Scope 3 carbon emissions data faces a range of hurdles due to constraints on company data collection and inconsistencies among vendor methodologies (see table below). While much has been written about the challenges related to environmental, social, and governance (ESG) data (see The ESG Data Challenge), defining and measuring Scope 3 emissions is a particularly difficult exercise for companies and for market participants seeking to use ESG criteria for investment decisions. In this piece, we define Scope 3 emissions, explain why the data is so complex, suggest solutions, and provide insight into why the data’s unreliability matters for investors.
Scope Three Emissions Data Come from a Broad Mix of Sources
Source: State Street Global Advisors, WRI/WBCSD Corporate Value Chain (Scope 3) Accounting and Reporting Standard (PDF), page 5.