IEMA sets out views on scope 3 reporting to government - December 2023

IEMA has submitted evidence to the Department for Energy Security and Net Zero consultation on the benefits, costs, and practicalities of Scope 3 greenhouse gas emissions reporting in the UK, including links to the Streamlined Energy and Carbon Reporting (SECR) framework. Here, Chloë Fiddy, IEMA’s policy and engagement lead for climate, discusses the key aspects of the IEMA submission.

The UK government has launched an endorsement process to assess the suitability of the standards IFRS 1 and IFRS 2 issued this year by the International Sustainability Standards Board (ISSB) for use in the UK. These standards require Scope 3 emissions to be reported, as do the European Sustainability Reporting Standards (ESRS). This, coupled with the fact that many companies are voluntarily reporting Scope 3 under schemes such as SBTi and the CDP, makes it timely for the government to consider it for companies reporting in the UK.

In summary, the call for evidence asks for organisations to put forward their lived experience of Scope 3 reporting, including the costs, benefits, barriers experienced, and perceived usefulness of the outturn data. It also asks about the practicalities of the reporting, acknowledging that there is a growing body of literature on this point, which is currently being addressed by separate consultations and reviews being held by the Greenhouse Gas Protocol.

The call for evidence also includes questions assessing the effectiveness of the SECR framework, now that it has been in place for a while. Consideration is being given to the potential for streamlining reporting where requirements and benefits overlap.

IEMA’s response, informed by dedicated workshops with members, looked closely at these matters and made the following core conclusions:

First, that Scope 3 emissions are a useful tool for a company to compare its emissions from one year to the next, but complexities and variations in boundary setting and data collection make reports not useful for comparing one company to another in any meaningful way.

However, in this, we do acknowledge that GHG Protocol is currently reviewing Scope 3 frameworks and guidance to iron out these issues. It was also agreed that whatever the issues with Scope 3 reporting are, without it, it is impossible for companies to understand their risks. In this respect, the workshops agreed with the IFRS approach to Scope 3.

Second, SECR reporting can be viewed as a tickbox exercise now that it has been in place for some years. The workshops noted that because it is not compulsory to implement actions identified in SECR reporting, it is likely that the companies that would take action, probably already have done so and companies that are not inclined to take action will continue to not take action.

We make four recommendations:

• First, we suggest that this may be the moment to take a holistic view of what reporting is supposed to achieve, and design a new framework based on this outcome rather than making small incremental changes to existing frameworks.

• Second, we propose that to resolve the known Scope 3 issues around data collection, ways need to be found to incentivise large companies to support smaller ones.

• Third, we recommend that all future reporting requirements should be clear enough in purpose to enable clear plain English guidance.

• Finally, we return to a central IEMA theme as a membership organisation for professionals: with a call for education and skills development in the process to be at the heart of any new regulations.

Our submission can be found here.

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