Challenges and solutions in measuring and reporting Scope 3 emissions

Challenges

Through engaging with over 22 organizations across diverse sectors in the Netherlands, our research uncovers the real-world challenges encountered in Scope 3 emissions accounting. We’ve heard first-hand about the complexities they face, and collaborated with experts to shape viable solutions.

The report distils the main challenges into five key categories:

1. Poor data quality and availability: Good quality primary data across value chains is often lacking, especially among smaller businesses.
2. Evolving and inconsistent disclosure standards: Understanding and keeping up with rapidly evolving standards requires expert knowledge, and even then, room for interpretation remains.
3. Stakeholder engagement: Obtaining Scope 3 emissions data requires cooperation from stakeholders across the value chain, which can be challenging due to a range of factors, including concerns about confidentiality and reputation.
4. Resource constraints: Many companies, particularly small and medium-sized enterprises (SMEs), find it challenging to process the large volume of data involved in Scope 3 emissions measurement and reporting with limited financial and human resources.
5. Limited integration into business operations: Scope 3 emissions are often not fully integrated into many businesses' operations and processes, slowing down emission data collection efforts and, thereby, the decarbonisation process.
    

Solutions

Despite these significant hurdles, solutions are emerging, most of which involve collaboration between multiple stakeholders across value chains or within specific sectors.

1. Data collection technology: Use of data collection technology enables businesses to measure and manage their emissions, improving the overall quality and availability of Scope 3 emissions data while reducing the required resources.
2. Accelerating the harmonisation of standards and guidance: Harmonisation and interoperability of standards can enhance understanding of measurement methods and simplify reporting processes, while an increased focus on interoperability ensures global consistency and accuracy of reported data.
3. Incentives and a long-term perspective: Use of subsidies and integration of emission measurement into procurement policies are examples of how organisations can be incentivized to engage in emissions reporting.
4. Increasing knowledge and awareness: Increasing the level of knowledge on the need and use of emission reporting through training and engagement programs across stakeholder groups is essential to addressing the identified challenges.

Our report concludes with specific recommendations for government, the private sector, standard-setters, auditors, and the financial sector to enhance emissions reporting, increase data availability, and raise emission data quality. Addressing Scope 3 emissions is a challenge, but with concerted effort and commitment, it can be overcome.