Many corporations around the world have set net zero commitments, detailing the ways in which they will address the various levels of carbon emissions of their businesses (defined byscope). In September of 2021, Cisco committed to reach net zero across Scope 1, Scope 2, and Scope 3 emissions by 2040. For Cisco, this means tackling our single largest source of emissions,Use of Sold Products(Scope 3, Category 11) which in FY21 represented an estimated 75 percent of our total greenhouse gas (GHG) emissions.

Taking on an ambitious challenge like this requires two things. First, establishing a methodology where the estimated GHG emissions from the use of our sold products can be reliably calculated year over year to help ensure the company is trending in the right direction. And second, having confidence in the numbers calculated. Once this calculation is complete, we can target our initiatives at our products that have the largest contribution to our overall total emissions, and then scale these initiatives across our company. Potential initiatives could include further improving the energy efficiency or continuing to reduce the overall energy consumption of our products.

Category 11: Use of Sold Products Calculation

GHG emissions from the use of our sold products are calculated based on the Greenhouse Gas Protocol Technical Guidance for calculating Scope 3 Emissions (version 1.0) methodology.Use phaseis defined as "...when the consumer takes possession of the product and ends when the product is discarded." Our products' emissions are classified asdirect use-phaseemissions because they consume energy during use. As an example, for a data center customer, that could mean receiving one of our UCS C240 M6 servers, running it around the clock for 5 years until the customer takes advantage of our product takeback and reuse program to return it to Cisco for remanufacturing or recycling.

The process for calculating direct use-phase emissions is straightforward in theory, but more difficult when scaling across thousands of products, each of which can include multiple configurations (for example, our 8800 series products can be configured with multiple types and quantities of line cards, route processors, fabric cards and optical modules). The calculation of direct use-phase emissions requires the aggregation of the following data:

• Quantities of products sold
• Electricity consumption per use of product
• Emission factors for electricity (estimating by country average when available, or global average otherwise)
• Total lifetime expected uses of product(s)

Once this data has been collected, an estimate of the total use phase emissions for products sold (kg CO2e) can be made using the following formula:

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