For years, Scope 3 emissions have been viewed as the most challenging part of corporate sustainability reporting. They are difficult to measure, complex to manage and often sit outside an organisation's direct control

As a result, many organisations still treat Scope 3 reporting as a compliance exercise, one that needs improving over time, rather than a priority today.

That mindset may be about to change  

A growing number of lenders are incorporating ESG performance into lending decisions, and supply chain emissions data is becoming part of the conversation. What was once a sustainability reporting challenge is rapidly evolving into a financing issue. Organisations that lack visibility of their Scope 3 emissions may find themselves facing more difficult discussions with investors, lenders and procurement teams in the years ahead.

The emissions challenge hiding in plain sight  

Most organisations are surprised when they calculate their first comprehensive Scope 3 footprint.

According to the Carbon Trust, Scope 3 emissions often account for between 70% and 90% of an organisation's total carbon footprint. Research from CDP and Boston Consulting Group found that supply chain emissions are, on average, 26 times greater than combined Scope 1 and Scope 2 emissions. Yet only a relatively small proportion of organisations have set formal Scope 3 reduction targets.

For many businesses, the largest environmental impact does not come from their own buildings, vehicles or energy consumption. It comes from purchased goods and services, outsourced operations, logistics networks and supplier activities.

This means that the quality of an organisation's sustainability reporting increasingly depends on the quality of information it receives from suppliers.

🔗The full article is available here: News - Ace Media