Scope 3 Emissions: Seeking Clarity in a Sea of Uncertainty

It is commonly recognized that Scope 3 emissions represent the majority of emissions for most companies. Unsurprisingly, investors and regulatory authorities continue to advocate for the inclusion of corporate financial disclosures relating to greenhouse gas (GHG) emissions that arise from the goods and services acquired to produce their outputs (upstream) and as a consequence of the use of their products (downstream). Yet CFOs face two dilemmas: the methodological and operational challenges of determining the emission of GHGs outside of the company’s control; and the absence of regulatory clarity as to how they are to be disclosed, with multiple frameworks proffering guidance. And these challenges omit the assurance, verification, and enforcement structure required but yet to be built.

Consequently, CFOs face new emission-reporting responsibilities and risks.

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