eBooks & Guides

DATA AVAILABILITY AND ACCESS Data access is often a significant challenge. Your value chain partners may be very early in their own journeys of accounting for their emissions and/or you may lack control or influence, especially as you get further up or down your value chain. ANTICIPATING CHALLENGES OF SCOPE 3 CONSISTENCY AND COMPARABILITY The methods of measurement related to Scope 3 emissions are significantly less mature than the measurement of Scope 1 and 2 emissions. It is common to experience considerable diversity in your data sources and their underlying assumptions. Therefore it is important to view any Scope 3 estimates as a baseline for internal comparison of a company's own GHG emissions over time, and not as a comparison between different companies. Even the GHG Protocol- the most widely used accounting standard for greenhouse gas emissions- itself only offers high-level guidance, and openly acknowledges the difficulty in aggregating and comparing Scope 3 emissions. The lack of a detailed methodology for Scope 3 is a cause for concern for most firms. LIMITATIONS TO DATA ESTIMATION At early stages, Scope 3 data is generated from fragmented, incomplete, and voluntary disclosures that often rely on estimates based on emissions factors. Many companies are forced to rely on industry averages to estimate their Scope 3 emissions, which may not be representative of the context or jurisdiction in which they occur. While data that relies on industry averages may help to identify where to direct further effort, your organization should be cautious in relying on it to support strategic decision-making. LIABILITY ASSOCIATED WITH INCOMPLETE DATA Disclosing estimates and imperfect Scope 3 data could result in repercussions for companies in the form of private litigants and reactions from stakeholders. While regulations may include safe harbors for scope, firms still need to take action to mitigate and control the reactions from stakeholders through transparency in how they are calculating Scope 3 and using science-based targets. Regardless of regulatory requirements, there is increasing market pressure to disclose. Corporations that are worried about the quality of their Scope 3 data and the possibility of facing legal challenges should be aware that many regulators and standard setters are making it clear that they do not expect large swathes of detailed and perfect Scope 3 data overnight. Most requirements for Scope 3 that are cropping up in rules around the globe, come with generous provisions for estimation, phase-ins, safe harbors, and other reliefs. REPORTING ON NON- MATERIAL CATEGORIES There are a total of 15 activity categories falling under the umbrella of Scope 3 emissions. Companies persistently choose to report on certain activities not because they are material or relevant, but because the data is easier to collect than other activities. Business travel is often the most reported category amongst corporations despite it typically accounting for less than 1% of most firms' total emissions. Categories that are typically more material like the use of sold products require more effort to account for and are ignored by companies. Sustainability & Energy Management Simplified

• Cover