Greenhouse gas emissions reporting: Scope 3 Group 3 - research

Appendix A: Evidence base for findings

This section outlines the key findings from the desk review and interviews with key stakeholders.

A.1 PBCCDR review

Key points: This review found one example of a Local Authority already reporting a Group 3 emission source. Among non-LA public bodies, there were a range of examples that could potentially be classed within Group 3, depending on how they define their reporting boundaries. These include emissions from sold food products, use and disposal of inhalers and pharmaceutical medicines, online training courses, and distribution of paper products.

As outlined in Section 2.1, the Public Bodies Climate Change Duties Reports (PBCCDRs) were reviewed for both Local Authorities (LAs) and non-Local Authorities (non-LAs). This was to identify any emissions that are already being reported and that fall under Scope 3 Group 3 categories. The team’s expectation was that there would be relatively few examples in existing PBCCDRs. This view was also stated by an individual at SSN who is responsible for compiling the annual summary reports. However, the rationale was that if any organisation had undertaken a materiality assessment and found Group 3 emissions to be significant, then this should be included in the PBCCDRs and could be used as a case study that might be relevant to other organisations.

From the LA reports, only one clear example was identified that would fall under the Scope 3 group 3 categories. This example was from Shetland Islands Council, which sells a small amount of aviation spirit for private use. Emissions from this fuel would fall under Category 11, use of sold products. Based on further investigation of the Shetland Island Council PBCCDR, it was calculated that this comprised less than 0.01% of their total emissions in the 24/25 reporting year, so was not a significant emissions source.

From the non-LA reports, some potential instances of activities that would fall under the Scope 3 Group 3 categories were identified. These included catering provisions, prescribing of inhalers and pharmaceutical medicines, provision of training courses and medical products and paper products. These were then considered in the context of the Scope 3 Group 3 categories to determine which categories emissions may fall under, as presented in Table 4. Inhaler emissions were reported clearly as from propellants, so the emissions currently reported would fall under Category 11, use of sold products. Other emissions reported under these activities could be classified in different Scope 3 categories depending on the organisational boundary, control approach and specific legal and financial structures in place. This has been investigated through further discussion with stakeholders to determine which Scope 3 emissions are included in the PBCCDRs for these activities.

A.2 Audited accounts review

Key points: The review of audited accounts did not find evidence that Group 3 activities are common or major GHG-emitting activities. This would seem to support the Scottish Government’s assessment that they are not generally relevant to public bodies, although there was a lack of detail to conclusively prove this.

As outlined in Section 2.1, a review of the Scottish Local Authorities audited accounts was undertaken to identify activities that could be categorised under Scope 3 Group 3 emissions. The review involved looking for evidence of:

• income sources from sold items or products;
• products being sold;
• services relating to the selling of products;
• existing subsidiary organisations; and
• franchises.

Overall, there was limited evidence in the audited accounts that GHG-emitting activities relevant to Scope 3 Group 3 emissions are occurring:

• Income: No explicit reference was made to income generated as a result of sold products, or income generated from services relating to the selling of products.
• Products: This review did not find any explicit reference to products being sold. As defined in the GHG Protocol, a ‘product’ includes goods or services designed and manufactured for the market. However, in some of the audited accounts, the sale of waste materials e.g. plastics, as ‘recycled materials’ was referenced. If waste materials are being sold, they would potentially be relevant to this study, as this could generate emissions from further processing (Category 10) and or end of life treatment of any products produced from the waste material (Category 12).
• Services: No explicit reference was made to services where products are sold. Where services were identified e.g. catering (e.g. school meals), it was understood Category 12 could be applicable with regards to the disposal and treatment of packaging waste provided with the meal, rather than the meal itself.
• Subsidiary organisations: Subsidiary organisations were referenced in the accounts of many public bodies. However, it was not documented in the audited accounts whether these subsidiary organisations were selling products and generating income from these product sales.
• Franchises: This review found no evidence of franchises for any local authority (relevant for Category 14).

Although this review does not prove that Group 3 emissions are immaterial or irrelevant to most Scottish public bodies, there does not appear to be evidence that they are common or major GHG-emitting activities. Notably, the audited local authority accounts report revenue as aggregated categories and by service area, rather than by individual products or activities for financial reporting purposes. Product-related income may also be combined with other fees, charges, and service revenues, making it difficult to identify and quantify distinct income sources. As such, the lack of evidence for significant Group 3 activities could be due to the lack of detail in the reports. Nonetheless, the findings seem to align with the Scottish Government’s starting assessment, that these activities are not likely to be relevant or material for most public bodies.

