Companies around the globe are under growing pressure to report their greenhouse gas emissions through the voluntary environmental disclosure platform CDP. While a company’s carbon footprint is one of the most important considerations in CDP reporting, it is often the area teams are least prepared to respond to, especially when it comes to scope 3 emissions.
In this article, we’ll talk about why scope 3 reporting is important and how you can efficiently integrate it into your CDP report.
How Does CDP Reporting Work?
CDP, originally known as the Carbon Disclosure Project, runs a voluntary international sustainability reporting system that helps investors, companies, and governments manage their environmental footprints. In 2024, more than 24,000+ companies — including some of the largest in the world — submitted reports to the CDP. A growing number of stakeholders now look to the organization for reliable information about corporate carbon emissions and other environmental data.
CDP allows customers and investors to formally ask companies to disclose their environmental data. When you get a request through CDP, you respond by filling out online questionnaires about climate, deforestation, water security, and/or biodiversity. CDP reviews your completed questionnaires and assigns a score, largely based on the thoroughness and transparency of your answers. CDP then shares its evaluation with the stakeholder who requested the disclosure, along with your organization, giving you the chance to identify opportunities for improvement.
“The worst thing you can do for scoring is leave a question blank. CDP is judging you on whether you answer the question and the level of detail — they’re mostly assessing the level of transparency in your response, although to achieve a very high score you will need to demonstrate you’ve taken action as well.” - Mike Galeski, Persefoni Director of Climate Solutions
What is the Significance of Scope 3 Data?
Scope 3 emissions come from a company’s value chain, and often make up the bulk of its carbon footprint. Purchased goods and services, waste disposal, transportation & logistics, capital goods, and investments all contribute to value chain impact. These emissions can be difficult to calculate, but a growing number of stakeholders are asking for them.
Scope 1, 2, and 3 Emissions
- Scope 1 (Direct Emissions): Fuel consumption (fleet, company-owned assets), process emissions, refrigerants.
- Scope 2 (Indirect Emissions from Energy Use): Electricity, heating, cooling usage, and purchased steam.
- Scope 3 (Value Chain Emissions): Purchased goods/services, employee commuting, business travel, waste disposal, transportation & logistics, capital goods, investments.
What Emissions Data Do You Need to Report to CDP?
In addition to scope 1 and 2 emissions, CDP asks companies to account for their global scope 3 emissions, broken down by each of the fifteen categories, explaining any exclusions. This section of the CDP disclosure is intended to allow investors, customers, and other stakeholders to evaluate a company’s carbon accounting process and how it analyzes its footprint.
CDP will ask for your calculation methodology and whether or not your scope 3 data has undergone assurance. You can find detailed guidance for reporting scope 3 emissions here. Persefoni Director of Climate Solutions Mike Galeski (formerly Senior Project Officer at CDP), says companies should be aware that CDP scores them on the completeness of their answers, and it is best to disclose even if you haven’t take action in that particular area.
What Method Do You Need to Use for Calculating Scope 3 Data?
CDP aligns with the Greenhouse Gas Protocol for emissions accounting, which accepts spend-based estimates for scope 3 emissions. While granular, activity-based data from suppliers is typically more useful for making progress on decarbonization goals, companies reporting to CDP will not be docked for using spend-based estimates — they just need to be transparent about the methodology they’re using.
What Are Common Challenges With Reporting Scope 3 to CDP?
Scope 3 reporting can be daunting. The biggest obstacles teams run into are the lack of knowledge, time, and resources needed to fill out the questionnaire comprehensively. Some specific stumbling blocks include:
- Determining What’s Material
Teams are often overwhelmed by deciding which emissions are material. There are 15 scope 3 categories to choose from, and it can be tough to know where to start. In reality, according to Galeski, most companies will only need to report on the handful of categories that are most material. The top 2-3 categories will typically make up more than 80% of the typical organization’s scope 3 footprint.
- Knowing Where to Find Data
Once you have a handle on the data that’s material for your organization, you must figure out where to find it. It’s common for emissions information to be scattered across different departments and systems, with wide variations in quality, sources, and collection methodologies. Collecting data can be especially trying if you’re in a large organization; the more people you have to reach out to, the more time you’ll need to spend.
- Understanding How to Calculate Data
Many of the sustainability teams in charge of CDP reporting are experts in environmental impact, not carbon accounting. It can be tough to identify which methodology to use and then perform the necessary calculations. This is another challenge that’s solved with carbon accounting software. The problem is that most platforms are expensive. While free online calculators exist, they are typically not comprehensive or reliable enough to support disclosure — many companies reporting to CDP also need to comply with regulations like California’s SB 253 or Europe’s CSRD, so data integrity is paramount.
Overcoming Challenges in Scope 3 CDP Reporting
Integrating scope 3 emissions into your CDP report doesn’t have to be complicated; technology can dramatically streamline the process. If you’re responding to a CDP request, you should look for a carbon accounting platform that supports:
Materiality Recommendations
With the right support, teams can skip the step of researching scope 3 categories and conducting in-depth materiality assessments. For example, Persefoni supplies you with recommendations on which scope 3 categories are most material for your industry, simplifying the list down so you can focus on the most important 2-4. You have the flexibility to edit these categories if you choose, but you can lean on the platform’s built-in expertise to move quickly. This is especially helpful if your priority is to complete the CDP questionnaire as thoroughly and efficiently as possible.
Streamlined Data Collection
If you have a solid grasp of your organizational structure to begin with, the data collection process will be much smoother. But the biggest time-saver by far is automated carbon accounting software. In addition to creating a centralized data collection system, Persefoni Pro provides detailed instructions for locating data for every scope 3 category. It’s all built into the scope 3 module, so you can skip research and move straight to the source of the data.
Automated Calculations
This is another area where automated carbon accounting software is crucial. If you’re using Persefoni Pro, you don’t need to know how to perform calculations. All you do is upload your operational data, and the platform will provide comprehensive, reliable calculations. You can then use this information to complete your CDP questionnaire in detail.
Carbon Accounting With the Future in Mind
Climate disclosure is a journey. If you’re just starting out or responding to your first CDP scope 3 request, your priority will be to answer as transparently and thoroughly as possible (remember: don’t leave questions blank). As you move to more advanced reporting, you can work on improving your data quality. That will likely mean adding more categories to your scope 3 calculations, moving away from spend-based data, and engaging your supply chain.
When your data gets more sophisticated, you’ll be able to pinpoint high-impact decarbonization opportunities. You’ll also be better equipped to keep up with rapidly evolving disclosure requirements and stakeholder needs. Ultimately, you’ll need to back up your public sustainability statements with evidence — you want to be confident that your data is reliable and auditable.
It’s a good idea to begin with a carbon accounting platform that will support you at every stage as you progress on this path.
Solving for Time, Resources, and Knowledge
If, like many others, you’re concerned that you don’t have the time, resources, and knowledge needed to adequately answer CDP scope 3 questions, support is available. Persefoni built its free platform, Persefoni Pro, with CDP reporting in mind. Thousands of companies are already leveraging Persefoni Pro to disclose to CDP and other reporting initiatives. The software provides a fix for each pain point you might run into, making disclosure as simple and straightforward as possible — and laying the foundation for successful decarbonization.
