In 2001 the GHG Protocol’s Corporate Standard established three different areas of emissions—or “scopes”—that define direct emissions from the company's own and controlled energy sources, indirect emissions (e.g., from purchased energy), and all indirect emissions that occur in the reporting company's value chain. These comprise scope 1, 2, and 3 emissions:

• Scope 1: Direct emissions under the company’s onsite operational control.

• Scope 2: Indirect emissions, mainly from energy and electricity use.

• Scope 3: Indirect emissions upstream and downstream of the value chain

In the short history of climate action, most companies have firmly focused on Scope 1 or Scope 2. While industry leaders have made some progress in Scope 1 and 2, Scope 3 emissions, which represent the indirect impacts upstream and downstream of the value chain, have stayed persistent. While more and more companies have started reporting their Scope 3 emissions, their scale is troubling since it is the most significant category for most businesses in most sectors. The beauty industry alone is responsible for about 1.5% of global emissions yearly (air travel sits at 2%). To demonstrate Scope 3 representation for our industry, we looked into the annual ESG report of 10 of the world’s leading beauty companies.

Scope 3 emissions pose a significant challenge for companies to engage in direct and fast climate action. But why?

The Scale—since Scope 3 Emissions grossly overrepresent in carbon footprints, companies must review their entire business operations and product provisioning across their value chain.

Varying Actors—one company’s Scope 1-2 emissions could show up as the Scope 3 of another. For example, a plant-based oil supplier could produce Scope 1 emissions from fuel combustion in delivery trucks and boilers and Scope 2 emissions from electricity used in its processing plants. These emissions are included in a skincare brand’s Scope 3 inventory under “Purchased goods and services,” representing the upstream carbon footprint of the raw materials the skincare brand relies on. This overlap could result in double counting.

Unreliable Data—Scope 3 emissions fall outside a company’s direct control or ownership, making consistent and sufficient data collection difficult.

Passing Responsibility—Since scope 3 emissions fall outside a company’s direct control and emissions inventories can overlap, the party responsible for reducing them is often left undefined and thus used as an excuse for inaction.

Value Chain Complexity—Within the scope 3 emissions, there are 15 underlying categories, from employee commutes to end-of-life product treatments. This shows how complex and significant the challenge of Scope 3 emissions is. For example, downstream companies can have little influence over how a product is used, transported, or disposed of.

The value chain complexity is especially critical in the cosmetics industry, where its intricate structure and global nature characterize the supply chain. This complexity notably arises from the extensive range of ingredients required, sourced from diverse regions worldwide, creating a highly international and multifaceted supply network.

Given these challenges, how can beauty brands, labs, suppliers, and retailers tackle their Scope 3 emissions?

Leverage Advanced Technological Solutions to Conduct Product Life Cycle Assessments (LCA) at scale, enabling comprehensive evaluation across 100% of your SKUs.

You can’t change the impact of what you don’t measure. Understanding environmental impact across your product portfolio's life cycle and organizational value chain is crucial to understanding what area can make the most impact.

There are 15 Scope 3 categories, from Capital goods and waste generation to downstream transport and End-of-life treatment of sold products. The most challenging aspect of calculating your Scope 3 emissions lies in the following categories:

• Scope 3.1 (Purchased Goods and Services): This category encompasses emissions from your ingredients/raw materials, packaging, and services purchased (e.g., advertising services). By implementing large-scale Life Cycle Assessments (LCA), you can effectively capture the majority of these emissions with minimal effort.

• Scope 3.4 and 3.9 (Upstream and Downstream Transportation): Emissions from transportation activities, both upstream and downstream, are also seamlessly accounted for through LCA conducted at scale.

• Scope 3.11 and 3.12 (Use and End-of-Life Treatment of Sold Products): These categories include emissions associated with the use of your products by customers and their eventual disposal. These impacts are also comprehensively addressed via LCA at scale.

By leveraging advanced LCA tools, you simplify the traditionally complex process of capturing emissions across these key Scope 3 categories, ensuring a thorough and streamlined approach.

The other impacts can be handled accurately in a matter of hours.

The good news is that more companies are reporting and reducing on Scope 3 emissions than ever before; make sure you’re one of them.

Business Model Innovation

Reimagining business models enables cosmetics companies to tackle Scope 3 emissions effectively. Start the shift towards circularity through refill systems and offer durable, premium packaging that can be returned, cleaned, and refilled. Incentivize customers to return empty packaging for proper recycling or reuse—partner with recycling or upcycling organizations to close the loop.

Establish good policy - Create financial incentives and catalyze innovation through internal carbon pricing. Purchase from Transparent, Low-Carbon Suppliers—With growing regulations such as the EU Deforestation Regulation or CSDDD, this becomes mandatory. Get a head start.

B2B Collaboration and Cooperation

Since Scope 3 emissions often overlap with other businesses and companies, B2B cooperation is essential. Reducing Scope 3 emissions in your company could reduce those in another company's inventory, catalyzing action on the challenges of reducing emissions in global, complex, and interconnected value chains.

Set supplier engagement targets. Commit to engaging with a certain percentage of suppliers in your value chain and set GHG reduction targets that align with climate science. The Science-Based Targets Initiative (SBTi) is a great place to start.

Product Eco Design

Sourcing recycled or sustainably certified materials for containers and applicators, minimizing the use of raw materials in packaging, and designing for easy disassembly to ensure components can be recycled efficiently.

Select ingredients with lower environmental footprints for formulations, such as sustainably farmed botanicals or lab-created alternatives that reduce deforestation or resource depletion. Durability also plays a role—brands can focus on creating concentrated or longer-lasting formulations that reduce waste and packaging needs.

New certification, such as India’s EcoMark Scheme, makes these efforts marketable.

Customer Engagement

Empower sustainable choices by encouraging responsible usage and ensuring proper end-of-life management of products. Introduce refillable packaging solutions for items like creams, shampoos, and perfumes. Offer incentives, such as discounts or loyalty rewards, for customers who use refill programs or return empty containers.

Provide clear, simple instructions on recycling or properly disposing of packaging directly on the product or via QR codes. Educate consumers about separating materials (e.g., pumps, caps, and bottles) to improve recycling rates—partner with eco-conscious influencers to spread the message about sustainability initiatives.

Implementing large-scale life cycle assessments (LCAs) can effectively address the inherent challenges of Scope 3 emissions calculations.

Despite the complexity of cutting down emissions generated across supply chains, with increasing and more accessible ways to measure Scope 3 emissions, companies can reduce and improve their environmental impact significantly.

Talk to Fairglow today to see how.