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Carbon Accountability: Why Supplier-Based Scope 3 Tracking is Non-Negotiable

Shane

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Responsible for approximately 40% of global emissions, the construction industry must shift how it tracks and mitigates carbon output. There’s no doubt that any efforts to fight climate change globally will be subpar without action from this sector. Accurate ‘Scope 3 carbon tracking’ is essential to overhauling efforts and making a real impact.

Scope 3 tracking traces emissions from a project back to their source, including manufacturing. This level of transparency, however, has historically been near impossible for major builders and developers. 

There are massive gaps and inefficiencies in sustainability reporting – partly due to apathy but primarily due to the complexity of reporting on all activities across an entire supply chain.

Scope 3 Tracking is No Longer Negotiable

This shift towards emissions accountability is now unavoidable for builders and developers.

New regulations come into effect on the 1st January, 2025 in Australia that mandate detailed Scope 3 reporting and include provisions around director liabilities for inaccuracies. 

The introduction of these rules follow the precedent set in California, USA and are closely followed by similar requirements from EU’s Corporate Sustainability Reporting Directive (CSRD) and the UK’s upcoming Sustainable Disclosure Requirements (SDR).

The USA isn’t stopping at the East Coast either. In fact, regulators are also pushing for stricter sustainability reporting across the country.

Just as it did for international organisations, these new requirements present significant challenges for Australian construction organisations.

The Challenge of Scope 3 Emissions Tracking

Scope 3 tracking refers to monitoring carbon emissions that occur outside a company’s direct operations. This encompasses everything from material production to logistics – a very wide net indeed.

For the construction industry, this means accounting for emissions not only from your own suppliers but their suppliers too. This is no mean feat when the supply chain can extend up to 6+ layers deep, and is hidden behind opaque relationships or idiosyncratic processes. The moment products are ordered, detailed tracking often evaporates into a fog of spreadsheets and siloed communication.

Matrak changes that dynamic. We offer a free tool that seamlessly tracks materials through their global supply chain, leveraging partnerships with government bodies in Australia and China for accurate measurement.

This approach not only facilitates your ESG goals but also delivers tangible on-the-ground efficiency gains—and does so at no extra effort or cost to your team or subcontractors.

Methods of Measuring Carbon (and Their Shortcomings)

Regulatory bodies like ASIC provide a clear hierarchy of Scope 3 reporting methods, ranging from basic to advanced:

  1. Spend-Based Estimates: The most rudimentary approach applies broad emissions factors to financial expenditure categories, producing rough estimates. It’s straightforward and linear which helps to get a sense of total emissions. However, it does not have the nuance to give an accurate idea of where in the supply chain improvements or reductions can be made.
  2. Input/Output (I/O) Modeling: A more detailed method using economic data to estimate carbon impact across supply chains. This model takes into account expenditure alongside relevant data from a number of industry / governmental bodies and the relatively scarce self-reporting that exists publicly. It provides greater context alongside a more accurate estimate of emissions – which leads to more effective decision making and greater compliance.
  3. Supplier-Specific, Materials-Based Tracking: The gold standard. This method provides precise, defensible emissions data tied directly to materials and their sources. Information is accurate, up-to-date, and can be utilised in real-time to make decisions and validate compliance whenever audits arise.

While spend-based and I/O models are easy to deploy, they are far less defensible and often rely on punitive emissions factors set deliberately high. Why? To push companies toward more accurate, supplier-specific tracking.

The end goal for all organisations is to undertake this nuanced, validated approach to emissions management. By making such information publicly available accountability is increased across the supply chain.

ASIC’s incoming standards, which will impose director liabilities for inaccuracies, take these even further. They underscore the need for data that’s not just good enough – but auditable. 

Why Materials-Based Tracking Isn’t Yet Standard

The primary obstacle for Tier 1 and Tier 2 builders is access. Typically, you deal with a subcontractor, who may be four or five steps removed from the original product manufacturer. 

Coordinating this network via spreadsheets and isolated emails results in a near-zero chance of retrieving accurate, auditable data. Suppliers guard their partnerships closely, and each order takes its own unique journey through a web of global vendors.

But why does this matter? Because the embodied carbon of a product can vary drastically based on where and how it was produced. The same item made in a factory powered by renewables will have a far lower carbon footprint than one using coal-based energy. Without detailed tracking, you’re left with inflated estimates that penalise your reporting – unless you have an auditable supply chain tool like Matrak.

Why Relying on Spend or I/O Estimates Can Hurt You

ASIC’s regulations acknowledge spend and I/O estimates as permissible but explicitly design benchmarks to penalise their use. The only way to ensure you’re reporting accurately and getting a proper picture of embodied emissions is by utilising supplier-specific data.

Take, for example, the NABERS Embodied Carbon tool: it sets emissions baselines intentionally high. Since it is a general purpose tool, using secondary (or even third-hand) data, it needs to err on overreporting rather than underreporting.

Even larger, seemingly high-polluting companies that can provide supplier-specific data often report lower emissions than those defaulting to generic benchmarks. 

Reliance on these less rigorous methods may keep you compliant, but it will do so at a reputational and financial cost. In an increasingly tight market, with increasingly environmentally conscious stakeholders, these costs can put your organisation at a significant disadvantage when vying for projects.

Unlocking Lower Scope 3 Estimates with Matrak

Matrak’s automated system helps organisations avoid the above pitfalls right out of the box. The platform can host production, quality, and logistics data from your supply chain to create a live, auditable history of every material used in your projects. Your suppliers (and their own vendors) can be added for free and can add information in a few clicks. Using the platform doesn’t require any specialists or tech-savviness. It’s as simple as attaching documents to an email.

Speaking of – suppliers and subcontractors can even CC your Matrak instance in an email with the required information and it will still be captured on the system.

This enables your company to achieve the gold standard of supplier-specific reporting, aligning with ASIC’s strictest regulations and unlocking lower carbon estimates that bolster both compliance and credibility.

The barriers to Scope 3 reporting are lowered, all stakeholders gain an accurate picture of embodied carbon emissions, and you gain peace of mind ahead of auditing.

What if Your Suppliers Don’t Have Carbon Data?

Matrak’s partnerships extend globally, tapping into reliable emissions data from key markets like Australia and China. There are also expansion plans for the US and EU in the near future. These partnerships provide the information you need to bridge gaps in your suppliers’ carbon estimates. With Matrak you can ensure that the less transparent segments of your supply chain are still accounted for in your reporting.

Download our guide for actionable strategies to build a digital ecosystem that makes it easy to track every critical element of you construction projects.

Why Wait? Start Tracking Now

Matrak is free to start and requires zero additional effort (or cost) from your team or subcontractors. Beyond its carbon tracking capabilities, having live supply chain stats enhances site management, supports decision making from the construction site to the boardroom, and minimises risks like liquidated damages.

The move toward comprehensive Scope 3 tracking isn’t just a trend – it’s an inevitability. Ensure your company isn’t just prepared for the Jan 1, 2025 Deadling but is setting the standard.

Get started with Matrak today and lead the charge in responsible, auditable carbon tracking.

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