The UK government has put out a Call For Evidence on the costs, benefits, and practicalities of Scope 3 emissions reporting. Responses on reporting will help the government assess its stance on the ISSB’s recently published sustainability disclosure standards and the impact of endorsing these reporting requirements. Stakeholders have until 14 December 2023 to provide their views.
Scope 3 emissions are indirect greenhouse gases associated with an organisation’s value chain and can often be difficult to define compared to Scopes 1 and 2. Scope 1 addresses the direct emissions related to an organisation, such as those from company-owned transport or burning fuel in onsite furnaces. Scope 2 emissions cover indirect emissions coming from purchased energy, e.g. for lighting and heating buildings.
Current regulations make most Scope 3 emissions reporting voluntary, with only the largest companies required to disclose them in line with Task Force on Climate-Related Financial Disclosures (TCFD) recommendations.
The Call for Evidence acknowledges the need to ramp up action in this area, given that Scope 3 emissions typically account for the lion’s share of a company’s footprint (up to 80-95% of total emissions, in many cases). Scope 3 disclosures are also becoming increasingly important to investors who are considering the preparedness for the transition to a low-carbon economy.
Evidence to improve understanding of current reporting logistics
In June 2023, the International Sustainability Standards Board (ISSB) released two standards that require organisations to report on Scopes 1, 2, and 3. These include IFRS-S1, which focuses on sustainability-related financial disclosure requirements, and IFRS-S2, which focuses on climate-related disclosures.
The government’s call for evidence aims to gather more information related to the financial implications, advantages, and feasibility of Scope 3 emissions reporting. Feedback will play a crucial role in the government’s decision on whether to endorse the ISSB standards for use by UK businesses.
Review of the SECR reporting framework
Additionally, the call for evidence seeks input on how such endorsement would complement existing requirements under the Streamlined Energy and Carbon Reporting (SECR) framework.
Under SECR, Scope 3 reporting is largely voluntary, although a Post-Implementation Review of the scheme is due in 2024. This Call for Evidence will help inform that review and ensure that SECR is achieving its aims and inform any future changes.
How to respond
Organisations or individuals interested in responding can take the survey on the DESNZ website or respond via email to reporting@energysecurity.gov.uk. For further guidance, visit the Government’s Call For Evidence page online.
Still have a question on reporting your emissions? Feel free to get in touch with one of our specialists at Sustainable Energy First for a no-obligations chat.
