60% of UK businesses may not be prepared for Scope 3 emissions reporting deadline, survey finds

On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) was initiated. This requires more large businesses and SMEs which trade in the EU to conduct sustainability reporting to stricter standards from January 2024.

Research conducted by Census-wide on behalf of 7bridges surveyed 800 businesses with over 250 employees in sectors such as retail, pharmaceutical, manufacturing, and logistics. It found that 60% of businesses surveyed believed that they may not be prepared to meet the new requirements for Scope 3 emissions reporting by the deadline.

Philip Ashton, co-founder and Chief Executive of 7bridges said: “The penalties are substantial; UK firms are set to be charged up to £40 per tonne of CO₂ emissions misreported under the new regulations and consumers can be unforgiving which puts their reputations at risk.”

“This is a huge challenge for companies such as retail and pharma, and many will be looking to their supply chains – which account for up to 80% of Scope 3 emissions – first.”

Scope 3 refers to indirect emissions that are caused not by an organisation itself, but by other businesses and activities somewhere along the value chain. Companies that don’t properly report their Scope 3 emissions before the deadline not only risk fines but also losing customers. In addition to businesses, Censuswide also surveyed 2,000 consumers, with 49% saying they would look elsewhere if a business were to be fined for non-compliance and 17% saying they would never use that business again.

As became very clear at the Sustainable Supply Chain Conference earlier this month, Scope 3 emissions are a hot topic and a challenge that many companies are really struggling with. At the event, Senior Consultant at the Carbon Trust Samuel Bird said that Scope 3 emissions “often account for a huge portion of a company’s overall value chain emissions; quite often those emissions can be 60-90% of the overall carbon footprint”.

Bird emphasised the importance of “a well-defined supplier engagement programme”, especially for businesses with significant upstream Scope 3 emissions.