Incorporating Scope 3 Emissions Reporting into Contract
Suppliers and partners in the technology and various industries will increasingly find it necessary to share validated Scope 3 emissions data to be eligible for customer contracts in the future.
Predicting the Environmental, Social, and Governance (ESG) trends for 2024, GlobalData analysis points to a growing inclination led by the technology sector, which serves as a benchmark for ESG, and across other sectors as they progress toward detailed, interconnected reporting of greenhouse gas (GHG) emissions.
While making progress in addressing Scope 1 and 2 emissions targets (both in-house and those undertaken by partners), technology and other companies are now directing their focus toward Scope 3 emissions (GHG emitted throughout the value/supply chain). In the tech sector, these emissions are particularly noteworthy, estimated to contribute anywhere between 60% and 90% of the overall emissions.
The intricacies involved in measuring, monitoring, and mitigating Scope 3 emissions have prompted several tech companies to adopt a 'carrot and stick' approach. They are increasingly insisting that their partners throughout the supply chain provide emissions data if they wish to be considered for business opportunities. This represents a substantial development given the significant purchasing power at play.
Rob Pritchard, Principal Analyst in Enterprise Technology and Services at GlobalData, said, “The tech sector is once again leading the way in ESG reporting innovation with emissions data flowing ever more freely up and down the supply chain to meet the demands of customers, regulators, and investors, amongst others.”
Christopher Papadopoullos, Senior Analyst in Thematic Intelligence at GlobalData, added, “We have observed this trend across various industries and anticipate it becoming the standard over time. Nearly every major company in every sector is establishing standards for their suppliers that necessitate a minimum level of ESG disclosure and target-setting.”