Opponents of mandatory Scope 3 reporting are ‘confusing the symptom for the cause’
Sustainable Views 19/04/2024
"Regulation making it mandatory to report upstream and downstream emissions will make life easier, not harder, for companies, argues the EDHEC-Risk Climate Impact Institute
Opponents of mandatory Scope 3 emissions reporting, who say that it is “unfeasible” or “too costly”, are “confusing the symptoms for the cause”, says a report by France-based academic think-tank the EDHEC-Risk Climate Impact Institute.
Challenges associated with mandatory reporting are the result of limited and inaccurate data being collected by value chain companies, the institute says. Mandatory reporting will lead to more widespread data collection, simplifying the task of reporting for large corporates, the report insists.
Yet opposition is moving the needle in the wrong direction, suggests the report. In March 2024, the US Securities and Exchange Commission removed “value chain greenhouse gas emissions” from the country’s first mandatory climate-related disclosure, “despite near unanimous investor support for their inclusion”, says the EDHEC-Risk Climate Impact Institute.
Similarly, even after the European Commission “scaled back the ambition” of its first set of European Sustainability Reporting Standards in early 2023, critics of the text continued to argue that Scope 3 emissions disclosures should be voluntary, the institute says.
The EDHEC-Risk Climate Impact Institute argues that accounting for value chain emissions is “crucial” to understand the full extent of an organisation’s climate impact and to help them “[navigate] the complexities of transition risks and opportunities”.
The report recommends that companies “embrace” value chain emissions reporting in line with the Greenhouse Gas Protocol 2011 Corporate Value Chain Standard, an internationally accepted method for companies to calculate Scope 3 emissions.
The institute also recommends that investors “continue to advocate” for mandatory disclosure and policymakers continue their regulatory efforts to mandate Scope 3, despite recent opposition.”
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Opponents of mandatory Scope 3 reporting are ‘confusing the symptom for the cause’
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Operating from campuses in Lille, Nice, Paris, London and Singapore, EDHEC is one of the world’s top 15 business schools. Fully international and directly connected to the business world, EDHEC commands a strong reputation for research excellence and the ability to train entrepreneurs and managers capable of breaking new ground. EDHEC functions as a genuine laboratory of ideas and produces innovative solutions valued by businesses. The School’s teaching is inspired by its research work and a focus on “learning by doing”, all with the aim of equipping people with the skills to succeed in business.
