Primary vs Secondary Data in Scope 3 Emissions

Scope 3 emissions - indirect emissions across a company's value chain - are notoriously challenging to measure accurately. Choosing between primary data (directly sourced from suppliers or operations) and secondary data (estimates or averages) is key to effective reporting. Here's the breakdown:

• Primary data: Precise, traceable, and audit-ready but requires significant effort and supplier collaboration.

• Secondary data: Easier to access and cost-effective but less accurate and may not reflect specific operations.

Key takeaway: Use primary data for high-impact areas and secondary data for broader assessments. Balance accuracy with feasibility, and maintain clear documentation to meet compliance and build trust.

Quick Comparison

Start with secondary data for baselines, then transition to primary data for key suppliers or emission hotspots. Tools like neoeco can streamline this process, improving data quality and reporting efficiency over time.

Primary Data in Scope 3 Emissions Reporting

Defining Primary Data

Primary data refers to activity-specific information collected directly from suppliers, partners, or operations within your value chain. Unlike using estimates or industry averages, this type of data comes straight from the source. Examples include fuel consumption records from logistics providers, energy usage reports from manufacturing partners, or waste disposal figures from facilities.

In the context of Scope 3 reporting, primary data is categorised into three levels of specificity:

• Supplier emissions footprint: This includes the overall emissions generated by a supplier’s operations.

• Supplier facility-specific emissions: Data focused on emissions from specific sites or production facilities.

• Supplier product-level carbon emissions: The most detailed level, showing emissions linked to specific products or services you purchase.

The Greenhouse Gas Protocol highlights supplier-specific methods as providing the highest level of precision and reliability in supply chain emissions data, setting the standard for carbon accounting.

Benefits of Primary Data

Primary data delivers greater accuracy and traceability compared to secondary estimates. When auditors review Scope 3 emissions calculations, they can directly link figures to actual business activities rather than relying on generic industry assumptions. This is critical for meeting compliance with ISSB standards and CSRD requirements.

For example, IKEA engages with tier 1 and tier 2 suppliers to collect accurate Scope 3 emissions data, strengthening supplier relationships in the process.

This method ensures data is directly tied to real-world activities, which is vital for precise reporting. Beyond compliance, primary data enables better decision-making by allowing companies to assess the direct impact of supply chain improvements. Such visibility is essential for managing Scope 3 emissions across intricate value chains in real time.

However, despite these advantages, collecting primary data is far from straightforward.

Challenges in Collecting Primary Data

Currently, fewer than 10% of companies accurately measure their Scope 3 emissions due to the complexities involved in gathering data from suppliers.

One of the main challenges is supplier engagement. Many suppliers lack the experience or resources needed to document activity data, while others may hesitate to share information due to confidentiality concerns. This often results in inconsistent or incomplete metrics. Some suppliers do not measure their emissions at all, and those that do may face contractual restrictions that limit data sharing.

Additionally, data is often provided in non-standardised formats, making it hard to draw meaningful insights. For instance, one supplier might report fuel use in litres, another in tonnes of CO₂ equivalent, and yet another might only offer partial facility data.

The resource demands of collecting primary data also pose a significant obstacle. Accurate Scope 3 calculations require skilled personnel, robust resources, and efficient data management systems. For UK businesses, outdated or siloed data systems make it especially difficult to extract consistent and reliable information without a standardised approach.

Inaccurate or incomplete data from supply chain partners can undermine an organisation’s Scope 3 emissions reporting. To overcome these barriers, leading companies prioritise mapping their vendor landscape, focusing on suppliers with the greatest impact. They use vendor assessment surveys to gather greenhouse gas (GHG) emissions data and update procurement policies to include sustainability criteria in RFPs. Assessing the sustainability maturity of suppliers and tailoring data-sharing strategies to suit each supplier’s level of comfort with Scope 3 reporting is also a critical step.

Secondary Data in Scope 3 Emissions Reporting

What Is Secondary Data?

Secondary data refers to information gathered from existing sources like industry databases, government reports, academic studies, and expert assumptions. Instead of collecting data directly from suppliers, this method uses standard emission factors and industry benchmarks to estimate emissions across operations. Unlike primary data, which involves direct engagement with suppliers, secondary data relies on established averages and proxies to fill in the gaps.

Benefits of Secondary Data

Using secondary data is a more budget-friendly option and helps organisations set benchmarks and realistic sustainability targets. For businesses managing extensive supply chains, it offers a practical way to establish baseline measurements without needing to engage directly with hundreds or thousands of suppliers. In the UK, secondary data is particularly useful for companies beginning their Scope 3 emissions reporting. It allows them to meet compliance deadlines while they work on improving their data collection processes.

Additionally, secondary data provides a broad overview of trends across the value chain. This can be especially helpful for organisations trying to understand their overall impact and establish initial disclosures. However, while it’s a good starting point, secondary data does have its limitations.

