According to the Greenhouse Gas Protocol, Scope 3 emissions are indirect emissions that occur across a company’s value chain (excluding purchased electricity), such as purchased goods, business travels, and investments. Therefore, understanding and calculating Scope 3 emissions has become a critical task for Non-financial and Financial Institutions aiming to comply with regulators or ESG investors.
Tri Hita Consulting has recently performed several GHG calculations focused on Scope 3 investment and uncovered insights into the unique hurdles companies face in managing their value chain emissions. Scope 3 emissions include all indirect emissions in a company’s value chain, such as upstream and downstream transportation, business travels, and financed emissions from investment. The 15 categories of Scope 3 emissions could be a significant challenge for companies to calculate emissions and track their environmental impact.
Gathering accurate data from numerous suppliers and partners can be challenging, and companies often lack the resources to obtain detailed emissions data. Additionally, diverse reporting methods and a lack of standardisation across industries complicate the process, making it challenging to ensure data consistency and comparability.
Companies can enhance their sustainability disclosures and better meet investor expectations by adhering to national and international standards and frameworks. For non-financial institutions, frameworks like the GHG Protocol, UNFCCC, and methodologies from the Intergovernmental Panel on Climate Change (IPCC) provide essential guidelines for robust emissions calculation and reporting. For financial institutions, regulatory frameworks and scoring systems from organizations like the Financial Services Authority (OJK) and the Partnership for Carbon Accounting Financials (PCAF) provide structured methodologies to guide Scope 3 emission reporting. These frameworks play a crucial role in addressing companies’ financial and technical challenges while ensuring the implementation of robust methodologies and supportive policies.
Tri Hita Consulting is dedicated to assisting our clients in navigating these complexities and achieving a comprehensive GHG emission management system. For more information or to explore partnership opportunities with us, please contact info@trihita-consulting.com.
References
- Hadziosmanovic, M., Rahimi, K., Bhatia, P. 2022. Trends Show Companies Are Ready for Scope 3 Reporting with US Climate Disclosure Rule. World Resources Institute: https://www.wri.org/update/trends-show-companies-are-ready-scope-3-reporting-us-climate-disclosure-rule (Accessed 7 December 2024).
- Greenhouse Gas Protocol: https://ghgprotocol.org/ (Accessed 7 December 2024).