Published on: 6 August 2024
Reporting Scope 3 emissions presents significant challenges for businesses due to their complexity and the need for collaboration across supply chains.
These emissions, from suppliers' and customers' activities, are crucial for effective ESG impact. Calculating them is intricate, requiring consistent data sharing and collaboration. Transparency and real-time data are essential for understanding environmental impacts and making informed decisions.
This article explores the roles of suppliers and customers in managing Scope 3 emissions, the complexities of calculation, the importance of data and insight, the shared responsibility for reducing emissions, the associated complexities and costs, and the increasing regulatory pressures compelling businesses to address Scope 3 emissions seriously.
The roles of suppliers and customers in managing Scope 3 emissions
Both suppliers and customers are integral to the success of emissions reduction efforts within supply chains. Effective management of Scope 3 emissions, which are emissions from suppliers' suppliers, requires a collaborative approach and shared information among businesses. This is why supply chain transparency is critical to successful ESG impact.
How complex is it to calculate Scope 3 emissions?
It's quite complex due to the intricacies of supply chains. These emissions are challenging to calculate without consistent collaboration and data sharing across the entire supply chain. It makes sense to collaborate on an open data platform in a connected and consistent way.
The significance of data and insight in this context
Data and insight are crucial. They help organisations understand their environmental impacts and make informed decisions. This involves measuring various dimensions of Environmental, Social, and Governance (ESG) factors and understanding the differences between various action paths. Operating within data silos will never lead to sustainable impact. Transparency in real time or virtual real time is key.
The differences in emissions footprints among organisations
The differences in emissions footprints among organisations. For instance, oil companies have a clear understanding of their Scope 3 emissions embedded in their products. In contrast, companies in the middle of the value chain face more challenges in tracing their emissions.
The importance of transparency in reporting emissions
Transparency is key. It's not just about looking forward but also understanding the carbon embedded in the history of a supply chain. This includes setting benchmarks for progress and analysing longer periods. Excitingly, there is an open energy data framework in the pipeline that TISCreport and many other platforms will be connecting to in order to make sharing of energy usage more automated. Watch this space!
The responsibility for reducing emissions: Is it shared?
Absolutely. There's a shared responsibility between suppliers and customers in measuring and reducing emissions. Collaboration and acknowledgement of this shared responsibility are crucial for success. At TISCreport we've reflected this in our two-way transparency approach. Supply chains are bi-directional when it comes to influencing corporate behaviour, and aggregating this leverage is possible on an open data platform.
How can businesses engage stakeholders in this process?
Engaging stakeholders is essential. Businesses should bring together their suppliers and customers to align them with emissions targets and ensure they have the necessary knowledge and skills. Public sector bodies are making great progress here. Just take a look at Cardiff Council.
The complexities and costs associated with addressing Scope 3 emissions
Addressing Scope 3 emissions can be complex and costly, covering multiple categories that align with the Sustainable Development Goals (SDGs). However, every UK company can align their tier 1 suppliers on key corporate behavioural metrics like prompt payment, real living wage and transparency, which in turn make it far easier to have confidence in emissions reporting. Once you've embedded transparency into your suppliers using your buying leverage, scope 3 reporting because far more straightforward.
Is there increasing regulatory pressure regarding Scope 3 emissions?
Yes, there is. Scope 3 emissions are increasingly featured in regulations and directives, such as the Corporate Sustainability Reporting Directive (CSRD) and proposed SEC climate disclosure regulation. This makes it essential for companies to seriously address Scope 3 carbon reduction.
