LONG VIEW ARE YOU IN SCOPE FOR GREENHOUSE GAS REPORTING? IStock / MaRussya Finance providers need to understand their value chains impact on carbon emissions, which, in turn, will force corporates to disclose Scope 3 data. Gavin Hinks reports I n the fight against climate change the core issue is greenhouse gas (GHG) emissions. But for corporates trying to force emissions down, the most complex issue may be addressing indirect emissions in supply chains, otherwise known as Scope 3 emissions. Corporates are under pressure even now to reveal the value chain emissions for which theyre responsible. And they are not alone: Scope 3 GHGs are set to play an important role in the future work of credit providers and investors who will need to disclose the emissions they finance through investments or loans. According to Ioannis Ioannou, a professor at London Business School and an expert in sustainable business, the issue of Scope 3 emissions and how they affect the relationship between credit providers and their clients is only going to grow in significance. Its a huge issue, and its an issue that will increasingly be on the agenda. He adds: There is no way to underestimate the importance of Scope 3 emissions because they are such a huge chunk of the carbon emissions problem. Scope 3 emissions are indeed a looming issue. They include emissions attributable to an organisation in their supply chain, including those produced in the production of purchased goods and services, business travel, transportation and distribution, and waste. Putting the data together will not be easy. As Ioannou says, the complexity cannot be understated. But it is inevitable. And that will place key individuals on the front line, according to Pietro Rocco, a senior manager and expert in green finance at the Carbon Trust. A corporate treasurer and the finance function in general will need to take emissions very seriously. Significant volume Though largely invisible to upstream value chain members, Scope 3 can potentially account for a significant volume of the emissions attributable to an organisation. According to the Carbon Disclosure Project (CDP), Scope 3 emissions make up just under 30% of total emissions in the steel and transport industries, and about half of all emissions produced by electricity utilities. In the cement industry, often viewed as a high emitter, Scope 3 may be less than 20%. But when treasurers.org/thetreasurer ISSUE 1 2023 13 TT ISSUE 1 23 pp12-15 Scope.indd 13 23/02/2023 09:06