November 27, 2024

Scope 3 Reporting for CSRD

By Emerald Power · 6 minute read

Scope 3 emissions are the largest part of most companies' carbon footprints, and reporting them accurately is essential for compliance with the EU's Corporate Sustainability Reporting Directive (CSRD). Here's what you need to know:

What is CSRD? A regulation requiring companies to report ESG impacts. Deadlines: large companies start in 2026, SMEs in 2027.
What are Scope 3 Emissions? Indirect emissions across your value chain, split into:
- Upstream: Emissions from suppliers, raw materials, employee commutes, etc.
- Downstream: Emissions from product use, disposal, investments, etc.
Why It Matters: Scope 3 often makes up 90% of a company’s carbon footprint. Reporting helps with compliance, trust, and identifying reduction opportunities.
Steps to Prepare:
1. Conduct a double materiality assessment to identify key ESG risks and impacts.
2. Build a reporting framework, using tools like Emerald Power for automation.
3. Collect data from suppliers and use proxy metrics when needed.
4. Validate data accuracy through regular checks and third-party assurance.
Tools: Use carbon accounting software that aligns with GHG Protocol and CSRD standards, integrates with your systems, and simplifies reporting.

Key takeaway: Start early, involve your suppliers, and leverage technology to meet CSRD requirements and improve sustainability efforts.

Steps to Prepare for Scope 3 Reporting

Getting ready for Scope 3 reporting under the Corporate Sustainability Reporting Directive (CSRD) doesn't have to be overwhelming. Here's how mid-market businesses can tackle this challenge head-on.

How to Conduct a Double Materiality Assessment

Think of a double materiality assessment as your reporting compass - it points you in the right direction by looking at both environmental impact and financial risks. Here's what you need to know:

First, map out ESG issues connected to your operations and value chain. This means looking at everything from your carbon footprint to your supply chain relationships.

Next, examine how these issues affect your bottom line and the environment. For instance, if carbon taxes go up, your energy costs will too - that's a direct hit to your finances.

Finally, focus your efforts where they count most by ranking these issues based on their impact. This helps you zero in on what really matters for your reporting.

Building a Framework for Reporting

Your reporting framework needs to be like a well-oiled machine - systematic, reliable, and built for the long haul. Here's what works:

Make sure you're in lockstep with CSRD guidelines - they're your blueprint for success. Put technology to work for you - platforms like Emerald Power can do the heavy lifting by automating data collection and tracking your progress toward net-zero goals.

Don't forget to build in quality checks. Regular audits or third-party verification will help you sleep better at night, knowing your data is solid.

Collecting Data for Scope 3 Emissions

Here's the truth about Scope 3 data: you can't do it alone. You'll need to team up with your suppliers to get accurate emissions data. When direct data isn't available, proxy metrics can fill the gaps. Look to your internal records - things like procurement and logistics data can help you make solid estimates.

Emerald Power's platform makes this process smoother by:

Pulling in supplier data automatically
Providing industry benchmarks
Checking data accuracy in real-time
Making sure everything lines up with GHG Protocol standards

Tips for Better Scope 3 Reporting

Working with Suppliers and Stakeholders

Getting accurate Scope 3 data starts with strong supplier relationships. Since most of these emissions come from outside your company, you'll need to work closely with your business partners to get the numbers right.

Jump in early with your suppliers. Take IKEA's approach - they've set up programs to get their suppliers on board with tracking emissions. This helps them collect better data and produce more accurate reports.

Getting suppliers to share data can be tricky. Start by setting up data-sharing agreements that protect everyone's privacy. One German manufacturer saw big results by running supplier training workshops - their data accuracy jumped 25% in just a few months. Plus, these workshops helped suppliers understand what they needed to do for CSRD reporting.

Once you've got your supplier data flowing, the right tools can help you make sense of it all.

Using Technology to Track Emissions

Scope 3 emissions data can get messy fast. That's where tech comes in - it helps collect data automatically and keeps you on track with requirements. Emerald Power offers tools that pull in supplier data automatically, cutting down on mistakes and saving time while following GHG Protocol rules.

Tech also helps you see how you stack up against others. With Emerald Power's platform, you can compare your numbers to industry standards and set realistic goals for cutting emissions. One French retailer tried this out and cut their reporting time by 30% just by automating their data collection.

When picking a carbon tracking tool, look for features like automation and APIs that plug right into your systems. These tools help you work faster while staying CSRD-compliant.

Validating Data for Accuracy and Assurance

Getting your numbers right matters for CSRD compliance. Good checking systems help catch mistakes early. One Dutch logistics company started doing checks every three months and cut their reporting mistakes by 15% year over year.

