William Theisen, chief executive officer of EcoAct North America, says the failure of the U.S. Securities and Exchange Commission to include Scope 3 emissions in its new disclosure ruling is no excuse for companies to get complacent about the issue.
Despite the SEC punting, for the moment, on public companies’ disclosure of their Scope 3 emissions (those originating from supply chain partners over which they have no direct control), a number of companies are voluntarily moving forward with such assessments, Theisen says. Their efforts extend upstream to suppliers, and downstream to customers, all the way to the environmental impact of how specific products are used by purchasers. “There’s been a lot of progress in the U.S. for companies leading the way on Scope 3 accounting,” he says.
At the same time, there are also laggards, who won’t make progress on Scope 3 measurements because they’re currently not being forced to do so.
Given the multi-tier nature of nearly all global supply chains, it can be a challenge getting all partners to participate. Yet there are ways to make the necessary assessments, Theisen says, with relevant data taking several forms. There’s primary data, obtained directly from suppliers, material providers and transporters, and “middle-ground” data involving details such as the materials that go into products, their weight, and how they’re transported. In addition, companies can employ economic input/output factors to correlate every dollar spent on a given product with the emissions required to make it.
Suppliers are being pressured by buyers who are setting science-based targets that require sufficient data in order to be met. They’re being “bombarded” by questionnaires that seek the necessary primary data, an exercise that can be expensive and tough to execute for suppliers with limited resources. “It’s a challenging time, because there’s no alignment in the questionnaires,” Theisen says.
In addition to SEC’s limited action, there’s a slew of new regulations, especially from Europe, to be considered, including the Corporate Sustainability Reporting Directive (CSRD), which affects companies with any operational footprint or revenues from that part of the world.
