HowGood’s Scope 3 Report measures the upstream Scope 3 emissions associated with a company’s sourcing portfolio. It includes the two categories that make up the majority of a company’s total emissions:

These two categories are the only categories that the CDP recommends companies in the food and beverage sector report on, and which are required for a company to achieve any higher than the basic “Disclosure” status.

HowGood measures Scope 3 emissions using its Product Carbon Footprint (PCF) methodology, which is third-party verified by Carbon Trust, the world’s leading authority on carbon footprinting. It is also ISO 14067 Carbon Footprint compliant and aligned with the GHG Protocol’s Product Life Cycle and Reporting Standard (also known as the Product Standard).

HowGood measures a product’s carbon footprint across 12 distinct stages of the product life cycle, according to the graphic below. This article specifies which stages of the product life cycle pertain to HowGood’s Scope 3 Report and addresses frequently asked questions on Scope 3 reporting data requirements.

The GHG Protocol defines Scopes 1-3 as the standard framework for understanding how a company can set the boundaries of its carbon reduction efforts:

While Scopes 1-2 are expected in the United States for ESG disclosures, a full reporting of Scope 3 emissions are becoming more of a priority. Investors and NGOs are increasingly looking to CPGs to report on Scope 3 emissions because they are estimated to make up 50-70% percent of CPG companies’ total emissions. They are also the most challenging to report as the data lies largely outside of a company’s purview and control.

There has been increasing pressure to report Scope 3 emissions, with the U.S. Securities and Exchange Commission (SEC) having recently released a proposed rule, The Enhancement and Standardization of Climate-Related Disclosures for Investors. The rule would require companies to disclose a wide variety of climate-related information, including information about climate-related risks that are reasonably likely to have material impacts on its business and/or its consolidated financial statements, and greenhouse gas (GHG) emissions metrics that could help investors assess those risks. The rule would require disclosure of Scope 3 emissions if the emissions are material, or if the company has set a GHG emissions reduction target or goal that includes its Scope 3 emissions.

The GHG Protocol defines Scopes 1-3 as the standard framework for understanding how a company can set the boundaries of its carbon reduction efforts:

While Scopes 1-2 are expected in the United States for ESG disclosures, a full reporting of Scope 3 emissions are becoming more of a priority. Investors and NGOs are increasingly looking to CPGs to report on Scope 3 emissions because they are estimated to make up 50-70% percent of CPG companies’ total emissions. They are also the most challenging to report as the data lies largely outside of a company’s purview and control.

There has been increasing pressure to report Scope 3 emissions, with the U.S. Securities and Exchange Commission (SEC) having recently released a proposed rule, The Enhancement and Standardization of Climate-Related Disclosures for Investors. The rule would require companies to disclose a wide variety of climate-related information, including information about climate-related risks that are reasonably likely to have material impacts on its business and/or its consolidated financial statements, and greenhouse gas (GHG) emissions metrics that could help investors assess those risks. The rule would require disclosure of Scope 3 emissions if the emissions are material, or if the company has set a GHG emissions reduction target or goal that includes its Scope 3 emissions.

Through the development of the Product Standard, the GHG Protocol has responded to the demand for an internationally accepted method to enable GHG management of companies’ goods and services. The GHG Protocol’s Technical Guidance for Calculating Scope 3 Emissions outlines four methods of Scope 3 emissions reporting, requiring varying levels of commitment and resources for a CPG company to undertake.2 While many CPGs cannot source supplier-specific reporting methods, the average data method which calculates cradle-to-gate emissions per unit of product is a viable method of reporting for CPG companies who can pair basic product data with HowGood’s vast database of 33,000 ingredients, chemicals and materials.

The farm to farm gate, ingredient processing and transportation stages of HowGood’s Carbon Life Cycle module provide the ingredient-level GHG emissions data required to fulfill GHG Protocol Scope 3 reporting requirements:
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For Category 1 (Purchased goods & services), data is calculated per ingredient used in the product. For farm to farm gate emissions and processing energies, individual LCAs (taking into account the location where the crop is grown or processing occurred) are consulted. The HowGood research team consults LCAs which are peer reviewed and follow the ISO 14000 standards.