Limitations of Secondary Data

One major drawback of secondary data is its inability to capture the specific details of a company’s operations or its suppliers’ unique efforts to reduce emissions. For instance, a logistics provider that has invested in electric vehicles may have much lower emissions than industry averages suggest, while another relying on older diesel vehicles could exceed those benchmarks. Over-reliance on secondary data can weaken the credibility of emissions reporting.

Auditors and stakeholders are increasingly looking for evidence of direct supplier engagement. Using only generic emission factors can signal a lack of understanding of a company’s actual impact, particularly when Scope 3 emissions account for an average of 84% of a firm’s total carbon footprint. This can undermine trust in the organisation’s sustainability efforts.

Another risk is the creation of a false sense of progress. Companies might assume they’re making headway based on improved industry averages, even if their suppliers haven’t made any real changes. This can lead to wasted resources and ineffective investments in sustainability. For businesses with complex value chains - where Scope 3 emissions often make up more than 75% of the carbon footprint in many sectors - over-reliance on secondary data can misrepresent the true impact. While secondary data is useful for establishing baselines, it must be carefully validated to meet rigorous audit requirements and ensure accurate reporting.

Primary vs Secondary Data: Direct Comparison

Compare primary and secondary data to determine how best to address your Scope 3 reporting needs, considering your available resources, requirements, and priorities.

Comparison Table: Primary vs Secondary Data

Here’s a breakdown of the key differences between primary and secondary data, focusing on factors that influence reporting decisions:

This side-by-side comparison helps clarify when each data type is most appropriate.

When to Use Each Data Type

Primary data is indispensable for high-impact suppliers. It provides the precision and traceability necessary for detailed reporting. On the other hand, secondary data is a practical choice for baseline assessments or when working with numerous smaller suppliers where direct engagement isn't feasible. It helps establish an overall understanding of emissions and patterns before delving into more resource-intensive primary data collection.

To make the process manageable, focus on gathering primary data from suppliers with the most significant impact first. This phased approach avoids overwhelming resources and ensures meaningful progress. For more detailed strategies, check out our approach to Scope 3 emissions management.

Accurate data selection must always be supported by thorough documentation.

Documentation and Transparency Requirements

To meet UK traceability and audit standards, it's critical to document all data sources and methodologies thoroughly. For primary data, maintain comprehensive records of supplier communications, data collection methods, and verification processes. This ensures that every piece of information can be traced back to its origin.

When using secondary data, transparency is equally important. Clearly identify the databases used, reference specific emission factors, and document any assumptions or adjustments made during calculations. Include details such as the data's vintage, geographical relevance, and any limitations that could affect its reliability. Auditors will closely examine these elements, especially if secondary data forms a significant part of your emissions reporting.

Transparency isn't just an internal requirement - external stakeholders also expect clarity. Explain how data was collected, where estimates were applied, and what steps are being taken to improve data quality. The goal isn't immediate perfection but demonstrating a credible plan for more accurate and comprehensive reporting over time.

Good documentation also supports long-term improvements. By tracking data quality over time, you can identify suppliers ready to provide more detailed primary data and determine where secondary data remains the best option. This systematic approach not only strengthens your methodology but also shows a commitment to improving reporting accuracy as your programme evolves.

Data Quality Management and Platform Integration

Effectively managing Scope 3 data requires a balance between precision and practicality. The goal is to implement robust data quality frameworks while using technology to simplify data gathering and validation.

Best Practices for Data Quality Management

When tackling Scope 3 data, a hybrid strategy works best. This involves combining primary data (directly sourced) and secondary data (estimates or averages) based on materiality and impact. Focus on collecting primary data from emission sources that significantly affect your carbon footprint, while relying on secondary data for broader coverage where direct supplier engagement isn't feasible.

A key step is developing a carbon inventory management plan. This plan should document your methodologies, assumptions, and estimates. As regulations evolve, such documentation is becoming a necessity. For instance, the GHG Protocol is moving towards requiring companies to classify their inventory quality into tiers based on data specificity. Here's a breakdown of these tiers:

Interestingly, only 6% of companies currently use supplier-specific emission factors. To improve, organisations should standardise data quality checks. Whether working with primary or secondary data, validation processes are essential. For example, engaging suppliers to collect primary data for key Scope 3 emission sources and clearly disclosing the percentage of emissions calculated using secondary data can make a big difference.

Improvement is an ongoing process. Start by using secondary data to establish a baseline, then gradually transition high-impact suppliers to primary data collection. This phased approach prevents resource strain while improving the accuracy of your reporting over time.

These practices lay the groundwork for integrated solutions, which are explored further below.

The Role of neoeco in Scope 3 Reporting

Integrated digital platforms can simplify and enhance Scope 3 reporting. One such platform, neoeco, merges financial and sustainability data through its FiS Ledger. This system embeds over 90 ESG impact factors directly into financial transactions using double-entry principles, ensuring more accurate and reliable reporting by eliminating the disconnect between financial and sustainability data.

neoeco also leverages AI-driven automation to reduce manual errors and speed up data validation. For UK companies navigating compliance requirements like ISSB (IFRS S1 & S2), CSRD, and GHGP, neoeco offers multi-framework reporting tailored to changing regulations. You can learn more about how ISSB reporting integrates into a financial strategy for effective sustainability management.

