Key Summary
- Scope 3 emissions cover indirect emissions across a company’s value chain.
- Most companies estimate them using industry-average emission factors.
- These averages treat all suppliers the same, regardless of how they produce a product.
- Recycled and virgin aluminium can receive the same emission factor despite a 25–30x difference in actual emissions; for steel, the gap is smaller but still material, around 7x.
- Industry averages estimate emissions, they don’t reflect your actual supply chain.
What is an emission factor?
An emission factor is a conversion factor that estimates emissions (kg CO₂e) for a unit of activity. Multiply what you bought by the factor, and you get an estimate. The GHG Protocol’s data hierarchy ranks spend-based and average-data methods as the least accurate inputs available, below hybrid and supplier-specific data. Most companies still run on averages because they’re fast, not because they’re right.
Why averaging erases the signal
An average doesn’t describe any one supplier, it describes none of them. A supplier who’s invested in lower-carbon processes gets no credit; their number looks identical to a supplier who hasn’t changed a thing.
Take aluminium: primary production generates around 14.8–15.1 tonnes CO₂e per tonne, while recycled aluminium generates about 0.5 tonnes CO₂e per tonne, according to the International Aluminium Institute — a roughly 28–30x gap. Under an average factor, both suppliers show up the same.
Steel tells a similar story, at a different scale. Traditional blast-furnace steel production runs about 2.2 tonnes CO₂ per tonne, while steel made from recycled scrap in an electric arc furnace runs around 0.3 tonnes CO₂ per tonne, per IEEFA’s steelmaking fact sheet — roughly a 7x difference. Smaller than aluminium’s gap, but still large enough that averaging flattens a real, decision-relevant difference between suppliers.
The pattern that matters here: the size of the gap varies by material, but the direction is consistent — recycled and lower-carbon production routes are getting systematically underrepresented every time an average is used instead of the real number. Your inventory can’t distinguish your biggest reduction opportunity from your biggest risk if both are wearing the same number.
What Moving to Supplier-Specific Data Actually Involves
This isn’t a wholesale replacement of every emission factor in your inventory — that’s neither necessary nor realistic. In practice, it means:
- Pulling primary data where it matters most: fuel consumption, purchased goods and materials, and inbound/outbound logistics from the suppliers whose processes vary widely and whose volumes are material to your total footprint.
- Prioritizing by variability, not by convenience: a category where every supplier uses near-identical processes doesn’t need this work. A category like metals, packaging, or energy-intensive components — where production routes genuinely differ — does.
- Validating rather than assuming: supplier-submitted data still needs a sense-check against known process benchmarks, so a genuinely lower number is credible rather than just under-reported.
This is closer to an ongoing data-collection discipline than a one-time project — which is exactly why most companies default to averages in the first place. It’s slower to set up, but it’s the only version of the number that can actually inform a sourcing decision.
Our take
Treating supplier-specific data as a “nice to have for BRSR” gets the priority backwards. SEBI’s BRSR Core framework is pushing toward assured, defensible value-chain data precisely because averaged numbers aren’t auditable in any real sense. A Scope 3 total built on averages will tie out on paper. It won’t tell procurement which supplier to consolidate volume with, or tell your board where the actual risk sits. It satisfies a disclosure line and nothing else.
Fitsol works with sustainability teams to replace averaged factors with supplier-specific data where it actually changes the picture, and to flag honestly where an average is still fine to use. If your Scope 3 number hasn’t been stress-tested this way, talk to us before your next disclosure cycle.
FAQs
Is average-data Scope 3 reporting non-compliant?
No, it’s an accepted method under the GHG Protocol. It’s just the least accurate tier, and increasingly out of step with BRSR’s push toward assured data.
How much better is supplier-specific data, really?
Enough to change sourcing decisions. The aluminium example shows a ~25–30x gap that averages flatten to zero; even steel’s smaller ~7x gap is enough to change which supplier looks better on paper.
Do we need supplier-specific data for every category?
No. Prioritize categories where supplier processes vary widely and volumes are material — that’s where averaging does the most damage.
How much of your Scope 3 inventory is based on supplier-specific data and how much still relies on industry averages? Tell us in the comments.
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