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Scope 3 emissions encompass indirect greenhouse gas (GHG) emissions that occur in a reporting company’s value chain, including upstream and downstream emissions. In the context of the global mobility industry and relocation, these emissions can be substantial due to the involvement of various service providers from the area of transportation, accommodation, and other logistics. The frequent question asked is who is accountable for reporting Scope 3 emissions and how to outline a step-by-step approach to effectively manage and report these emissions?
Accountability for reporting Scope 3 emissions in the global mobility industry mainly lies with the companies who are initiating the relocation but also the ones who are providing relocation services. These companies include relocation management companies (RMCs), global mobility service providers, corporate HR and other departments that manage employee relocations. However, due to the extensive supply chain involved, accountability extends in a certain way to all stakeholders within the value chain, meaning all third-party service providers.
First and foremost, the corporate clients that are outsourcing their employee relocation must ensure their RMCs are reporting Scope 3 accurately to them so they can include the emissions in their overall sustainability reporting. The RMCs are at the forefront of the reporting as they manage and coordinate the whole relocation process so they also must account for all indirect emissions resulting from their operations. And down the line all the service providers within the supply chain, let it be moving and transportation companies, housing providers, travel agencies etc. also need to measure and provide the respective data to the primary relocation company. What about companies which are based outside of the EU? Even these companies are not exempt from the reporting if they meet certain criteria. And many of the multinational players in the global mobility industry will fall into the category to be classified and obliged to report.
The purpose of the reporting is usually to inform on the past activities and measure certain metrics against past performance to be able to define how much closer did we get to the targets which were outlined by the management or by a European directive or another legislative instrument. The goal should be a key thing to consider at the beginning, because reporting is “just” a mechanism. Without a strategy and actionable steps on how to reduce emissions, it is highly probable you are going to miss the target. Each business activity in the supply chain requires different emission reduction strategies based on where the most emissions are produced and where the potential for reduction lies. When talking about a transportation sector, the currently used strategies can be use of a more sustainable fuel, optimizing transportation routes, consolidation of shipments, use of a public transport, car sharing services or opting for electric or hybrid cars. And many more are about to come.
Reporting on Scope 3 emissions
To be able to report on anything imaginable, historical data is always needed. Data managed, collected and stored in a structured way. Imagine having a tax authority auditing your company for the past years of doing business. And imagine not having all the relevant invoices and recipes stored. How would you be able to report on your activities? The same problem might likely happen when it comes to CO2 reporting. Especially as we are in the early phase of adopting the standards and navigating ourselves in how to measure and collect the data in the first place. So how to start?
First, it is needed to identify and zoom in into the value chain – in other words what are the sources? What partners and activities are involved in the relocation process? For DSPs this might be more straightforward than for RMCs. Once mapped out, the respective stakeholders shall be notified about the need for and importance of GHG reporting and what data they need to provide to fill in the missing pieces of the puzzle. At this moment, most of us are at the start of the data collection and reporting journey, and many of us wait for the others to initiate the conversation or to provide the help to navigate in the process. Not all companies have dedicated personnel for that matter or are not sure of their role and how to even get the data they need to provide. Especially on the DSP side.
The respective data sources which need to be collected shall be gathered where they occur. This might be fuel consumption from transportation services with a respective emission factor based on the car category and type, energy use in the housing etc. Making sure using the standardized templates and standardized methodology is crucial for ensuring the consistency. When the data is gathered, the GHG Protocol’s Scope 3 Evaluator or other calculators can be used to calculate the emissions and convert into CO2 equivalents accordingly to make sure the emissions are quantified correctly.
However the first data for the initial period we decided to report on are just a start. This is the moment we can finally start reviewing how we are doing and how close we are to the targets or the strategic objectives we are after. From this moment onwards, regular updates of the emission inventory or respective areas of data we are measuring shall be ensured so the company stays up to date. Being up to date is important, but being transparent is even more. Particularly in the methodology used, informing about the data sources used or disclosing any assumptions during the calculation process which might have led to the reported results.
So, as you have already understood, the bigger the company and the bigger the supply chain the more data will be needed to collect and manage overtime. To ensure the appropriate data management and more importantly the accurate and customizable reporting, a robust system would need to be put in place to consolidate it all and ensure its transparency, verifiability and comparability. According to Deloitte survey, 74% of public companies are planning to invest in tools and technologies for sustainability reporting over the next year. (source 1 email) The platforms can not only guide the users step by step through the process but thanks to the ability to manage the supply chain complexity in an automated manner they shall make the data collection, processing and reporting faster and easier. With a high number of ESG platforms and reporting tools being presented on the market (let it be Sweep, Normative, WorldFavor etc.) it would be interesting to watch which one of them will get profiled itself as an industry leader and will serve as a credible partner which high verification potential.
The global mobility industry and talent relocation in general plays a significant role in contributing to Scope 3 emissions due to its extensive and complex supply chain and will affect, sooner or later, all stakeholders. By following a systematic approach to identify, collect, calculate, and report Scope 3 emissions data, the industry can significantly improve its sustainability performance. And it will not only help in mitigating environmental impact but will also align with the growing demand for transparency and accountability in corporate sustainability practices.
Sources:
1. ESG Today
2. Volts
Image credits:
1. Photo by Max Langelott on Unsplash
3. Photo by Meriç Dağlı on Unsplash
4. Photo by Claudio Schwarz on Unsplash
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