Familiarising Businesses with New Challenges
As another fraught COP closes, many are left scratching their heads about who is really due to take responsibility for tackling climate change. While key advancements have been made in unlocking financial resources for mitigation, the business community has a gap to fill. The United Nations, at an event on private sector engagement, said “Private sector involvement can facilitate the development of financial mechanisms, build stakeholder trust, and address the gap between policy formulation and actionable climate solutions.”
As such, pressure upon larger corporations to report on their emissions across the whole lifecycle of their products and services, this drive to change has come from a variety of sources, including the recent implementation of CSRD and the growth of government tenders that require up to 30% disclosure of green credentials. Both require an understanding of Scope 1, 2, and 3 emissions – and while the first two have been well documented, the third remains a little trickier to grasp.
We have created this explainer to answer any questions you might have about your Scope 3 emissions.
What are my Scope 3 emissions?
Grant Thornton Ireland defines them as “any other indirect emissions from sources outside of your direct control. This covers all the emissions associated, not with the company itself, but those for which the organisation is indirectly responsible up and down the value chain. This includes purchased goods and services, use of sold goods, business travel, commuting, waste disposal, and water consumption.”
How are Scope 3 emissions affecting business now?
Many small businesses do not currently have the labour or financial resources to dedicate to the reporting of Scope 3 emissions. Indeed, many organisations have broadly committed to understanding and beginning to measure their Scope 3 emissions by 2030. According to the Environmental Protection Agency, “reporting on Scopes 1 and 2 emissions are mandatory under the GHG Protocol while Scope 3 reporting is voluntary.” As such, many have prioritised their Scope 1 and 2 emissions as the lower-hanging fruit (you can see our handbook on getting started here).
However, while many SMEs still need to be included in the first wave of CSRD, many are indeed being caught up in the reporting of larger corporations. One such company in the Logistics sector reached out in 2023, explaining that they were part of a Global Food and Beverage Production’s Scope 3 assessment. As such, they were obliged to make meaningful adjustments to their reporting to continue working for said company.
How will this affect my operations?
Firstly, it is important to ascertain in which category your business falls for CSRD reporting. Public Interest Entities (PIEs) in the EU with over 500 employees and currently covered by the Non-Financial Reporting Directive will have to follow the CSRD requirements beginning from the fiscal year 2025. This will be based on 2024 data. This legally binds such companies to CSRD Scope and Strategy Alignment, Double Materiality Assessment, Roadmap and Implementation, Mandatory Assurance, Tax Reporting, and Training.
However, as the scope of the disclosure broadens to include smaller businesses with fewer resources and less capital to deploy, many are left scrambling to keep up. However, decarbonising your operations has never been more accessible, with innovative and cost-effective solutions now readily available.
UrbanVolt’s Solar-as-a-Service model eliminates upfront costs by providing fully financed solutions that include installation, maintenance, and ongoing repairs. Taking the first step toward reducing your emissions may feel overwhelming, but it can begin with a simple conversation. Our dedicated team is here to guide you every step of the way. If you’re ready to explore your options, don’t hesitate to reach out to us here.
Author: Will Penn | Energy Associate Manager | UrbanVolt