SCOPE 3 EMISSIONS MOST CRUCIAL
Meanwhile, mandatory Scope 3 reporting, which has taken a back seat under the new reporting regime for now, remains the most problematic.
Scope 3 emissions are all indirect emissions that occur along the value chain of a company’s operations with upstream (such as suppliers) and downstream (such as customers) activities included.
The mandatory implementation of Scope 3 has met with pushback globally. Scope 3 emissions account for the majority of the carbon footprint for most companies, even making up to 80 per cent or 90 per cent of emissions in some cases.
Voluntary Scope 3 reporting therefore translates into a technical loophole for companies, creating opportunities for greenwashing.
To illustrate, a company could outsource its polluting operations to suppliers or sell their polluting assets to a private company, which will shift the emissions classification from Scope 1 to Scope 3. The company then could simply claim it has reduced its carbon footprint without any genuine change in the overall emissions along the value chain.
This is no different from sweeping dust under the rug – the dirt is still there, just hidden from sight.
Until Scope 3 reporting becomes mandatory and subject to strict audit requirements, mandatory Scope 1 and Scope 2 emissions reporting still lacks the horsepower to fully drive genuine decarbonisation.