For Category 4 (Upstream transportation and distribution), the distance for transportation from where the individual goods are processed to where the product is manufactured is estimated using the location of both facilities, inclusion of each ingredient in a final product, and a likely mode of transportation. Emissions due to modes of transportation are obtained from the GLEC framework.

The Carbon Life Cycle and Scope 3 Carbon Reporting Modules are available by contract - contact your Customer Success Manager to find out more.

HowGood has spent more than 17 years mapping global supply chains and building the world’s largest database of emission factors for the food industry. We are able to meet customers where they are in their sustainability journey, and measure their impact using only back-of-pack ingredient lists. The minimum data requirements to calculate a company’s Scope 3 emissions are aligned to the system boundaries for where the company’s product sits in the supply chain. Generally speaking, these data requirements are outlined in the table below.

​Upstream Transportation includes emissions associated with all of the transportation of a raw material from the farm to the first processing facility (if applicable) and on to the initial manufacturing stage.

Transportation to Manufacturing includes emissions associated with the transportation of processed materials from Processing to Manufacturing.

For products or materials that rely on only the minimum data inputs (ingredient name, annual amount purchased and manufacturing location), Transportation to Manufacturing will almost always be zero. Customers that have greater supply chain visibility will be able to model the Transportation to Manufacturing emissions of any nested products or materials and therefore calculate the emissions associated with this stage of the product lifecycle.

HowGood enables its customers to share Product Reports with their own customers who are existing Latis users. They can also request their suppliers to share their PCFs using Latis SupplierConnect. Leveraging the interconnectivity of Latis and fostering supply chain collaboration can help to achieve a more granular product carbon footprint and in turn, provide more accurate measurement of Scope 3 emissions associated with the Transportation to Manufacturing stage of the product life cycle.

The manufacturing of a company’s own products is NOT included in Scope 3 Category 1 (Purchased Goods and Services) calculations, but any manufacturing of materials or products that occurred upstream in the supply chain IS included.

The scope of Purchased Goods and Services varies greatly depending on the type of goods being purchased. Consider this example:

An ingredient supplier might purchase raw (unprocessed) commodities straight from a farm, or from a wholesaler/supplier to make their top selling ingredient. A CPG might then purchase this ingredient from the ingredient supplier to include in their product which is then sold to a distributor or retailer.

Raw commodity > Ingredient supplier > CPG > Retailer

Raw commodity > Ingredient supplier > CPG > Distributor

For each of these company types (Ingredient supplier, CPG, Retailer, and Distributor), the system boundaries of the purchased good is different.

Since the ingredient supplier purchases raw commodities, the manufacturing in their PG&S calculations of the purchased good for the top selling ingredient would be 0. The CPG would want the manufacturing of the ingredient included in their PG&S emission factor calculations. Finally, the CPG’s manufacturing emissions must be included in the PG&S emission factor calculations for the retailer and distributor.

The Cradle to Manufacturing Gate emissions of each material are used to calculate Scope 3 Category 1 (Purchased Goods and Services) emissions. This includes on-farm emissions, statistical land use change (sLUC), processing and manufacturing of the goods as well as the transportation legs between those stages. The energy requirements of the processing or manufacturing type, along with the grid mix at the relevant location is taken into account to calculate energy usage. All manufacturing data within Latis is calculated as manufacturing energy requirements per kg of final product. Additional allocation from co-manufacturing is not required by HowGood in order to calculate energy usage, however we always welcome primary data from customers for a case where they believe this to be a differentiator. In the case where primary co-manufacturing energy usage data is available, this could be used to override HowGood’s default energy usage calculations.

Materials Transportation refers to the last leg of transportation from when a procured material is processed or manufactured, until it is purchased by your company.