Navigating the supply chain for Scope 3 emissions

With more data centres transitioning to renewable energy sources, Scope 3 emissions become a data centre's most significant contributor to its greenhouse gas (GHG) emissions. This category of emissions is also the least reported and understood.

The focus on quantifying Scope 3 emissions in the value chain is part of a broader effort by organisations to assess and manage their environmental impact comprehensively. However, a data-driven approach is required to help data centre operators identify and categorise emissions from operations and the supply chain, then prioritise efforts to make impactful carbon reductions. This includes outsourced IT services from cloud and colocation service providers.  

Undertaking this process allows for more informed decision-making and targeted efforts to reduce carbon emissions throughout the value chain. Developing a strategy to identify the most significant source of carbon emissions in the value chain is quickly becoming a data centre industry priority, along with the urgency to establish easy-to-use frameworks. 

Data collection practices for a reporting framework 

The effort to quantify and manage Scope 3 emissions aligns with broader sustainability and corporate responsibility trends. Many organisations recognise the importance of transparently addressing their environmental impact as part of their commitment to sustainable practices. Still, they need to figure out where to start, which reporting framework to use, or how often they should collect and report data.  

However, quantifying and reporting on Scope 3 presents a significant challenge for data centre operators. This is mainly due to a need for three resources: reliable supplier data, quantitative tools, and an accounting and reporting methodology.  

Establishing and implementing a framework that incorporates accurate carbon counting and
target setting while systematically reviewing company data and emission sources is the foundation for creating an achievable reduction plan.

Electricity generation, GHG emissions, and water consumption determine the carbon footprint and water footprint of data centres, including that of its suppliers. To be successful, suppliers must provide data centre operators with their own Scope 3 emissions data related to the products used in their data centres. 

These emissions vary significantly depending on many factors, including data centre size, redundancy level, location, electricity emission factor, core and shell construction, IT equipment configuration, energy efficiency, equipment lifespan and replacement frequency, and value chain activities. 

Sustainability reporting can provide a competitive advantage  

The proactive stance of data centre operators towards achieving net-zero climate goals reflects a broader shift in business attitudes toward sustainability. As environmental concerns become more prominent, companies recognise the need to align their operations across the value chain with climate goals to meet the expectations of diverse stakeholders, including customers, investors and vendors, and contribute to a more sustainable future.  

Aside from being a compliance necessity, GHG reporting encompassing Scope 3 emissions is increasingly recognised as a strategic and beneficial practice for the data centre industry. It aligns with the growing emphasis on sustainability, helps manage risks, and positions companies as responsible and forward-thinking entities in an environmentally conscious market.  
Robust emissions reporting can enhance investor confidence and attract investment from those seeking sustainable and responsible opportunities. Data centres that prioritise emissions reduction and extend their sustainability efforts to their supply chains can provide a competitive edge. A resilient and sustainable supply chain can contribute to business continuity and enhance a company's overall reputation.  

Vendor commitment to reducing embodied carbon 

Scope 3 emissions are the most challenging to report for data centre operators who should integrate sustainability into their evaluation criteria when selecting data centre equipment suppliers and service providers to minimise Scope 3 value chain carbon footprint.

Vendors need to commit to reducing the embodied carbon of their product portfolio. Finally, data centre equipment suppliers must make environmental product disclosure documents freely available and easily understandable for their products.  

By actively seeking equipment suppliers and service providers committed to reducing their environmental impact, data centre operators can play a crucial role in mitigating the overall carbon footprint associated with their operations related to Scope 3 emissions. The call for transparency and the availability of environmental product information further enhances the ability to make sustainable choices when selecting data centre equipment. 

Many organisations have focused on measuring and reporting Scope 1 and 2 emissions associated with their IT resources and implementing strategies to reduce them. Knowing where to start your Scope 3 emissions metrics journey can be daunting. By quantifying Scope 3 emissions from their value chain, organisations can measure their total carbon footprint, including outsourced IT services from cloud and colocation service providers. Organisations can then prioritise their efforts to make impactful carbon reductions.  

Schneider Electric offers many resources and tools to help organisations define Scope 3 emissions, including an inventory of nine emissions source categories and their data centre-specific subcategories for accounting and reporting purposes. This includes a modelling tool to simulate and model energy consumption within data centres that can help to estimate associated CO2 emissions. It also considers other factors such as power consumption, cooling systems, and overall data centre efficiency.   

Its supply chain decarbonisation services help customers leverage world-class technology to measure and model resource use in the supply chain, educate and engage supplier partners, and support actions to decarbonise supplier operations. 

By following these initial steps, data centres can expand their understanding of Scope 3 emissions and implement the right tools and measurement practices to work towards reducing their overall environmental impact and meeting reporting requirements with improving results.