A new report published this week suggests that most companies are failing to provide a full picture of their carbon footprints and environmental impacts.
Despite impending efforts to mandate emission disclosures that are related to companies supply chains, the report by environmental charity group, Carbon Disclosure Project (CDP) says less than half of the 18,500 companies who self-report their environmental impact to the group disclosed such emissions.
The report also says less than one percent of the companies covered by the CDP require their suppliers to set strong emission reduction targets in line with the Paris Agreement target of capping global warming at 1.5 degrees Celsius above pre-industrial levels.
The CDP collects data from companies around the world so it could rate their environmental impact and sustainability, as they are factors that have become increasingly important to investors.
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“From 2024, European companies – and global companies with significant revenues in the European Union – will need to disclose their supply chain impacts and their Scope 3 emissions,” the executive director of CDP Europe, Maxfield Weiss, told reporters.
Weiss said many companies are not prepared for this.
Business-related carbon emissions are divided into three categories. Scope 1 are emissions directly under the company’s control, Scope 2 covers energy use, while Scope 3 applies the indirect emissions relating upstream to a company’s supply chain, and downstream to the life cycle of their products.
However, the new CDP analysis shows that <50% of disclosing companies in 2022 reported on #SupplyChain emissions, despite their impact significantly outpacing direct emissions, albeit they recorded real impact when they engaged with their suppliers.
The climate and environmental impacts flowing from upstream supply chains are more than 11 times larger than corporate direct emissions, the report says.
Meanwhile, more stringent regulatory frameworks are now been put together in the United States and through the International Sustainability Standards Board (ISSB), which sets standards for climate-related financial disclosure.
Story was adapted from RFI.
