Deloitte: Only 15% of Companies Report on Scope 3 Emissions
There’s no question about it – Scope 3 emissions can be tricky to tackle.
They can contribute up to 95% of a company’s total emissions, but as they are not produced by the company it’s difficult to have full visibility of their impact.
Research from Deloitte shows that while 74% of companies disclose their Scope 1 emissions, a mere 15% report on Scope 3.
This gap represents a huge blind spot in emissions.
Deloitte’s 2024 Sustainability Action Report explores the state of ESG reporting and the tangible benefits of becoming more sustainable.
“In the rapidly changing ESG landscape, we’ve seen considerable strides among businesses,” says Kristen Sullivan, Audit & Assurance Partner for Sustainability and ESG Services at Deloitte.
“The creation of dedicated ESG teams, the rise in specialised roles, and investments in sustainability reporting, all indicate a strategic shift toward embedding sustainability into their core operations.
“While challenges still exist, the commitment to sustainability is becoming more evident as companies continue to unlock the potential of ESG insights.”
Companies have been building ESG capacity
The report says that companies are making ESG reporting a strategic priority, with 98% of survey respondents reporting some level of progress towards sustainability goals and targets in the last year.
Nearly all companies surveyed have an ESG working group meeting at least quarterly, and 43% meet at least once per month.
Half of executives surveyed reported they are hiring new resources to enhance reporting capabilities in support of greenhouse gases.
Since December 2022, the role of Chief Sustainability Officer now appears 13% more in surveyed companies.
Deloitte warns that organisations using a ‘wait and see’ approach to ESG reporting may find they have catching up to do in preparation for new regulations.
Steven Goldbach, Sustainability, Climate and Equity Leader at Deloitte, says: “To foster growth of the low-carbon economy, leaders must find new ways to drive change across industries and sectors.”
Organisations are recognising the benefits of sustainability reporting
One fifth of executives surveyed by Deloitte identify brand reputation as the primary business outcome anticipated from enhanced ESG reporting.
This finding shows the significant impact that robust sustainability disclosure can have on a company's public image.
Additionally, 15% of respondents expect improved talent attraction, while 14% anticipate the ability to implement pricing premiums for their products.
The results highlight the multifaceted external benefits that effective ESG reporting can bring, influencing not only consumer perceptions but also potential employees and market positioning.
Beyond these external advantages, more than half of the surveyed executives expect internal benefits from strengthened ESG reporting practices.
These include risk reduction, enhanced stakeholder trust, and improved operational efficiencies.
The dual focus on both external and internal benefits demonstrates the comprehensive value that companies are beginning to recognize in their ESG efforts.
As organisations continue to invest in sustainability reporting, they are increasingly viewing it not just as a compliance exercise, but as a strategic tool that can drive both reputational gains and internal improvements across various aspects of their business operations.
The challenges in ESG reporting
As companies invest in infrastructure and resources to improve ESG reporting, further complexities can become more visible.
More than half of executives surveyed told Deloitte that data quality is the biggest ESG challenge, and 88% report it as one of the top three challenges.
Important control steps such as sign off, review and certification of ESG data were cited in the top three by more than 80%.
The research also shows that 74% of companies disclose Scope 1 emissions, but only 15% report on Scope 3.
Whilst some climate disclosure regulations do not specify Scope 3 emissions reporting, others like the CSRD, California Climate Legislation and IFRS do.
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