The Scope 3 Conundrum (1 of 3)

Supply-chain management with emissions as the pivot

The actual emissions of any company is not complete without considering the emission of the supply-chain. As companies strive to go deeper into their value chain for a true assessment of their GHG emissions impact, they realise that the process is fraught with challenges.  

The WRI/ WBCSD’s Scope 3 Accounting and Reporting Standard provided a standardized and step-by-step approach for companies to understand the full impact of the emissions in their value chain. However, preparing the Scope 3 inventory presents some unique challenges:

    •    Vendors that are larger than the reporting company, often ignore requests for sharing emissions-related data, or the reporting company is pointed to the disclosures made by the vendor in the public domain.

    •    In the case of small-sized vendors that do not have a well-formed sustainability strategy, the vendor simply does not have the wherewithal to collect and collate such data or requests for data sharing are either looked upon with suspicion.

    •    In both the above cases, the constrains/ concerns of the vendor are easy to appreciate.  It does, indeed, seem to make little sense that a vendor company should have to disclose the same data to its different customers, in differing formats at multiple instances.

    •    Moreover, the reporting company frequently finds it difficult to penetrate beyond its major Tier 1 Suppliers while preparing a Scope 3 inventory.

The above combination of reasons is largely responsible for the failure to prepare a reasonably good Scope 3 inventory, unless the reporting company has the wherewithal to expend significant resources towards such effort.  

The shared responsibility/ shared value approach of the India Greenhouse Gas Program (IGHGP) is ideally suited to deal with the Scope 3 conundrum. 

- follow the 3 blog series for strategy to tackle the scope 3 conundrum