Scope 3 Emissions: The Hidden Greenhouse Gas Challenge

As businesses seek openness in reporting their greenhouse gas emissions, a crucial gap appears in the form of Scope 3 emissions, which frequently originate from suppliers and stretch throughout the lifespan of a product. Many businesses disclose their Scope 1 emissions willingly, which account for emissions directly produced by their activities, but they frequently neglect the broader and more difficult Scope 3 emissions. According to a survey of over 13,000 firms, those simply revealing Scope 1 emissions may unwittingly disguise their real environmental effect by transferring emissions upstream to less efficient suppliers. This UCLA Anderson Review article explains why corporations that disclose emissions appear to be greener only in a limited sense.

Many corporations who release greenhouse gas emissions statistics, according to the article, tend to focus primarily on Scope 1 emissions, which are emissions directly created by their activities, while ignoring Scope 3 emissions, which encompass emissions throughout a product’s life cycle. These emissions, which are frequently generated by suppliers, are rarely recorded and are far more difficult to quantify. The study examined emissions data from over 13,000 firms and discovered that companies that disclosed just Scope 1 emissions had lower Scope 1 emissions than non-disclosing enterprises. When Scope 3 emissions were taken into account, however, disclosing firms actually created greater overall emissions. According to the article, businesses may be purposefully or unwittingly moving emissions upstream to suppliers, potentially making their own operations look greener than they are. Finally, the article notes that the study emphasizes the need for more complete reporting and accounting for emissions, particularly within supply chains.

In light of the study’s findings, it becomes evident that companies must adopt a more comprehensive approach to emissions reporting, encompassing Scope 3 emissions as well. Read through the article to learn more about the issue.