Industry brief on the ICMM's scope 3 emissions guidance
International Council of Mining and Metals members have already committed to net zero by 2050 for Scope 1 and 2 emissions and are now also required to report on Scope 3 emissions by the end of 2023. What does this mean for the industry?
Mining is responsible for a surprisingly low contribution of direct or Scope 1 emissions globally, between 4% and 7%. However, the emissions from upstream and downstream value chain activities, also known as Scope 3 emissions, can contribute as much as 28% of global emissions when coal mining and mineral beneficiation is included.
ICMM members are required to set targets for Scope 3 emissions by the end of 2023, or as soon as possible, and to support their members with this commitment, the ICMM released Scope 3 emissions reporting and accounting guidelines.
The guidelines build on the fundamentals and principles of the Greenhouse Gas (GHG) Protocol but express the minimum reporting requirements in “mining” language with many decision-making frameworks that support, for example, determination of materiality for a specific emission category. This enhances the efficiency of the process to identify emission hot spots that present high absolute emissions or increased climate risk in the sector.
According to the GHG Protocol, Scope 3 emissions must align to the principles of Relevance, Completeness, Transparency, Accuracy and Consistency. In addition to these principles, mines need to consider the dimensions of materiality, boundary definition, data improvement and calculation methodologies. The ICMM guidelines include frameworks for reporting against these dimensions for all 15 categories of Scope 3 emissions.
Reporting on Scope 3 emissions and promoting transparency is a crucial first step towards reducing Scope 3 emissions for the industry by 2050. It provides a foundation for informed decision-making, collaboration, and innovation that will drive sustainable practices and contribute to a greener future by enabling companies to have a comprehensive understanding of their carbon impact. By quantifying and disclosing Scope 3 emissions, companies can demonstrate their commitment to sustainability and accountability.
Emissions are typically deemed material if they represent 5% or more of total Scope 3 emissions. As a starting point, the ICMM guidelines recommend including suppliers representing 80% of total spend for activities covered by upstream categories and 80% of revenue for products sold downstream into Scope 3 emissions reporting. Mines will be required to continuously evaluate materiality and aim to increase the accuracy of emissions factors over time to enhance overall Scope 3 reporting accuracy.
Initiating scope 3 reporting serves as a baseline for identifying areas with the highest emissions and potential for improvement. It enables companies to identify opportunities for collaboration and innovation across the value chain, leading to more efficient and sustainable business practices. With this complete picture, companies can set realistic reduction targets and develop strategies to engage suppliers, customers, and other stakeholders in their emission reduction efforts.
The goal of accounting for Scope 3 emissions is to reduce the impact on climate change, in line with the Paris agreement. Reporting on Scope 3 emissions will enable industry-wide knowledgesharing and the development of effective strategies to reduce emissions throughout the value chain. Collaboration will be key to drive reductions in the entire ecosystem beyond Scope 3 emissions reporting and target settings.
How should mining companies start to implement Scope 3 reporting?
Scope 3 emission calculations and reporting is inherently data and resource intensive. Suppliers and clients alike might struggle to locate and understand their own emissions or how to calculate them, resulting in an inaccurate or incomplete picture of emissions.
Collaboration is key
Collaboration with competitors is necessary to align on requirements for supplier data requests to avoid adding to the burden on sometimes much smaller organisations.
Context is necessary
To limit data and reporting fatigue, it is important to communicate and contextualise additional information requests to stakeholders within the value chain to ensure full support and management of change. Several upstream supplier reporting obligations already exist in certain jurisdictions that relate to preferential procurement and employment equity. Where such systems already exist, they should be evaluated as potential platforms to expand data collection fields in support of Scope 3 emissions reporting.
Empower your stakeholders
Mining companies should support the training and capacity building of stakeholders within the value chain that can benefit the wider effort to collect accurate data and understand reduction drivers. This could be achieved through interventions like organising training days and mentorship for tier 1 suppliers to learn the basics and GHG accounting and how to estimate their emissions according to best practices.
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