A close look at scope 3 emissions. What are companies reporting?
Roméro Diaz, Nicolas Veredas, David
Roméro Diaz, Nicolas
Veredas, David
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2022
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20
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Abstract
Since 2001, as a means of gauging a full picture of a company’s carbon footprint (see Figure 1 below), the Greenhouse Gas Protocol has divided greenhouse gas (GHG) emissions into 3 different Scopes. Scope 1 consists of GHG emissions generated during the course of the company’s main business operations (e.g., the emissions associated with a vehicle’s assembly line). Scope 2 emissions are the GHG emissions incurred by a firm through the purchase of the electricity required for its operation. Finally, Scope 3 emissions account for indirect emissions generated by suppliers, partners, and customers along a company’s value chain. This definition of Scope 3 emissions is intentionally broad, which means that it usually consists of more than 70% of a company’s total emissions profile. Despite the significance of this figure, Scope 3 emissions reporting is lagging far behind that of the other scopes. According to the WWF, this relative scarcity of Scope 3 reporting is due to several unique challenges that arise from the fact that, by design, Scope 3 emissions lie outside the direct management of a company’s leadership. This does not mean that companies have no influence over their Scope 3 emissions. In fact, these challenges represent a unique opportunity for businesses to engage with value chain partners, rethink their business operations, and streamline their emissions reporting methodology.
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Greenhouse Gas, Sustainability