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The metals and mining industry is considered a “hard to abate” sector, but it is taking increasingly assertive measures to shift towards global decarbonization and sustainability through clean energy. This is an evolving landscape that presents a substantial challenge but holds exciting opportunities. The sector plays both a critical and crucial role in resolving escalating demand for the resources required to decarbonize whilst seeking ways to decarbonize these same (and future) operations in parallel. This is not an easy task.
Across most industries, Scope 3 emissions—both upstream and downstream, outside the businesses' direct control—are significantly larger than their respective Scope 1 and Scope 2 emissions combined. They are challenging to measure, estimate, track, and report accurately due to their indirect nature stemming from suppliers and consumers rather than directly from their own operational activities. Although these factors present notable obstacles, a fundamental focus on common understanding, collaboration, influence, and continuously improving underlying data represent key aspects in tackling Scope 3 emissions.
ENGIE Impact was commissioned by the ICMM to collaborate with executives from various mining companies to design and develop the Scope 3 Emissions Accounting and Reporting Guidance for metals and mining. Formally launched in September 2023, this represents a sector-specific guidance building on the GHG Protocol that provides a standardized framework for accounting and reporting Scope 3 emissions for metals and mining companies. Key insights and considerations that pertain to mining value chain content are included for all fifteen of the Scope 3 categories. It also provides a deep dive into three primary areas underpinning Scope 3 accounting and reporting about mining and metals companies: materiality, boundaries, and best available data.
By conducting a materiality assessment, organizations can identify and prioritize the most significant emission sources within their value chain. This focused approach ensures that efforts and resources are concentrated where they can have the greatest impact on reducing the overall carbon footprint. The guidance provides details to determine the materiality of Scope 3 categories on a quantitative and qualitative basis for accounting and reporting. Related best practices for adhering to the GHG protocol are also highlighted.
Once organizations have defined organizational boundaries for their overall GHG reporting (equity share, financial or operational control), they need to define reporting boundaries for each applicable Scope 3 category. For upstream categories, this refers to the attributable portion of respective key supplier Scope 1,2 and Scope 3 upstream emissions. This tends to be clearer for most industries, and the minimum boundary is ‘cradle–to–gate’, which covers extraction, production, and transportation of goods and services purchased by the reporting company in the metals and mining sector. In the case of downstream categories, a boundary has to be drawn at a certain product stage where the eventual end use is unknown or cannot be reasonably estimated. The downstream side of customer Scope 1 and 2 emissions from processing is more complex due to multiple subsequent processing stages. For a mining company, the focus for this limit aligns with their 'first finished product' that follows a high emissions processing stage. In this sense, the guidance recommends including emissions from the next consumer’s ‘first-finished downstream product’, where emissions are material as a minimum.
Successful measuring and accounting of supply chain emission starts with quality data and emissions factors from the relevant Scope 3 categories. This data helps quantify the level of activity generating the emission. Emissions factors are the specific amount of mass of GHG emitted per unit of the parameter’s activity data being calculated. The guidance provides a breakdown of Scope 3 accounting methods with a focus on both using and seeking to continuously improve data availability.
This guidance aims to directly help organizations improve their existing reporting methodology to account for all material along the value chain. It also seeks to provide a basis for those looking to develop their Scope 3 emissions inventory for the first time. In addition to key concepts and definitions tailored to the metals and mining sector, the design of the guidance includes appendices that provide key references and standards together with the basis for applying the concepts. Appendix 3 is structured around performance output and requirements, which provide direct, practical, and streamlined guidance on a category-level basis for effective use by practitioners.
In addition to giving insight into the three key areas underpinning Scope 3 accounting and reporting, this guidebook will help the mining and metals industry tackle their hard-to-abate emissions and help the industry move towards decarbonization.
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