5 April 2024
The UK government put out a Call for Evidence in October 2023, on ‘Scope 3 Emissions in the UK Reporting Landscape’. Scope 3 Emissions are all the indirect emissions associated with the company's activities, including those from suppliers and from customers using their products or services. These emissions often make up most of a company's carbon footprint and are usually the most challenging to reduce. Close attention to effective decarbonisation strategies across all three scopes of emissions (that is both direct and indirect) will be essential for the UK to reach its net zero target by 2050.
Regulators across various jurisdictions, including the European Union, Japan and California, are signalling the impending requirement for corporations to disclose Scope 3 emissions. These disclosure requirements are also being integrated into global standards such as those from the International Sustainability Standards Board (ISSB). Indeed, the UK’s ‘Call for Evidence’ is directly addressed at informing the government’s decision on endorsing the ISSB standards for the UK.
In CCLA’s response, we strongly advocate for mandatory Scope 3 emissions disclosure for UK listed companies.
Determining Scope 3 emissions is an area recognised as subject to variability and estimation. We therefore recognise the Green House Gas Protocol's suitability as the most widely recognised accounting standard for greenhouse gas emissions, providing a base level of consistency and evidence for benchmarking against industry peers.
We use data on Scope 3 emissions in our climate change engagement strategy to help identify the largest absolute emitters that we invest in. We consider it essential for companies to make credible decarbonisation commitments based on science and prioritise engagement with these identified high-emitting companies.
Our support for mandatory Scope 3 emissions disclosure reflects our commitment to understanding, monitoring and mitigating climate risks in our engagement approach. We therefore need the fullest emissions data information, over all scopes of emissions, to help us push for the fastest and the most effective reductions in companies’ overall impact.