As businesses increasingly focus on Scope 3 emissions reporting, the task of measuring and monitoring these indirect emissions within their value chain presents its unique set of difficulties. Director at Position Green, Amélie Huart, recently outlined key trends influencing Scope 3 and suggests effective strategies to commence your journey towards substantial impact.
Effective management and reporting of Scope 3 emissions – the indirect emissions prevalent within a company’s upstream and downstream value chain – have become vital for a credible climate transition. Numerous ESG trends have a profound effect on this.
The demand for investment-grade disclosures from both investors and regulators necessitates that sustainability data be on a par with financial data. Forthcoming ESG disclosure guidelines imply that businesses should create dependable transition strategies. Also, the push for superior disclosures mandates data to be trackable, encompassing details from your firm and its supply chain.
Starting with Scope 3 emissions measurement, management, and reporting might seem overwhelming for several companies. However, the following tips and best practices could be instrumental in addressing key challenges and targeting efforts for the highest impact.
Huart started off by explaining it’s essential to grasp your influence on your supply chain. Large corporations are decarbonising their supply chains expeditiously and extensively, and you’re likely a part of this process. This signifies that your Scope 1 and 2 emissions become your client’s Scope 3 emissions, fostering expectations for quality data support. Recognising your operations’ boundaries within the value chain is crucial. This not only promotes appropriate greenhouse gas accounting but also facilitates constructive discussions with customers to cut down emissions throughout the value chain.
Best Practice: Commence with an understanding of your Scope 3 activities and the areas of maximum impact. GHG Protocol offers guidance on this matter. Understand how your clients perceive their value chain emissions. This will allow you to communicate progress and identify additional improvements in both upstream and downstream processes.
Secondly, companies should aim to enhance data quality over time. Companies often get stuck by going into too much detail initially, disregarding where their greatest impact lies. A balanced approach involves starting with a spend-based method, which estimates emissions using data derived from expenditure and industry average emissions factors.
Best Practice: Don’t attempt to do everything simultaneously. Establish a starting point and then gradually transition from spend-based data to activity-based data. Remember that the quality of your and your suppliers’ Scope 3 data will keep improving.
Finally, professionalise your data collection and storage. The ongoing and forthcoming disclosure regulations in the EU, UK and US necessitate traceable, quality data and verification-ready documentation.
Best Practice: Implement a data collection and reporting system that simplifies processes and gives you access to updated emission factors. Over time, increase the number of suppliers and ensure that the system supports efficient reporting with an updated set of emissions factors.
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