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  January 23rd, 2024 | Written by

Navigating the Green Landscape: Organizations Face Challenges in Scope 3 Emission Reporting

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A recent study by Ivalua sheds light on the growing concerns within U.S. organizations regarding unintentional greenwashing, with 45% expressing worries about the legitimacy of their green claims. As the pressure from both customers and regulators intensifies, the focus is on ensuring that all environmental claims are accurately substantiated.

The research reveals that only 48% of organizations feel “very confident” in accurately reporting on Scope 3 emissions, a crucial aspect of environmental impact. A significant 62% admit that reporting on Scope 3 emissions is more of a “best-guess” measurement, highlighting the need for more precise and verifiable data.

While the Securities and Exchange Commission considers incorporating Scope 3 emissions in its final Climate Disclosure Rule, it is imperative for U.S. organizations to proactively manage and improve Scope 3 reporting. The study emphasizes the importance of moving beyond best guesses and adopting a more data-driven approach to support green claims over time.

Despite 88% of organizations expressing confidence in meeting net-zero targets, the study identifies gaps in comprehensive plans for various sustainability initiatives:

– Adopting renewable energy (78%).
– Reducing carbon emissions (68%).
– Embracing circular economy principles (72%).
– Decreasing air pollution (67%).
– Mitigating water pollution (63%).

Jarrod McAdoo, Director of Sustainable Procurement at Ivalua, underscores the urgency for organizations to address sustainability. He emphasizes that obtaining Scope 3 data is a crucial step in the maturation process of sustainability programs, even if they may currently rely on estimated data.

The study also highlights the importance of collaboration with suppliers in achieving net-zero goals. Over half (51%) of organizations believe that green initiatives not involving suppliers are ineffective. Challenges in supplier collaboration include resistance to emission reduction (27%), competing priorities such as cost and risk (24%), incomplete or unreliable sustainability data (22%), and poor visibility into sub-tier suppliers (18%).

To build trust and credibility in sustainability programs, the study suggests that organizations should focus on finding effective ways to measure and gauge the impact of Scope 3 emissions. While achieving absolute accuracy might be challenging without substantial investment, organizations are encouraged to equip procurement teams with good data and insights for meaningful progress.

In conclusion, the research underscores the need for a smarter approach to procurement, with granular visibility into supply chains and effective collaboration with suppliers. This transparency is crucial for showcasing meaningful sustainability progress and avoiding accusations of greenwashing in the long run.