Scope 3 emissions reporting becoming a requirement in contracts

25 January 2024
The complexity of measuring, monitoring and mitigating Scope 3 emissions has led to a number of tech companies using a ‘carrot and stick’ approach

Suppliers and partners in the technology and other verticals will increasingly need to share validated Scope 3 emissions data to qualify for customer contracts in future.

In predicting the Tech-Enabled ESG (Environmental, Social, and Governance) trends for 2024, GlobalData analysis highlighted an emerging tendency led by the technology sector, which sets the benchmark for ESG, and across other verticals as their journeys towards detailed, interconnected reporting of GHG (greenhouse gas emissions) evolve.

Having made significant progress in addressing Scope 1 and 2 emissions targets (in-house and those made by partners on their behalf), technology and other companies are increasingly turning their attention to Scope 3 emissions (GHG from further up and down the value/supply chain). These are very significant in the tech sector as a whole as they are estimated to account for anything between 60% and 90% of overall emissions.

Scope 3 complexity

The complexity of measuring, monitoring and mitigating Scope 3 emissions has led to a number of tech companies using a ‘carrot and stick’ approach by increasingly demanding that their partners up and down the supply chain are able to provide emissions data if they want to be approved to bid for business. Given the purchasing power involved, this is a significant development.

GlobalData Principal Analyst, Enterprise Technology and Services, Rob Pritchard observed: “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.”

GlobalData Senior Analyst, Thematic Intelligence, Christopher Papadopoullos added: “We have seen this trend across a wide range of verticals and expect it to become the norm over time. Virtually every major company in every sector is setting standards for their suppliers that require a minimum amount of ESG disclosure and target-setting.”

The article was first published by MEED's sister site Verdict

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