Background: The client is a global services company. Its Scope 3 emissions occur from sources owned or controlled by other entities in the value chain. The GHG's Scope 3 Standard is the only internationally accepted method for companies to account for greenhouse gas emissions.
All upstream (i.e., cradle-to-gate) emissions from the production of electronics purchased or acquired by your organization in the reporting year.
Is this category material?
Include in Scope 3 emissions?
An inability to identify and understand risks and opportunities associated with emissions from eWaste.
For all upstream (i.e., cradle-to-gate) emissions from the production of capital goods purchased or acquired by the reporting company in the reporting year.
Emissions from the use of capital goods by the reporting company are accounted for in either scope 1 (e.g., for fuel use) or scope 2 (e.g., for electricity use),
rather than in scope 3.
Is this category material?
Include in Scope 3 emissions?
The inability to identify GHG reduction opportunities, set reduction targets and track performance.
For emissions related to the production of fuels and energy purchased and consumed by the reporting company in the reporting year that are not included in scope 1 or scope 2.
Is this category material?
Include in Scope 3 emissions?
Electricals produce electricity. Electricity is a specific form of directly usable energy. Energy is the total amount of work that is done. Electrical waste represents the physical products that no longer produce energy at a useful rate.
For emissions that arise from electronic and electrical equipment as they relate to the transportation and distribution activities throughout the value chain.
Is this category material?
Include in Scope 3 emissions?
Handheld devices for receiving or shipping goods.
For emissions from third-party disposal and treatment of waste generated in your owned or controlled operations in the reporting year.
Is this category material?
Include in Scope 3 emissions?
This area is under construction.
For emissions from the electronics and electricals used in the transportation of employees for business-related activities in vehicles owned or operated by third parties, such as aircraft, trains, buses, and passenger cars.
Is this category material?
Include in Scope 3 emissions?
Adapters, charging outlets, battery banks, car chargers, bluetooth keychain, smart tags, et al.
For emissions from the transportation of employees between their homes and their worksites.
Is this category material?
Include in Scope 3 emissions?
Electronic and electrical equipment is likely to have already been accounted for in other Scope 3 categories.
For emissions related to the operation of leased electronic and electrical assets by the reporting company in the reporting year.
Is this category material?
Include in Scope 3 emissions?
The trend to lease electronics is increasing. Ensure your eWaste emissions are included in this category, as opposed to Category 1.
For emissions that occur in the reporting year from transportation and distribution of sold electronics and electricals in vehicles and facilities not owned or controlled by the reporting company.
Is this category material?
Include in Scope 3 emissions?
As with Category 4, this
For emissions from processing of sold intermediate products by third parties (e.g., manufacturers).
Account for these emissions after your company makes the sale.
Is this category material?
Include in Scope 3 emissions?
Have you figured out how much your manufacturers contribute to total carbon emissions at each stage of the supply chain?
For emissions from the use of goods and services sold by the reportingcompany in the reporting year.
Is this category material?
Include in Scope 3 emissions?
How often do you communicate with your suppliers?
For emissions from the waste disposal and treatment of productssold by the reporting company (in the reporting year) at the end of their life.
Is this category material?
Include in Scope 3 emissions?
Do you know how to obtain the necessary data? Perhaps the required underlying data does not exist.
For emissions from the operation of assets that are owned by thereporting company (acting as lessor) and leased to other entities in the reporting year that are not already included in scope 1 or scope 2.
Is this category material?
Include in Scope 3 emissions?
This area is under construction.
For emissions from the operation of franchises not included in scope 1 or scope 2.
Is this category material?
Include in Scope 3 emissions?
This area is under construction.
For emissions associated with the reporting company’s investments in the reporting year.
Is this category material?
Include in Scope 3 emissions?
Are you relying on estimates and modelled proxies?
Why does SFDR matter?
