Climate changes
CDP reports show that Scope 3 emissions can account for more than 70% of a company’s total carbon footprint. This finding consistently appears across global studies, including supply chain analyses by CDP and the GHG Protocol. This means that the majority of climate risk actually exists outside a company’s direct operations.
If the focus has only been on office electricity and operational fuel, then a significant portion of emissions remains unaddressed. This is where Scope 3 becomes critical, not just as a sustainability reporting add on, but as a core component of climate strategy.
Scope 3 includes 15 categories of indirect emissions across the value chain, from purchased goods to product use by customers. Based on the GHG Protocol Standard, the most material categories vary by sector, but common patterns exist.
For service and technology companies, categories such as Purchased Goods and Services, Business Travel, and Employee Commuting are often the main contributors. Meanwhile, in manufacturing and FMCG sectors, Purchased Goods and Services and Use of Sold Products tend to dominate.
Many companies are surprised to learn that emissions from raw materials or product usage by customers are significantly higher than emissions from their headquarters. This highlights that the largest carbon risks are often embedded within the supply chain.
In the early stages of reporting, many companies rely on the spend based method, which calculates emissions based on financial expenditure multiplied by average industry emission factors. This approach is practical, especially when activity data is not yet available.
However, several common mistakes often occur.
First, assuming all suppliers have average industry carbon intensity, when in reality each supplier has different energy profiles and efficiencies.
Second, using emission factors that are not geographically relevant. Electricity emission factors in Indonesia differ significantly from those in Europe or North America.
Third, failing to update data regularly, even though prices and procurement volumes change over time.
If companies rely too long on this method without transitioning to activity based method or supplier specific data, the results can deviate significantly from actual conditions. This is not only a technical accuracy issue, but also a matter of reporting credibility.
Transparency has become a major focus for global investors. Reports from the World Bank and financial institutions show that climate risk is increasingly integrated into investment decisions.
When companies disclose Scope 1 and Scope 2 in detail but provide limited or underestimated Scope 3 data, stakeholders may question their integrity. This can be perceived as greenwashing, especially when net zero claims are not supported by robust value chain calculations.
Beyond reputational risks, regulatory risks are also increasing. The European Union, through policies such as the Corporate Sustainability Reporting Directive, is pushing for more comprehensive disclosures. This trend will influence global markets, including Indonesian companies with international partners.
Ignoring Scope 3 creates exposure to reputational risk, compliance risk, and loss of stakeholder trust.
If more than 70% of emissions lie within the value chain, the solution is not just measurement, but engagement.
Supplier engagement is essential. Companies need to encourage suppliers to measure their carbon footprint, provide activity data, and set emission reduction targets. While this approach requires time, it delivers far more accurate and impactful results.
In addition, structured data collection systems are critical. Without them, data becomes fragmented, inconsistent, and difficult to audit. Digital platforms enable companies to map Scope 3 categories, group suppliers, and identify the most material emission sources.
This also opens opportunities for collaborative emission reduction initiatives, such as energy efficiency improvements, renewable energy adoption, and logistics optimization.
This is where technology plays a key role. CarbonIQ by Jejakin is designed to help companies systematically map and categorize Scope 3 emissions.
Using an international standards based approach, CarbonIQ simplifies the identification of relevant Scope 3 categories based on a company’s business model. The system classifies data across the 15 GHG Protocol categories, reducing misclassification risks.
In addition, CarbonIQ supports the transition from spend based estimation to more detailed, activity based data collection. Through an integrated dashboard, companies can identify the most material categories, prioritize interventions, and develop measurable emission reduction strategies.
This approach aligns with increasing market expectations for transparency and accountability.
Global data shows that most corporate carbon footprints exist beyond direct operational control. Ignoring Scope 3 means ignoring the majority of climate related risks.
The opportunity, however, lies in collaboration and innovation. With proper mapping, supplier engagement, and structured digital systems, companies can move beyond reporting toward real emission reduction actions.
It is time to view Scope 3 not as an administrative burden, but as the foundation of a credible and sustainable climate strategy.
If you want to better understand your company’s Scope 3 profile in a more accurate and structured way, Jejakin is ready to support you with technology driven solutions tailored to industry needs.
Jejakin’s green programs combine high-tech monitoring, biodiversity restoration, and community-led initiatives to deliver powerful, sustainable change across ecosystems.
