FTSE Russell Proposes Scope 3 Simplification    

Investors should focus on systematically identifying and examining the most material Scope 3 categories in available data to enhance robustness and comparability, new research from FTSE Russell has shown. Scope 3 greenhouse gas (GHG) emissions make up over 80% of corporate carbon footprints on average, according to the research. However, data quality issues and gaps hinder investors’ ability to systematically evaluate those emissions and integrate them into investment processes and reporting. To tackle this issue, FTSE Russell recommended that investors identify the most material Scope 3 categories, as defined under the GHG Protocol. The protocol divides Scope 3 emissions into 15 categories, including purchased goods and services and business travel. In its research, FTSE Russell proposed a methodology to identify the most material Scope 3 category across different sectors. Scope 3 refers to emissions linked to a company’s activity but generated outside its own operations, such as through customers or in its supply chain. 

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