CDP Climate Change 2022 Reporting Guidance

(SC1.1) Allocate your emissions to your customers listed below according to the goods or services you have sold them in this reporting period.

Change from last year

Modified question

Rationale

This information provides clarity to Supply Chain members on the emissions associated with goods and products sold to them over the reporting period. This supports transparency in emissions allocations, verification of these emissions allocations and methodologies used.

Connection to other frameworks

SDG

Goal 12: Responsible consumption and production

Response options

Please note that this table (for SC1.1) is designed so that only the customer that you select in column 1 (“Requesting member”) will be able to see the data relevant to them. If you enter an answer without selecting a requesting member, your answer will not be viewable at all.

Please complete the following table. The table is displayed over several rows for readability. You are able to add rows by using the "Add Row" button at the bottom of the table.

[Add Row]

*Has the allocation of emissions to your customers been externally verified?

Description of allocation method drop-down options (column 9)

Select one of the following options:

Unit for market value or quantity of goods/services supplied (column 11)

Select one of the following options:

Requested content

General

• This table is designed so that only the customer that you select in column 1 ("Requesting member") will be able to see the data relevant to them.
• If you enter an answer without selecting a requesting member, your answer will not be viewable at all.
• Note: Disclosers must check that the Requesting members presented in this table are correct for their organization for the reporting period.

Scope of emissions (column 2)

• Use this column to specify which scope of your emissions you are allocating to your customers. Note that emissions that you allocate will be your customers’ Scope 3 emissions, however it is up to your customer to allocate your organization’s emissions into a specific Scope 3 category. You should only be allocating the emissions you stated in C6.1, C6.3 and C6.5. You can allocate either direct emissions from your company boundary (your Scope 1) or indirect emissions (your Scope 2 and 3). An explanation of defining Scopes 1, 2 and 3 can be found in the GHG Protocol Corporate Standard.
• Note that you should be specific whether you are allocating your Scope 2 location-based, or your Scope 2 market-based figure in the methodology column. Companies are only required to allocate one Scope 2 figure.

Allocation level (column 3)

• Specify the level i.e. company-wide, business unit (subsidiary company), facility or commodity level at which the allocation of emissions applies.

Allocation level detail (column 4)

• Responding to this column is only required if you have selected ‘Business Unit (subsidiary company)’ or ‘Facility’ in column 3.
• Using no more than 500 characters, provide details on the business unit (subsidiary company) or facility for which you are allocating emissions to your customers.

Emissions in metric tons of CO₂e (column 5)

• Specify the metric tons of CO₂e you are allocating to your customer for the scope given in column 2.

Uncertainty (± %) (column 6)

• Provide the degree of confidence that you have in the figures expressed as a percentage, e.g. you estimate that they are accurate to +/- 15%.

Major sources of emissions (column 7)

• Describe significant sources of emissions for which you have provided a figure. The following list of examples is non-exhaustive:

- Scope 1 emissions may be equipment in which fuel is burnt to provide heat (e.g. ovens, driers or kilns); emissions from company owned or controlled vehicles; emissions from production processes e.g. in cement manufacture;
- Scope 2 emissions may include electricity used to power production lines, lighting in offices, electricity for data centers, etc.; and
- Scope 3 covers a broader range of possible sources. For example, the “Scope 3, Business travel” category would include air travel for company employees; the “Scope 3, Capital goods” category would include the manufacture of steel to make heavy machinery or infrastructure; and the “Scope 3, Waste generated in operations category” would include emissions from out-sourced treatment of organic waste. As you will be reporting your Scope 3 emissions as a single figure, you may wish to use this column to identify which category of emissions are included in this figure.

Verified (column 8)

• Select ‘Yes’ if the allocation of emissions to your customers has been externally verified. “Externally verified” means it has been verified by a third party organization, independent of the reporting company.

Allocation method (column 9)

• To allocate emissions to your customers, your company might have used a series of allocation methods. Chapter 8 (page 86) of the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard describes some of these methods. There is also other literature available on Life-Cycle Assessment discussing the details of different allocation methods. For the purpose of CDP reporting, a classification was established based on the Corporate Value Chain (Scope 3) Standard. You can select from the following values:

- Allocation not necessary due to type of primary data available
- Allocation not necessary as secondary data used
- Allocation based on mass of products purchased
- Allocation based on the volume of products purchased
- Allocation based on the energy content of products purchased
- Allocation based on the chemical content of products purchased
- Allocation based on the number of units purchased
- Allocation based on area
- Allocation based on another physical factor
- Allocation based on the market value of products purchased
- Other, please specify