Having outside experts check your work builds trust. When someone else verifies your data meets CSRD standards, it shows stakeholders they can count on your numbers. As ClimateCamp puts it:

"Transparency and accountability on ESG aspects will become as important as the quality of the service or product provided" [1]

Being open about how you track emissions helps build trust and cuts down on doubts. By mixing smart tech, teamwork with suppliers, and thorough checking, mid-market companies can nail their CSRD requirements and lead the way in sustainability.

Tools and Resources for Scope 3 Reporting

This section covers key tools and strategies to make Scope 3 reporting under CSRD simpler and more effective.

How to Choose Carbon Accounting Software

Picking the right carbon accounting software doesn't have to be complicated. Here's what matters most:

Standards Match: Make sure the software follows GHG Protocol and CSRD rules
System Connections: Look for tools that work well with your current software
Room to Grow: Pick software that can handle more data as your business expands
Easy to Use: Choose a platform your team can navigate without headaches
Help When Needed: Get a provider that offers solid support - like Emerald Power, which includes expert help in Pro and Enterprise plans
Budget Smart: Think about all costs - setup, training, and upkeep

Emerald Power: Features for Carbon Accounting

Emerald Power helps mid-market businesses tackle CSRD requirements head-on. Their platform pulls in supplier and company data automatically - one UK manufacturer cut their data work time by 40% in just six months.

Want to set net zero goals? The platform helps you match them with GHG Protocol standards. You can see how you stack up against others in your industry and build plans to cut emissions that actually work.

Need to file CSRD reports? Emerald Power creates them in European Single Electronic Format (ESEF), making compliance straightforward.

Integrating Software for Efficient Reporting

Connect your systems and watch the magic happen. Emerald Power's custom APIs link your carbon tracking to supply chain tools. One German logistics company saw reporting mistakes drop by 30% after connecting Emerald Power to their inventory system.

When you can see your emissions data in real time, you can make better choices, faster. It's like having a sustainability dashboard right at your fingertips - spot issues early and grab opportunities as they come up.

Conclusion and Key Points

Action Steps for Mid-Market Businesses

Getting ready for CSRD compliance doesn't have to be overwhelming. Here's what your mid-market business needs to do for Scope 3 reporting:

First, know your deadlines and requirements. Mid-market companies must comply by 2026 and submit their first reports in 2027. Get familiar with the European Sustainability Reporting Standards (ESRSs) for Scope 3 emissions - these set the rules for your reporting.

Next, look at what matters most. Do a double materiality assessment to spot the biggest sustainability risks and impacts in your value chain. This isn't just a box-checking exercise - it's your roadmap for CSRD-compliant reporting.

Then, put the right tools to work. Smart tech choices make a big difference. Take this real-world win: A UK manufacturer cut their data processing time by 40% in just six months by using carbon accounting software. And don't go it alone - your suppliers need to be on board and ready to share their data.

Finally, get ready for outside checks. Start building solid internal controls now. When auditors come knocking, you'll want your numbers to hold up.

The Role of Transparency in Scope 3 Reporting

Let's talk straight about transparency - it's the backbone of Scope 3 reporting under CSRD. But here's the reality check: A 2024 survey shows 83% of companies hit roadblocks when trying to gather accurate CSRD reporting data.

As ClimateCamp puts it: > "Transparency and accountability on ESG aspects will become as important as the quality of the service or product provided." [1]

Think of transparency like your business's trust account - every clear, verified piece of data you share is a deposit. And with third-party assurance backing up your numbers, you're not just meeting rules - you're building credibility that sets you apart.

FAQs

How to calculate your scope 3 emissions?

Let's break down how to tackle Scope 3 emissions calculations for CSRD compliance - it's not as scary as it might seem.

First, you'll need to map your entire value chain. This means looking at everything from the goods you buy to what happens to your products after they're sold. Here's something that might shock you: Scope 3 emissions typically make up about 90% of a company's total carbon footprint.

The basic calculation is pretty straightforward: Supplier Activity x Emission Factor = Supplier Scope 3 Emissions

Here's what you need to do:

Map your value chain: List all your upstream activities (like purchased goods) and downstream activities (like product disposal).
Get your numbers right: Use emission factors from trusted sources like DEFRA or the GHG Protocol to convert activities into emissions data.
Mix and match your data: Don't have all the exact numbers? No problem. You can combine actual supplier data with industry averages. A German retailer did this for their logistics partners, using regional transport averages to fill in the blanks.

Pro tip: Tools like Emerald Power can make this process much easier. For example, a UK manufacturer cut their data processing time by 40% in just six months using automated tools.

Remember to stick to GHG Protocol standards - they'll keep you CSRD-compliant and your calculations on track.

Smart move: When you can't get exact data, use a mix of supplier information and industry averages. Technology can help speed things up and make your calculations more accurate.