Investors are increasingly focusing on Scope 3 emissions – which include indirect emissions from a company’s value chain – as a key way to assess climate risk. Often representing the majority of corporate greenhouse gas (GHG) emissions, assessment of these types of emissions is becoming increasingly important but is often underreported or ignored by companies. Lack of transparency leaves investors in the dark when assessing the real climate risk exposure of their portfolios. Regulators in the US, the EU and New Zealand have proposed mandatory Scope 3 emissions reporting for listed companies. Improving reporting will enable investors to better identify sources of emissions and potential solutions, ultimately contributing to a more accurate assessment of climate risks. Neglecting Scope 3 emissions in climate commitments weaken the overall climate strategy and raises concerns about greenwashing. For instance, Exxon Mobil faced criticism for its net zero announcement in January 2022, which included Scope 1 and 2 emissions while excluding Scope 3 emissions.
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It is important that carbon credit schemes also benefit local communities.
The World Meteorological Organisation has stated that 193 countries have given unanimous backing to a scheme to monitor global greenhouse...