• It can be difficult to estimate what proportion of your emissions are attributable to your respective customers’ purchases. The Corporate Value Chain (Scope 3) Accounting and Reporting Standard by the World Resources Institute and the World Business Council for Sustainable Development (the partnership that created the GHG Protocol Corporate Standard) helps companies to meet this challenge.
• The Corporate Value Chain (Scope 3) Standard is written for companies trying to calculate their Scope 3 emissions. However, the procedures can also be used by suppliers of those companies to assess how much of their (the suppliers) GHG emissions are associated with their customers’ purchases. As such, the standard can be used by both suppliers or by customers.
• The Standard contains information that will help you to apportion your emissions to your respective customers’ purchases (see Chapter 8). If you only had one customer, this would be an easy process and all of your Scope 1, 2 and 3 emissions would feed into your customer’s Scope 3 calculations. However, in practice, most companies have more than one customer, therefore attributing emissions to the purchases of each of them is more complicated. We use the term “allocate”/”allocation” to refer to this attribution. The GHG Protocol standard defines Allocation as “the process of partitioning GHG emissions from a single facility or other system (e.g. activity, vehicle, production line, business unit, etc.) among its various outputs."
• Allocation is necessary when:

- A single facility or other system produces multiple outputs, and
- Emissions are only measured for the entire facility or system as a whole”

• The Standard outlines the process of determining how to divide (“partition”) emissions between different goods and services.
• However, if you know that a specific amount of metric tons of coal or kilowatt hours of electricity have been used in producing a particular customer’s goods, or in providing services to a particular customer, then all of the emissions from burning that coal, or associated with using that electricity, can be linked to that customer’s purchases. Therefore, you avoid “allocation” in the technical sense of having to partition emissions. We would ask that you use that data to complete the table in SC1.1.
• The situation described would require a procedure that would enable you to know how much coal had been combusted to make a particular customer’s products or electrical sub-meters that were read when the work for a customer started and when it ended. There are other ways to avoid this partitioning process and these are covered in the section 8.2 of the Standard “Avoid Or Minimize Allocation If Possible”.
• Sometimes it might not be possible or practical to do measurements at that level of detail. You may know how much electricity a particular production line used in the last quarter or how much gas was used last year to heat your company’s offices, but during those time periods work was done for more than one customer. Consequently, the emissions associated with that electricity and gas have to be allocated between more than one customer. Chapter 8 explains the different approaches that can be taken to do this.
• Remember that although the document is developed from the perspective of a customer calculating their Scope 3 emissions and determining what to do with the data from their suppliers, the techniques described can also be used by the supplier in deciding how to allocate their emissions to customers (e.g. the situation that you are in). It is also worth noting that the new standard is called the Scope 3 Standard because it is written from the perspective of your customer, investigating emissions outside of its organizational boundary. However, it contains advice to help the supplier to allocate its Scope 1, 2 and 3 emissions – not just its Scope 3 emissions.
• When allocating emissions, use emissions data that is as specific as possible to the products that your customer has purchased from you. This is particularly important in the case of companies that are diversified and that produce a wide range of very different products.
• Table SC1 shows the order of preference for different types of data, it is adapted from table 7.7 of the GHG Protocol Scope 3 Standard.

Table SC1: Levels of Data

• Table SC2 is based on table 8.1 of theGHG Protocol Scope 3 Standard. It shows possible options for allocating the emissions data. To learn more about considerations in deciding which equation to use, refer to Chapter 8 of the Standard.

Table SC2: Options for allocating emissions to customer

Allocation Method	Definition
Physical Allocation	Allocating the emissions of an activity based on an underlying physical relationship between the multiple inputs/outputs and the quantity of emissions generated
Mass	Mass of co-products
Volume	Volume of cargo transported
Number of Units	Number of units shipped
Energy	Energy content of heat & electricity co-products
Chemical	Chemical composition of chemical co-products
Other Factors	Protein content of food co-products, floor space occupied by products Other formulas
Economic Allocation	Allocating the emissions of an activity based on the market value of each output/product
Market Value	Market value of co-products When determining the “market value”, companies should use the selling price (e.g., the price the customer pays to acquire products from the supplier), rather than the supplier’s production cost (e.g., the costs incurred by the supplier to manufacture its products).
Other Methods	Allocating the emissions of an activity based on industry-specific or company- specific allocation methods
Other Factors	Other formulas

Market value or quantity of goods/services supplied to the requesting member (column 10)

• Specify the total market value or quantity of the goods or services provided to the requesting member in the reporting period.
• If you provide multiple goods/services that do not share a common unit, please provide the market value of the goods and/or services supplied.

Unit for market value or quantity of goods/services supplied (column 11)

• Specify the unit for the figure given in column 10.
• If you have provided the total market value in column 10, select “Currency”. The figure provided should be in the same currency that you selected in question C0.4 for all financial information disclosed throughout your response.

Please explain how you have identified the GHG source, including major limitations to this process and assumptions made (column 12)

• Companies often have many different sources of emissions and this question seeks to understand how you have selected major emission sources.
• The GHG Protocol Corporate Standard states companies should report on all emissions within their chosen organizational boundary. This defines the sources of emissions on which you are going to report. There are three options: sources in which the company has an equity share; sources over which the company has financial control; sources over which the company has operational control. If you exclude any sources within the boundary, you are asked to disclose and justify those exclusions.
• However, it may be that you have been limited by your knowledge of potential emission sources or made assumptions about which sources were the largest. Or alternatively, that certain sources do not play a role for the specific products your customers are purchasing from you. Please explain the thinking behind your selection including the difficulties that you encountered.
• N.B. Please note that your answers to the following questions SC1.2 and SC1.3 can be viewed by any requesting members, not only those selected in column 1 of the table at SC1.1.