Additionally, neoeco’s Life Cycle Assessment (LCA) tools provide detailed, real-time insights that help distinguish between primary and secondary data quality tiers. Its seamless integration with accounting software, ERP systems, and energy meters creates a single source of truth, supporting both internal analysis and external reporting requirements.

Centralised Data and Supplier Engagement

Centralised platforms, like neoeco, build on data quality measures by ensuring traceability across the supply chain. Managing multiple tools and formats can be complex, but a centralised system simplifies this by providing standardised workflows. These workflows not only improve data quality but also boost supplier participation.

neoeco’s centralised approach allows companies to establish consistent data collection protocols across their supply chain. With open APIs and adaptable data models designed to meet evolving sustainability demands, organisations can refine their strategies as suppliers improve their reporting capabilities.

Engaging suppliers becomes easier with a centralised system. Replacing scattered spreadsheets with standardised supplier interfaces improves data consistency and helps suppliers transition from secondary to primary data collection. This transparency fosters trust and encourages suppliers to participate more actively in primary data initiatives. Over time, this enhances the accuracy and traceability of Scope 3 emissions reporting across the entire value chain.

Conclusion: Balancing Accuracy and Feasibility

Achieving effective Scope 3 reporting requires striking the right balance between precision and practicality. It’s not about choosing between primary and secondary data, but rather crafting a thoughtful mix of both to maximise accuracy without overextending resources.

Relying too heavily on secondary data can undermine credibility, while exclusively using primary data often proves too costly and inefficient. The key is to focus primary data collection on critical emission hotspots and rely on secondary data for broader, less material areas. Transparency is essential - clearly disclose the proportion of secondary data used to build trust with stakeholders and show your commitment to continually improving data quality.

Engaging suppliers plays a pivotal role in this process. Collecting primary data for major Scope 3 sources hinges on active collaboration. As Amélie Huart, Director at Position Green, highlights:

"Keep in mind that this will likely be a multi-year process, so companies should work to improve their data quality over time".

These steps lay the groundwork for actionable insights and practical strategies.

Key Takeaways

Here are the essential steps to consider: Prioritise primary data collection for emission sources that have the greatest impact on your carbon footprint, while implementing robust validation processes for both primary and secondary data. This approach ensures resources are directed where they can make the most difference in improving data quality.

Technology can significantly ease this balancing act. Specialised platforms simplify Scope 3 data collection, streamline greenhouse gas (GHG) reporting, and make audit-ready data more accessible. For example, neoeco helped Kreston Reeves achieve remarkable results, including a tenfold increase in emissions data granularity, a 60% reduction in manual data collection time, and an 80% improvement in assurance readiness. These outcomes underscore how integrated management tools can enhance data quality while alleviating operational challenges.

Success in Scope 3 reporting ultimately depends on establishing a systematic process for data collection, supported by standardised forms and procedures. Combining this foundation with the right technology and a phased approach to improving data quality over time allows organisations to meet compliance requirements while earning the trust of stakeholders and investors.

With a well-rounded strategy, companies can drive meaningful progress while keeping operations efficient.

FAQs

How can businesses shift from using secondary to primary data for reporting Scope 3 emissions?

To shift from secondary to primary data in Scope 3 emissions reporting, businesses need to prioritise gathering information directly from suppliers and their value chains. This involves setting up structured supplier engagement initiatives, building strong data validation systems, and maintaining clear, transparent tracking of emissions-related data.

Using real-time data collection tools and adopting lifecycle assessment (LCA) techniques can significantly boost both the accuracy and traceability of the data. Platforms such as neoeco can play a key role in this transformation by automating data integration and offering detailed insights. These tools not only help businesses align with global reporting standards but also improve the dependability of their emissions disclosures.

How can I effectively engage suppliers to collect accurate primary data for Scope 3 emissions reporting?

To gather precise primary data for Scope 3 emissions, start by focusing on your key suppliers - those responsible for the bulk of your emissions, often the top 80%. Establish regular, open communication with them, making sure to clearly outline your reporting standards and expectations.

Providing suppliers with practical tools, resources, and training can encourage them to submit accurate data rather than estimates. Using globally recognised frameworks like the GHG Protocol helps ensure the data is consistent and traceable. Building trust and maintaining an ongoing dialogue are essential steps towards improving data accuracy and working together to meet shared sustainability goals.

How can neoeco help improve the accuracy and efficiency of Scope 3 emissions reporting?

neoeco improves the precision and speed of Scope 3 emissions reporting by using AI-powered automation alongside Life Cycle Assessment (LCA) techniques. These advanced tools allow for accurate, real-time data collection and analysis, reducing the risk of manual errors while enhancing data traceability.

By integrating financial and sustainability data, neoeco streamlines the reporting process, ensuring alignment with global frameworks such as the GHG Protocol and ISSB. This approach not only saves time and effort for CFOs and ESG teams but also delivers emissions calculations that are more dependable and ready for audits.

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