“Scope 3” emissions have emerged as a highly divisive yet priority topic in the Environmental, Social, and Governance (ESG) space. Drawing attention across all sectors, increasing focus is being devoted to firms’ responsibilities to consider these emissions as part of their wider ESG considerations.
With their undeniable contribution to the ongoing climate crisis, greenhouse gas (GHG) emissions are posing increasing physical, financial and regulatory risks to businesses. In the strive to reach net-zero targets, backed by mounting regulatory and investor pressure, companies must account for emissions produced throughout their full value chain. More transparent and standardised disclosures on GHG emissions, across all three scopes, has been one of the major calls from the investment community especially, so that they can obtain a full picture of a company’s exposure to climate-related risks and opportunities.
However, many organisations are not yet reporting necessary Scope 3 metrics, despite them often being the largest: according to the CDP, a company’s indirect emissions (Scope 3) are, on average, 11 times larger than the emissions produced by a company’s own operations.
While reporting isn’t yet mandated, there is a clear trend in regulation towards obligatory Scope 3 disclosures. For example:
The transition to Net Zero is the collective responsibility of all businesses, from SMEs to large corporates. This transition will present both challenges and opportunities, rewarding those who can effectively translate their Net Zero pledges into meaningful action. It is now unavoidable for businesses to improve their understanding of their true carbon footprint, which involves taking responsibility in monitoring and reducing emissions not just from their own operations, but across their entire supply chain.
With more stringent climate and ESG-related regulations to come into force, companies must develop and implement their scope 1, 2 and 3 emission goals in a strategic and holistic framework, ensuring their Net Zero commitment forms a key part of their wider ESG responsibilities.
Acasta understands that every company is at a different stage in their efforts to successfully integrate a robust Net Zero strategy, and we are here to help you navigate your way through the complexities of this process.
If you would like to talk to us about how Acasta can support your company’s Net Zero and ESG ambitions and strategy, then please contact Daphne Biliouri-Grant.