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Ivalua warns lack of Scope 3 visibility could trigger a wave of unintentional greenwashing

With the UK government set to launch a revised Net Zero Strategy at the end of March, Supply Chain Expert Ivalua has today cautioned that the path to Net Zero could be blocked if businesses don’t radically improve the visibility into and measurement of Scope 3 emissions data. Despite making up 70% of emissions, more than half of UK organisations struggle to obtain reliable data on Scope 3 emissions, making assessing their true environmental impact virtually impossible. This could create a wave of unintentional greenwashing and an inability to achieve progress on emissions reduction.

In his recent independent review of Net Zero, MP and former Energy Minister Chris Skidmore claimed that the UK risks falling behind on curbing emissions unless it takes a new approach. The review has recommended the UK government should provide more support to businesses to help them measure emissions through their supply chains. Businesses giving evidence to the review that a lack of such data creates a huge challenge for accurately reporting Scope 3 emissions and taking action to reduce them.

“The UK government and businesses must urgently resolve the Scope 3 measurement conundrum,” explains Alex Saric, Smart Procurement Expert at Ivalua. “Failure to do so could result in a wave of unintentional greenwashing, with companies trying to demonstrate they are achieving Net Zero goals, but failing because they cannot obtain or report accurately on Scope 3 emissions. This is often because organisations suffer from incomplete, absent or unreliable supplier data. While they may have some visibility into Scope 3 emissions for critical suppliers, few have that transparency into all immediate suppliers and deeper into their supply chains. This lack of visibility could leave efforts to provide environmental transparency at a complete impasse.”

The Net Zero Review also highlighted that a lack of readily available emissions data in a standardised format makes accurate reporting challenging. This acts as a barrier to decarbonisation. As such, the review recommends the UK Government endorse and implement the International Sustainability Standards Board (ISSB) standards as soon as possible. The review says that the UK should aim for 2024/25 as the first sustainability reporting cycle for companies in scope, encouraging companies to apply the ISSB’s standards voluntarily in 2023/24.

The ISSB agreed in February 2023 to release global guidelines at the end of Q2 2023, which would go into effect in January 2024. This will allow organisations time to apply its standards and start building the capacity and infrastructure to track and accurately report Scope 3 emissions.

“Scope 3 emissions shouldn’t be a best guess or finger-in-the-air measurement,” explains Saric. “The key to tracking emissions, committing to science-based targets and acting to achieve them will be establishing transparent and consistent reporting standards. The UK government must ensure that it is supporting businesses in creating the capacity and infrastructure for measuring Scope 3 emissions, and outlining the reporting standards for which they should abide by.”

“Procurement has a central role to play in establishing transparent emissions measurements,” Saric concluded. “Their proximity to suppliers means they can work directly with them to obtain the data needed, or source it from third-party data sources to accurately report on emissions targets. By assessing emissions at the product and category level, procurement teams can accurately report on progress, and identify areas to collaborate with suppliers on reducing emissions to ensure they are making meaningful progress on Net Zero pledges.”