I have a doubt regarding GHG protocol and SBTi GHG inventory.
CASE 1: the Company A produces semi-finished products (like PCBA, printed circuit board assembled with electronic components). Is it possible to avoid calculation of category 10 (Processing of Sold Products) and 11 (Use of Sold Products), according to GHG protocol and SBTi?
The fact is that it is basically impossible to evaluate emission related to the mounting and usage of PCBA (mounting can be done in several ways, components do not have any “own” energy consumption and both mounting and usage are totally out of control of the Company A). Also, no literature data can be found and it has to be considered that the company is producing many thousand of different products and final applications are all different.
CASE 2: the Company B produces in contract manufacturing (B2B manufacturing of a product with a given design; product will be marked with the customer company name).
Is it possible to avoid calculation of category 11 (Use of Sold Products), according to GHG protocol and SBTi?
The fact is that, even if the size of emission is relevant, since the Design is ownership of the customer, the Company A cannot have any Influence on the Use emissions (There isn’t any potential emissions reductions that could be undertaken or influenced by Company A), that is one of the criteria for relevance according GHG protocol.
3 answers yet
Anonymous User
Hi Luca,
to add a bit of context: The relevant section of the GHG Protocol, the Corporate Value Chain Accounting and Reporting Standard (https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf) adds specific guidance on when downstream emissions can be excluded from an assessment (Chapter 6.4):
“In certain cases, the eventual end use of sold intermediate products may be unknown. For example, a company may produce an intermediate product with many potential downstream applications, each of which has a different GHG emissions profile, and be unable to reasonably estimate the downstream emissions associated with the various end uses of the intermediate product. In such a case, companies may disclose and justify the exclusion of downstream emissions from categories 9, 10, 11, and 12 in the report (but should not selectively exclude a subset of those categories).”
The chapter also gives an example of when an exclusion is appropriate.
In your case, I would say that you could argue to exclude the Scope 10 and 11 emissions with your justification. However, the standard also underlines that every CCF must follow the basic principle of Relevance: Ensuring that the GHG inventory appropriately reflects the GHG emissions of the company and serves the decision-making needs of users – both internal and external to the company. So you should at least give a qualitative assessment of the expected amount of emissions excluded and argue why the exclusion does not negatively influence the decision-makijng-ability of internal and external stakeholders. The last part should also be in the center of the argument in Case B, if you want to exclude emissions.
If you have any more questions on this, feel free to reach out directly!
Best regards
Thanks for the answer! I still have some doubt, that i can try to explain.
Regarding CASE 1, each product in reality has a specific application. The problem is that there are approximately 2000 different product codes which don’t have emissions as standalone products (PCBA), each corresponding to a different application.
Mapping Scope 3, Category 11 emissions for every single product use would require an effort far beyond what is considered “reasonable effort” under the GHG Protocol.
In addition the regions of final use are unknown by the company and therefore it’s impossible to define the proper emission factors for the use phase.
Regarding CASE 2, since the product are Contract Manufacturing, there is basically no possibility to influence emissions of Downstream categories.
In both case probably the emission are “relevant” in the sense that if we try to calculate downstream emissions (with many assumptions, probably also not accurate), they will result high, but without any added value…
Thanks for the answer. I still have some doubt, that i try to explain.
Regarding CASE 1, in reality each product does have a specific application. The problem is that there are approximately 2000 different product codes which don’t have emissions as standalone products (Printed Circuit Boards with Assembled components), each corresponding to a different application.
Mapping Scope 3, Category 11 emissions for every single product use would require an effort far beyond what is considered “reasonable effort” under the GHG Protocol.
In addition the regions of final use are unknown by the company and therefore it’s impossible to define the proper emission factors for the use phase. Similar situation for all the downstream emissions, but for other would be kind of easier to calculate with some reasonable assumption.
Regarding CASE 2, it is more related to the principle of “influence”, since Contract Manufacturing means that the company only assembly parts, with a given design.
In reality, in both cases, if we try to do a calculation of impact of downstream activity (with many assumption, often not accurate and not based to real data), it will result that emission are “relevant” (especially for cat. 11), but this will be an inaccurate and misleading information..
Anonymous User
Thanks for the answer. I still have some doubts, that i try to explain.
Regarding CASE 1, in reality each product does have a specific application. The problem is that there are approximately 2000 different product codes which don’t have emissions as standalone products (Printed Circuit Boards with Assembled components), each corresponding to a different application.