A.3 Interview findings

Stakeholder interviews were conducted with participants from Local Authorities and Public Bodies, selected through voluntary expressions of interest and Scottish Government recommendations. Discussions explored the relevance of Group 3 categories to specific use cases and organisational arrangements. Interview questions covered, but were not limited to:

• Does the organisation currently calculate emissions from any Group 3 emissions categories?
• Likely scale of any relevant emissions, if known
• Level of influence Local Authorities or public Bodies have over them
• Anticipated effort, in terms of time, resource, and data collection processes required to estimate them, where relevant

The findings of the interviews are summarised in the sub-sections below, grouped based on three themes: ‘Relevance’, ‘Materiality’, and ‘Value for money in reporting’.

A.3.1 Relevance

Key points: Some Group 3 activities are relevant to public bodies, but they may or may not technically be classified as Group 3 depending on each organisation’s circumstances. This presents a challenge for the Scottish Government if it wishes to introduce a reporting requirement that is defined based on formal GHG Protocol categories.

The stakeholder interviews confirm that some GHG-emitting activities that could be classed within Scope 3 Group 3 are, in fact, relevant to public bodies. However, whether they are actually in Group 3 depends on the reporting organisation’s approach to defining its organisational boundary, as well as the specific financial and contractual arrangements.

Overall, interviewees reported a lack of clarity regarding the consolidation and control approaches used by their organisations. Inherently, this presents a challenge in determining whether particular activities fall within the organisational boundary and should therefore be considered relevant to Group 3 reporting. This would make it difficult to introduce a new reporting requirement based on the formal Scope 3 categories as listed in the GHG Protocol; the categories do not align neatly with the nature of the activities taking place.

A key conclusion from the stakeholder interviews was that adhering to the GHG Protocol categories would almost certainly result in public body reporting that is not consistent across organisations. Conversely, a system that ensures consistent reporting approaches would probably not align fully with the GHG Protocol.

A.3.2 Materiality

Key points: ‘Materiality’ comprises both scale and emissions impact, and influence over emissions. The scale and emissions impact of potential Group 3 emissions is largely unknown, as formal materiality assessments have generally not been undertaken by public bodies. In contrast, organisations reported a clearer understanding of the activities they can or cannot influence in relation to Group 3 categories.

Emissions impact: The scale and emissions impact of potential Group 3 emissions was often unknown in discussions with public bodies. In most instances, potential sources were thought to be minor or have low impact. For example, Forth Valley College identified the associated Group 3 emissions from canteens were likely to be minor and low impact as Category 11 indirect use emissions (from reheating) and Category 12 end-of-life treatment would only be applicable if people took food away to eat elsewhere. One potential exception was Forestry and Land Scotland, who indicated that the sequestered carbon from harvested wood products could potentially be very significant; if so, then depending on how the sold products are treated at the end-of-life, there may be a large amount of carbon re-emitted to the atmosphere or there may be methane emissions if any timber products end up in landfill.^[28] However, the research team’s understanding based on the interviews is that none of the participating public bodies have formally assessed the materiality of downstream emissions, to evidence these assumptions.

This highlights a need for organisations to undertake initial screening and organisation-specific materiality assessments to better understand their Scope 3 impact and the potential significance of these emissions.^[29]

Influence over emissions: Public bodies identified they tend to have greater influence over procurement and transportation activities for sold products than over intermediate product processing, product use or end-of-life treatment. For example, public bodies that cause or arrange transport when fulfilling the sale of products can potentially influence emissions by choosing which transport providers they work with. In contrast, once products have been sold, they generally have minimal influence over how they are used or disposed of, as the products are with the end user outside the operational boundary. One exception was Fife Council, which noted that it has some influence over where waste products are sold (e.g. abroad, local), but limited control over the process, as decision-making tends to happen at an operational level within an Arm’s Length External Organisation (ALEO).

More broadly, interviewees considered their ability to influence the processing of sold goods to be limited, and questioned the value of reporting emissions where there is little opportunity to drive change. Several organisations highlighted the importance of focusing reporting on emissions sources they can meaningfully influence. Notably, National Museums of Scotland highlighted that reporting Group 3 sources when they have low influence over the categories could lead to disengagement from the internal team, who currently demonstrate strong buy-in. Interviewees emphasised that current support is partly driven by a focus on areas where their organisations can take action. As a result, the degree of organisational influence was identified as an important consideration when assessing the usefulness of Group 3 reporting.

