“Jungle of emerging regulation” making quick and credible action on credible Scope 3 emissions a business priority

Last updated: 30th November 2023

SustainCERT launches a new report which finds that an increase in regulation has driven more businesses than ever to report their Scope 3 emissions, but these same organizations still face many challenges to reduce and remove them at the scale that is needed to combat the climate emergency.

  • New research has indicated that businesses face significant challenges to reduce and remove their Scope 3 emissions, and a notable increase in regulation means action needs to happen fast.
  • Clearer guidance, better collaboration and real incentives have been cited as key drivers that can help scale credible Scope 3 emissions reductions.
  • Researchers worked with 500 large organizations in the US and Europe to understand what was stifling progress on Scope 3 emissions reporting – and action to reduce or remove Scope 3 emissions – which will be essential to reaching net zero targets.

An increase in regulation has driven more businesses than ever to report their Scope 3 emissions, but these same organizations still face many challenges to reduce and remove them at the scale that is needed to combat the climate emergency.

New research published today has revealed that 69% of businesses currently report their Scope 3 emissions and a further 22% will start in the next 12 months. However, industry experts have identified six core challenges that can impact reporting, action and implementation of Scope 3 emission reduction projects. Clearer guidance, better internal and external collaboration, and real incentives to invest in such projects will be key to scaling credible Scope 3 emissions reductions. 

The poll of 500 sustainability leaders at large companies across the US and Europe, conducted by Opinium on behalf of SustainCERT, explored how businesses are addressing the need to report on their Scope 3 emissions and their plans for the future. It interviewed several organizations currently reporting on and taking Scope 3 action, including Nestlé and Nutrien Ag Solutions.

Marion Verles, CEO of SustainCERT, said: “We are seeing companies increasingly reporting their Scope 3 emissions, driven by pressing net zero targets and increasing regulation. We need more significant, scalable, credible progress on Scope 3 emissions to be able to achieve our net zero ambitions. The science is clear – we have a climate emergency. Businesses need distinct guidance, best practice and real incentives to drive change now.”

Scope 3 emissions are all indirect emissions that occur in the value chain of a reporting company. They make up the majority of a company’s emissions but are the most complex and expensive to reduce and remove.

While nearly 70% are already capturing the data and reporting their Scope 3 emissions, with 57% of those using third-party verification to bring independent credibility to the results, there remain core challenges in gaining investment in Scope 3 projects to reduce and remove emissions.

These include their ability to correctly identify the relevant actors, the roles they play and their methods for data capture and reporting within highly complex value chains. This is particularly pertinent considering the globalized nature of businesses today. “We want a bit more consistency between how people are doing similar things in different parts of the business”, explained Conor McMahon, Global Net Zero and Nature Lead, Nestlé. Devising and implementing a universally agreed upon approach to Scope 3 emissions data capture and reporting is a challenge for collaborators within an organization, never mind when external parties are involved.

Collaboration in value chains for Scope 3 emissions reductions remains a relatively new concept and one that is impacted by a “jungle of emerging regulation and voluntary standards”, as Andrew Voysey, Chief Impact Officer at Soil Capital expressed. Those with existing knowledge recognize “the rules aren’t black and white” and there’s a lack of guidance on how to track, measure and account for supply chain interventions and outcomes.

Furthermore, there is often a reluctance to share potentially sensitive information with competitors. “It takes time to have everyone following a formula and…doing proper quality checks of the data,” McMahon outlined. This sentiment aligns with the views of Sally Flis, Director of Sustainable Program Management and Outcome Design at Nutrien Ag Solutions. She added that incomplete data sets where “they may not have all the pieces that we really need” presents a unique set of challenges.

SustainCERT launched its new value chain decarbonization project verification solution in 2023. This enables businesses to achieve digitally supported validation and verification of intervention projects in their value chain and ensures the reported outcomes that are associated with the interventions are of high quality and can be trusted.

SustainCERT is also co-founder of the Value Change Initiative – a multi-stakeholder forum bringing together some of the world’s largest companies, leading civil society actors and internationally recognized frameworks to collectively focus on defining best practice for Scope 3 emission reductions at scale. It focuses on bringing sectors together to identify and address challenges – currently Food, Beverage and Agriculture and Apparel & Textile sectors.

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