Is Scope 3 emissions reporting the elephant in the server room?

Scope 3

Data centre operators have made great progress in driving down Scope 1 emissions –those from owned or controlled sources – and Scope 2 emissions – indirect emissions from the generation of purchased electricity, steam, heating and cooling. Large cloud companies such as Amazon, Google and Microsoft are some of the biggest users of power purchase agreements (PPA) in the world, funding new renewable energy projects across the world. Other emissions are offset through the purchase of carbon credits, and new technologies are being introduced to reduce cooling costs and water usage. 

However, a significant portion of a data centre’s operational emissions come from Scope 3 – indirect emissions that occur in a company’s value chain such as business travel, purchased goods and services, waste disposal and even employee commuting. 

A big focus in the near future will be tackling Scope 3 emissions, according to David Watkins, solutions director for Virtus Data Centres. By measuring their Scope 3 emissions, Watkins says that data centre providers will be able to assess where the emissions hotspots are in their supply chain, identify energy efficiency and cost reduction opportunities, and engage suppliers and assist them to implement sustainability initiatives. 

“Good communication will be key to making this happen,” comments Watkins. “The savviest providers will look to collaborate with their partners, customers and peers to minimise their environmental impact and implement innovative solutions that will help reduce energy consumption, curb emissions, and complement customers’ own sustainability programmes.” 

Whole Life Carbon Assessments 

Design and consultancy company, Arup, says that they are convinced that whole life carbon assessments (WLCAs) are the only way to tackle the issue of radical reductions in emissions.  

A WLCA is an assessment of all building-related emissions over its entire life cycle. According to a recent blog post, WLCAs offer the data centre industry the ability to understand the bigger picture in relation to the carbon impact of data centres and offer key insights into where the hot spots are so efforts can be made to reduce them. Greater emphasis is placed on early site selection, design choices, and material specifications. 

However, they note several challenges preventing implementation of WLCA. Given the current immaturity of the data centre industry in conducting these assessments, there is confusion about what should be included. In many assessments, the MEP systems and externals are excluded from the Scope, yet in some assessments Arup has carried out, the MEP systems can prove to be a huge component of the overall embodied carbon emissions of a data centre. 

A lack of regulation and enforcement of WLCAs is another challenge. Given that conducting a WLCA on a project is not always a requirement, Arup says that it may not be perceived as a priority or a financial risk. In an ideal world, data centre operators would measure and report to a common database, but which one should they choose? 

Coupled with a lack of widely available industry data, reliance on global reference designs as opposed to regional carbon information, and the fact that the data centre industry is intensely cost focused and time driven, there is a danger that WLCAs may fall off the priority list when considering other elements of design and construction. However, efforts are being made to further define the measurement of Scope 3 emissions in data centre settings. 

You cannot fix what you cannot measure 

According to Schneider Electric, data centre architecture has become increasingly hybrid, with servers residing in company owned facilities and colocation facilities (some with different business models), then procuring cloud services. To report the carbon footprint of all of their IT resources, operators must account for the carbon emissions from all three data centre types that apply to their organisation. 

The Science Based Targets initiative says that the Scope 3 target boundary should include the majority of value chain emissions, for example, the top three emissions source categories or two-thirds of total Scope 3 emissions. However, organisations in the early stage of their Scope 3 journey sometimes make the mistake of reporting on course categories with easy-to-attain data, such as business travel and employee commuting. The emissions normally represent a small percentage of total Scope 3 emissions, leading to the misconception that Scope 3 represents a small portion of the total carbon footprint of an organisation. 

A recent Schneider white paper – ‘Recommended Inventory for Data Center Scope 3 GHG Emissions Reporting’ – breaks down the Greenhouse Gas Protocol’s (GHG Protocol) standardised Scope 3 framework into more granular categories applicable to IT reporting. This, they say, will assist companies in identifying their Scope 3 emissions from all of their IT operations, developing complete, accurate, and consistent emissions accounting and reporting. 

The nine subsections include purchased goods and services; capital goods; fuel- and energy-related activities; upstream transportation and distribution; waste generated in operations; business travel; employee commuting; upstream leased assets; and downstream leased assets. 

Schneider Electric asserts that using this framework will help develop complete, accurate, and consistent Scope 3 emissions accounting and reporting. A consistent reporting framework for IT across all organisations is crucial in order to benchmark and ultimately achieve net-zero carbon sustainability goals. 

Finding a standardised accounting method 

The biggest problem however, as already alluded to, is a lack of standardisation in reporting Scope 3 emissions data. Mauro Cozzi, co-founder and CEO of carbon accounting platform Emitwise, says that, with Scope 3 emissions accounting for up to 90 per cent of a company’s entire emissions, it is imperative that supply chain emissions are properly addressed. 

While the GHG Protocol has established the framework for a global standardised measure to manage emissions from private and public sector operations, value chains, and mitigation actions, Cozzi notes that it still allows for a certain degree of flexibility, and that there is no mandate for how it should be followed. 

“This lack of standardisation has made it difficult to compare the Scope 3 emissions of different companies – with sustainability reports using different methodologies, incorporating different categories,” notes Cozzi. 

Schneider Electric agrees. They note that carving out the IT operations sustainability data and then reporting on it is quite challenging. To make matters worse, frameworks for reporting Scope 3 emissions, such as the GHG Protocol, are vague and not useful for reporting on IT resources.  

An additional challenge is that IT resources can be distributed across on-premise data centres, colocation data centres, and IT services from cloud service providers. Tracking and reporting Scope 3 GHG emissions must include cloud and colocation service providers for accurate allocation of carbon emissions. 

However, the situation in Europe is changing, with the imminent introduction of the new Corporate Sustainability Reporting Directive (CSRD). A broad range of companies are included in the CSRDs sustainability reporting obligations, which demand Scope 3 reporting and the digital tagging of sustainability information to enable easier auditing and comparison. 

“The implementation of the CSRD marks a new era in corporate sustainability reporting,” concludes Cozzi. “It will enable companies to be held accountable for their complete environmental footprint, including Scope 3 emissions. With standardised and auditable reporting, investors and consumers can make more informed decisions with a clearer picture of how companies are performing from a sustainability perspective.” 

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