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DATA COLLECTION SELECTING CALCULATION METHODOLOGIES 60% of respondents to TCFD said they faced challenges when selecting or applying calculation methodologies. Scope 3 calculations can be challenging as it is up to the reporter to decide if they want to use spend-based methods to estimate emissions or supplier-specific data. Whereas scope 2 emissions are calculated by one of only two methods that cover both categories, each of the 15 scope 3 categories can be calculated by multiple different methods (spend-based, average data, supplier-specific, etc), with data varying in granularity and accessibility. T H E S C O P E 3 C H A L L E N G E S 80% of respondents found the process of data collection difficult. Companies often have complex value chains with many suppliers and customers. Collecting data on scope 3 emissions can be challenging due to limited data transparency and traceability across the value chain, as well as a lack of automated and scalable tools for data extraction. We realize that scope 3 reporting is not easy and that it comes with its challenges. A survey by TCFD survey revealed some of the most common challenges to measuring scope 3: LACK OF INTERNAL EXPERTISE 29% of respondents said they lack the internal expertise or resources for calculating Scope 3 emissions. This gap of knowledge opens up firms to the threat of increased liability when it comes to regulations. 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, and hiring the appropriate personnel for audits of data. 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. Copyright 2024 Tango. All rights reserved.

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