Mapping Scope 3, Category 11 emissions for every single product use would require an effort far beyond what is considered “reasonable effort” under the GHG Protocol.
In addition the regions of final use are unknown by the company and therefore it’s impossible to define the proper emission factors for the use phase. Similar situation for all the downstream emissions, but for other would be kind of easier to calculate with some reasonable assumption.
Regarding CASE 2, it is more related to the principle of “influence”, since Contract Manufacturing means that the company only assembly parts, with a given design.
In addition the regions of final use are unknown by the company and therefore it’s impossible to define the proper emission factors for the use phase.
In reality, in both cases, if we try to do a calculation of impact of downstream activity (with many assumption, often not accurate and not based on real data), it will result that emission are “relevant” (especially for cat. 11), but this will be an inaccurate and misleading information..
Hello Luca,
For CASE 1, I would use exactly the reasoning you gave in the comment here as the reason for exclusion. In the end, “relevance” is not the sole guiding principle but one among four others (completeness, consistency, transparency, accuracy) which need to be balanced. All of these underlie the proposition that the effort to assess the scopes has to be reasonable.
Regarding CASE 2, “influence” is not one of the official principles; however, it should still be considered a factor guiding the amount of effort deemed reasonable. If you have direct influence on the amount of emissions caused, a verifier will usually expect you to put in more effort to obtain proper data coverage and inclusion of emissions, and vice versa.
So, in the end, you could argue to exclude the emissions from your scope 3 downstream in both cases, providing the respective reasoning to your verifier. In your reasoning, I would still try to give an assessment of the magnitude of emissions expected there. Following the principle of “relevance” in this case can also mean disclosing that relevant emissions are expected in those scopes but explaining why you excluded them anyway because of the arguments stated.
Anonymous User
What a great question Luca! Very deep into the process of GHG accounting!
Under the GHG Protocol (Corporate Value Chain Standard) and SBTi criteria, companies are expected to report on all relevant Scope 3 categories, including:
Category 10 – Processing of sold products
Category 11 – Use of sold products
However, relevance-based exclusions are permitted if clearly justified based on the following five GHG Protocol criteria:
Magnitude of emissions
Potential for emissions reductions
Stakeholder interest and decision relevance
Outsourcing of Scope 1 or 2 emissions
Financial significance or risks
Case 1: Company A – PCBA
Potentially yes — if clearly documented:
Category 10 (Processing):
If there is no standardized downstream processing or the company produces thousands of highly customized products with no consistent data available, the category may be considered not relevant. A qualitative explanation should be provided, illustrating the diversity and the lack of feasible emission estimation.
Category 11 (Use):
If the PCBAs themselves do not consume energy, and their usage depends entirely on external systems and unknown end products, the category can also be considered negligible or irrelevant.
However, both exclusions require a clear narrative and documentation that outlines why emissions are likely insignificant.
Case 2: Company B – Contract Manufacturer/White Label Production
It depends if the company has no control or influence over product design and use-phase efficiency and this is highly depending on the white label contract!
When a company only executes production based on the client’s design, and has no authority to drive design changes, this often could justify the exclusion of Category 11.
So, please have a deeper look into the contract.
Hope this helps. And disclaimer: This response is not a legally binding interpretation, nor a substitute for professional verification.
Hi Luca,
to add a bit context to Case A: In the Corporate Value Chain Accounting and Reporting Standard (https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf), the GHG protocol defines the possibility to exclude downstream emissions if the eventual end use of sold
intermediate products may be unknown (Chapter 6.4).
Here’s the respective segment:
“In certain cases, the eventual end use of sold intermediate products may be unknown. For example, a company may produce an intermediate product with many potential downstream applications, each of which has a different GHG emissions profile, and be unable to reasonably estimate the downstream emissions associated with the various end uses of the intermediate product. In such a case, companies may disclose and
justify the exclusion of downstream emissions from categories 9, 10, 11, and 12 in the report (but should not selectively exclude a subset of those categories).”
The chapter also states an example for when emissions can be excluded.
However, the standard also underlines the principle of “Relevance”: Ensuring that the GHG inventory appropriately reflects the GHG emissions of the company and serves
the decision-making needs of users – both internal and external to the company.
If you want to exclude downstream emissions, you should still give a (at least qualitative) assessment of the potential magnitude of the disclosed emissions, as well as an explanation on why you think the exclusion won’t influence the capability of the assessment to serve internal and external stakeholders.