Scope 3 Disclosure is New ESG Trend – Sustainable Fitch 

Sustainable Fitch has said that disclosure of Scope 3 emissions – the greenhouse gas emissions that occur in a company’s value chain and outside its direct control – is a key ESG trend in the short to medium term. In a new report, it said disclosure of Scope 3 is complicated by lack of alignment with corporates’ preferences across guidance from international standards and frameworks on disclosure and climate-related financial risk, creating tension and diverging approaches. Regulation on whether or not companies need to disclose their Scope 3 emissions is still evolving and differs across jurisdictions, standards and sectors. Most climate disclosure-related regulations refer to the Task Force on Climate-related Financial Disclosures (TCFD), which recommends that all organisations consider disclosing Scope 3 emissions, but they differ in how they cover Scope 3 emissions. The most common approach is to mandate Scope 3 emissions disclosure under certain conditions such as a materiality assessment. However, Sustainable Fitch said in the absence of guidance and agreement on how to assess the materiality of Scope 3 emissions categories (of which there are 15) this is likely to lead to confusion among investors and other stakeholders. 

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