Tighter regulations are on the horizon for companies required to report on their greenhouse gas emissions. Last month, the ISSB – International Sustainability Standards Board – announced plans to include Scope 3 emissions in mandatory reporting requirements. But what exactly does this mean for your organisation?
The rule is expected to come into effect early in 2023. This will mean a lot more emissions data needs capturing. It also presents all sorts of new logistical challenges – such as data sharing across your supply chain. Suddenly, you’ll have to consider the emissions of your workforce’s commutes and the energy use of the manufacturer you work with across the globe. And this is on top of the data you’re already collecting for Scope 1 and 2 emissions.
The ISSB says they will provide relief provisions to make the transition more manageable for in-scope organisations. This will include more time to provide disclosures. But there are steps your organisation can take right now to simplify the transition.
Commit more time and resources to your sustainability reporting
Scope 3 emissions are a unique challenge because they’re so broad. They account for all the indirect emissions produced up and down your supply chain. It’s the emissions created by all of your vendors. Those released while consumers use your products. Or during any business travel from your staff.
To accurately capture these emissions, you’ll need to collect data from a wide variety of sources – a lot of which will be external to your organisation. It’s not like Scope 1 emissions where the data stays in-house. This means more data to capture, first of all. But also more to organise, analyse, and report on well into the future. There will no doubt be a hefty increase in your teams’ data admin. And you’re going to want more hands on deck to make it as efficient as possible.
You want to hit the ground running when these regulations go live. So look to invest more time and resources into your in-house sustainability teams sooner rather than later.
The more staff you have ready and prepared to handle emissions data, and to liaise with your supply chain, the easier it will be to ramp up your data capture when the time comes.
Lean on technology now more than ever
Mandatory Scope 3 reporting will make technology even more important. Manual data processes and spreadsheets are fiddly and restrictive enough for Scope 1 and 2 emissions. Let alone when you have an influx of data from your wider supply chains.
Shifting from manual processes to a cloud-based, automated reporting platform allows you to expand your reporting capabilities – without having to invest heavily in additional labour costs or time you don’t have to spare. They can also relieve you of a hefty administrative burden on existing staff and take away a lot of compliance concerns.
Look for tools that automate the capture of emissions data from your supply chain. Ones that bring all the necessary data into one place and simplify the conversion of cold data into actionable insights.
While investing in new technology might mean more upfront costs for your company in the short term, think of it this way. Thanks to technology, your teams will be able to visualise your Scope 3 emissions quicker. And the sooner they’ll be able to make decisions to reduce your carbon footprint and costs in the process.
Start conversations with your supply chain now
These regulations will share the responsibility for your company’s mandatory reporting between you and your supply chain. But the logistics of getting every supplier, vendor, or partner onto the same page can be difficult. Which is why we recommend opening up lines of communication as quickly as possible.
Sit down with your supply chain and get on the same page about what these regulations will mean. Iron out how you plan to measure the necessary data. Set expectations up front about the tools you want to use and the schedule you want to follow.
By managing expectations early on, you allow your suppliers enough time to build up their own resources and confidence to support your reporting requirements. For example, they might need to educate staff on your chosen reporting platform. You don’t want to blindside them once the regulations are live, as this will only delay your ability to produce the necessary reports.
Mandatory Scope 3 reporting might bring a few extra headaches in the short term. But it will ultimately be a great thing for your organisation. Following these new regulations, you’ll be able to make more informed and effective improvements to reduce your environmental impact. You’ll maintain stronger visibility of your carbon footprint and make greater strides towards your sustainability and net-zero targets.
Impact makes capturing, evaluating and reporting on core sustainability, social value, or ESG data a breeze. It’s never been easier to visualise data across your supply chain, and make informed decisions to reduce your organisation’s impact. To find out more about our social value software, schedule a demo or get in touch with the team on 0161 532 4752.