ongoing tracking and management. Materiality assessments consider the relevance of each Scope 3 category to an organization’s overall business goals and strategies. They also consider the opportunities for a health sector organization to influence the emissions within each category toward overall reductions. Both of these decision criteria are reviewed alongside the overall significance of emissions within each of the 15 Scope 3 categories to define the categories that are material. The six key Scope 3 emissions categories mentioned previously are generally material to health sector organizations, but other categories may be more significant depending on each organization’s unique situation.
Internationally recognized standards like those developed by GHG Protocol provide a structured approach to calculating Scope 3 emissions based on available data. As data collection and Scope 3 calculation methods are adopted, an inventory management plan should be developed to document procedures, data sources, stakeholders involved, roles and responsibilities, gaps and omissions, and opportunities for improvement, and to track adjustments over time. This inventory management plan should act as a living document, which is regularly updated alongside the inventory development process.
Continuous Improvement: Data Collection and Management
Scope 3 emissions accounting requires continuous refinement to improve the accuracy of emissions calculations, and the associated Scope 3 data collection is an iterative process that will evolve as data availability improves over time. Initially, health sector organizations may be limited to relying on spend-based data where supplier- or product-specific data is not yet available. As organizations mature in their carbon management journey, supplier- or product-specific data and calculation methodologies should be integrated where possible to improve the accuracy of Scope 3 estimates.
Accurate data collection underpins effective Scope 3 emissions management. However, health sector organizations often face challenges in obtaining specific data from suppliers, leading to reliance on estimation and generic emission factors like the EEIO factor set. Initiatives to improve supplier engagement and data sharing are critical to enhancing the accuracy of Scope 3 emissions reporting and should be prioritized as a significant opportunity to influence reductions or improve data quality. Health sector organizations should regularly review and verify their emissions data, update and integrate refined emission factors, and engage with suppliers to encourage transparency in emissions calculation methods.
Figure 4: Scope 3 Data Quality
The implementation of robust data management systems and leveraging technology platforms can significantly improve the collection, analysis, and tracking of Scope 3 emissions data. Digital solutions are increasingly adept at scanning for publicly available supply chain data or integrating artificial intelligence for predictive analysis, offering health sector organizations new insights into their emissions profile and opportunities for reductions.
The Challenge of Scope 3 Emissions in the Health Sector
The health sector supply chain is extensive and complex, making data collection for Scope 3 GHG calculations a significant undertaking that requires collaboration between multiple teams, including sustainability, operations, leadership, and procurement. The health sector's value chain includes a wide range of medical products, services, and logistical operations—from pharmaceuticals to medical devices and from patient transportation services to waste management of food or single-use materials required for sanitary health practices. For many reasons, health sector organizations often face challenges in motivating this diverse supplier network to provide necessary GHG data. For example, suppliers may not face the same regulatory pressures, they may have higher priority compliance obligations, and/or may not share the same commitment to carbon management. Other suppliers and vendors simply may not have the capability or incentive to measure and report their emissions, or to develop product-specific emission factors (often referred to as Environmental Product Declarations, EPDs). This makes data availability and data accuracy a critical hurdle in Scope 3 emissions tracking, especially as the health sector experiences a dynamic shift in operations toward innovative medical technology and changes in service delivery models.
Building a collaborative approach to sustainability requires time, resources, and often a change in procurement policies to prioritize low-carbon products and services. Health sector organizations and their suppliers must navigate an evolving landscape of regulatory and voluntary reporting requirements, while anticipating and preparing for potential future conditions, to develop a consistent and compliant approach to emissions reporting. Transparency, streamlined data collection methods, and supplier engagement are meaningful early steps toward accurately accounting for and reducing supply chain emissions. Collaborating with industry groups, leveraging technology for better data management, engaging with the regulatory process to communicate challenges and operational realities, and aligning procurement strategies with sustainability goals are also critical components of this journey.