A.3.3 Value for money in reporting

Key points: Interviewees expressed mixed views on the ‘value for money’ of reporting Scope 3 Group 3 emissions. While greater transparency and understanding of emissions sources were recognised as potential benefits, concerns were raised about data collection requirements, methodological complexity, resource constraints, and the limited ability of public bodies to influence downstream emissions.

Data availability: Whilst relevant data sources can be identified, interviewees noted that data extraction is time-consuming and dependent on data supplier engagement.

Public bodies cited improved data quality where reporting is linked to financial or regulatory requirements. For example, pharmacies maintain a granular level of data on products, including inhalers dispensed, as they are reimbursed for the products they provide. National Museums Scotland highlighted they have only recently established mature data capture processes through their Electronic Point of Sale (EPOS) systems, facilitating comprehensive upstream emissions reporting. The EPOS system tracks product footprints, suppliers and stock levels for the vast majority of products. However, achieving this level of coverage required significant investment in systems and processes over several years. For emerging activities such as e-commerce, a potentially relevant source of Group 3 emissions, they lack the same level of maturity in data processing. Hence, establishing data collection practices for downstream emissions may be an important prerequisite before organisations can effectively assess and report on Group 3.^[30]

Overall, interviewees reported that they encounter varying levels of challenge in collecting data. As such, it is not possible to definitively say whether the data is broadly available to calculate Group 3 categories. Where data collection for product processing, distribution and transportation was considered to be more feasible than for product use or end-of-life stages, good working relationships with manufacturers or contractors were cited as key to facilitating data collection. Local Authorities and Public Bodies generally reported better data availability for activities over which they have direct oversight. For example, NHS Scotland Procurement noted that it holds detailed data on goods supplied, although many of these products are delivered directly to end users, limiting visibility of downstream emissions. One exception was Forestry and Land Scotland, which highlighted the difficulty of tracking the distribution of harvested wood products to end consumers, as key data holders such as sawmills sit outside its organisational boundary and sphere of influence. On the other hand, they indicated that they could estimate the end use of the timber based on its quality, which suggests that they could therefore potentially make some rough assumptions about processing and other downstream emissions.

Interviewees generally reported higher-quality data for upstream activities than for downstream emissions sources. Discussions highlighted a trade-off between reporting robust, comparable upstream emissions datasets and attempting to capture Group 3 emissions that may be less complete, less reliable and more difficult to track over time. Hence, strong emphasis was placed on ensuring any Group 3 reporting provides meaningful and useful information for decision-making.

Assumptions, proxy data and ad-hoc methodologies: Where Group 3 emissions are being, or could be estimated, interviewees highlighted that there is currently strong reliance on assumptions or proxy data. Where there is limited product-specific data there is a need to disaggregate data which can be particularly challenging when applying these assumptions to activities that sit outside of the influence and control of public bodies. For example, applying assumptions to the destination and amount of waste being disposed of by the end user.

The GHG Protocol provides Scope 3 calculation guidance which was not mentioned in interviews. This could simply be because the topic did not arise, but may also indicate that it is not being widely used. If that is the case, it could be beneficial to signpost to the guidance more clearly. Overall, interviewees highlighted that current methodologies for Scope 3 calculations are largely ad hoc, with limited steer beyond the SSN guidance. Several organisations referred to using Defra spend-based emission factors to estimate upstream emissions.^[31]

NHS Scotland Procurement also highlighted its move towards trialling dynamic life cycle assessment (LCA) tools, which incorporate product-specific end-of-life assumptions. These tools are considered more accurate and scalable for tracking product emissions than spend-based emission factors. This reflects a broader trend towards using circular economy and life cycle approaches to support strategic Scope 3 decision-making, rather than focusing solely on reporting individual Group 3 emissions categories. This is an important consideration, as accounting for emissions at both the product and organisational level could potentially increase the risk of double counting, particularly for end-of-life treatment and waste-related emissions.

Resource requirements: Interviewees highlighted that establishing data collection and reporting processes can stretch available resources, although reporting sometimes becomes more manageable once systems are established.

One public body that was interviewed noted that a Scottish Government requirement to report Group 3 emissions could help secure additional internal resources and build reporting capability. Without such a requirement, however, resource constraints may limit progress. Given existing capacity challenges and, in some cases, reliance on consultancy support, one interviewee suggested that requiring reporting only for Group 3 emissions above a defined materiality threshold could provide a more proportionate and cost-effective approach. This approach would support the need for organisation-specific materiality assessments to be undertaken. Nevertheless, reaffirming the findings of the earlier consultation (see Section 1.2) public bodies commonly emphasised the view that the burden may outweigh the benefits of reporting.