News / Scope 3 emissions are somebody else’s problem no longer

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More than half of all companies are unprepared to quantify and report their Scope 3 emissions, as per incoming EU law, according to an IBM survey of over 3,200 firms.

Scope 3 emissions encompass those from third parties, including supply chain operators, as well as business travel and employee commuting. While they are almost always firms’ largest source of greenhouse gas emissions, they are also the most difficult to quantify, requiring accurate accounting not only from companies but also their suppliers.

“Leaders that say they have a mature measurement capability are only slightly more likely to say they are ready to report, suggesting that the ‘less-mature’ organisations may be simply more realistic about their capabilities,” IBM reported.

IBM noted a gap of 7% between leaders claiming they are ready for Scope 3 reporting, versus firms already measuring them.

The implications of Scope 3 emissions are sufficient to turn existing emissions data on its head. For example, Tesla’s Scope 3 emissions of 22m tonnes of CO2 equivalent (tCO2e), which include sourcing material for its batteries, dwarf those in its manufacturing by around 37 times.

Manufacturing goods bound for OECD countries has drastically increased China’s GHG emissions, allowing western firms to relocate manufacturing there, claiming a reduction in their own emissions. According to a study by the WWF, taking into account production and transport of goods manufactured overseas for domestic consumption almost doubles the UK’s carbon footprint.

The phase-in period for the EU’s Corporate Sustainability Reporting Directive (CSRD) begins on 1 January 2024 for large EU and EU-listed companies, and the UK has matched this timeline. Meanwhile, California is bringing in Scope 3 measures independently through its Climate Corporate Data Accountability Act, but the US Securities and Exchange Commission (SEC) is also mulling introducing reporting at federal level.

This week, The Loadstar spoke with freight forwarder Forto, which has been offering customers the chance to offset their transport emissions with biofuel insetting. The company is now offering a new service, pledging to remove plastic from some of the world’s most polluted rivers in exchange for ‘plastic credits’.

Since most ocean pollution originates in rivers, this represents an expedient way of tackling the problem at its source, claimed CEO Karsten Hirsch, as well as offering businesses the chance to tackle their indirect contribution to pollution.

“Back in 2009, everything was just carbon,” said Achim Jüchter, Forto’s head of sustainable logistics offering. “In 2015, air pollutants came in. Now waste is coming in. In the future, we want to be a one-stop shop for our customers. This means they can have the solution in our portfolio.

“You cannot dance at all the weddings, as we say in Germany, you have a budget and you can decide to split it or you say, ‘look, I spent 10 today on this one and 10 next time on the other one’. More than 70% of Fortis customers already purchased one or the other sustainable service with us, meaning we have a very sustainable customer base.”

Mr Jüchter praised Plastic Fischer for its system of verifiability for plastic reclamation, saying he wanted to avoid a situation in which companies “just start throwing money at sustainability” without proof of the results.