These Sustainable Financial Disclosure Regulations known as SFDR, ask companies to declare their ESG impact in clear and standardized terms. Only real, verifiable data can be reported under the SFDR. The initial focus of SFDR is on the environment. Social and governance reporting will be phased in over time.
Scope Three reporting under SFDR requires organizations that trade publicly, on the markets, to disclose the greenhouse gas emissions of your supply chains. Scope 3 impacts should be reported by the end of 2022. The key issue is a lack of data.
Article 6 funds represent business as usual. For example, tobacco companies can be included. Article 8 funds "promote" sustainable practices. Article 9 funds represent companies making a clear and distinct impact on the environment.
What is the significance of the EU Taxonomy?
The European Commission wants to prevent market players from supporting activities and invest in sustainable solutions. Companies subject to the NFRD and CSRD must address six questions:
1.) Climate change mitigation
2.) Climate change adaptation
3.) The sustainable use and protection of water and marine resources
4.) The transition to a circular economy
5.) Pollution prevention and control
6.) The protection and restoration of biodiversity and ecosystems
Why does NFRD matter?
In 2018, the Non-Financial Reporting Directive (NFR Directive) came into effect in all EU member states. In 2021, the European Commission launched the Corporate Sustainability Reporting Directive (CSRD), which expanded the NFRD's existing reporting requirements.
The NFRD covers:
a.) Environmental matters
b.) Social and employee aspects
c.) Respect for human rights
d.) Anti-corruption and bribery issues
e.) Diversity on board of directors.
Under NFRD, companies may disclose this information using national, European or international guidelines, such as ISO 2600.
What is the significance of the CSRD?
The CSRD, or Corporate Sustainability Reporting Directive, replaces the Non-Financial Reporting Directive (NFRD).
The European Financial Reporting Advisory Group (EFRAG) is working on creating the more ambitious standards. The first set of standards will come in to force around October 2022.
Scope 3 guidance will be published in October 2023. Large companies will be subject to CSRD from January 1, 2024. 50,000 EU companies will report under CSRD from 2025.
Why bother with TFCD?
The TCFD, or Task Force on Climate-related Financial Disclosures, was created in 2015 by the Basel-based Financial Stability Board (FSB). In its 2017 report, TCFD said companies should only include Scope 3 emissions in their reporting if appropriate or financially material.
Corporates are increasingly expected to be transparent on all emissions they produce. Investors increasingly demand Scope 3 disclosures to get a clear picture of the corporate’s commitment to net-zero and decarbonisation.
What indicators are available?
Principle Adverse Impact (PAI) indicators outline all the potential ways your company's activities affect the environment. Mandatory indicators cover areas such as waste levels and carbon emissions.
Upcoming changes (effective date of December 2022)
Why use SASB for ESG reporting?
SASB’s Environmental Reporting covers quantitative metrics within GHG Emissions and Waste & Hazardous Materials. SASB recently merged with IIRC to create the VRF or Value Reporting Foundation.
Why use the RTS indicators?
Once fully launched, the EU's Reporting Technical Standards (RTS) document will provide greater clarity on company reporting requirements.
When do we use the SBTi targets?
SBTi requires the Scope 3 reporting if and when Scope 3 emissions exceed 40% of overall emissions.
Why report Scope 3 emissions in line with the UN Global Compact?
By measuring Scope 3 emissions, organisations can:
a.) assess where the emission hotspots are in their value chain;
b.) identify resource and energy risks in their supply chain;
c.) identify which suppliers are leaders and which are laggards in terms of their sustainability performance;
d.) identify energy efficiency and cost reduction opportunities in their value chain;
e.) engage suppliers and assist them to implement sustainability initiatives;
f.) improve the energy efficiency of their products; and
g.) positively engage with employees to reduce emissions from business travel and employee commuting.
What is the advantage of the GRI?
The Global Reporting Initiative offers globals best practices for impact reporting.
Why CDP?
The CDP focuses on three key areas: climate, water and forests.