The Securities and Exchange Commission (SEC) published on March 2022, a draft regulation to require public companies to disclose climate risks as well as carbon dioxide and methane emissions, including those from their suppliers (Scope 3 emissions). The proposed rules would phase in the reporting of Scope 3 emissions starting in fiscal year 2024, for cases in which these emissions are material; if there is a substantial likelihood that a reasonable investor would consider the information important in deciding how to vote or make an investment decision; or if the company has set an emissions reduction target that includes Scope 3.
This will have important implications for multinational companies, as for large businesses, Scope 3 emissions usually range somewhere between 80% and 97% of total emissions. Importantly, this means that Small and Medium Enterprises, as part of today’s global supply chains, will be eventually forced to provide information similar to that required by large companies.
Read this technical briefing by Soffia Alarcón, EC2’s non-resident fellow, to read more on the main opportunities and challenges from getting ahead and start calculating Scope 3 supply chain-based emissions, and to learn about the main different Environmental, Social and Governance (ESG) frameworks globally that require companies to provide information on them.