Delivering a credible sustainability reporting regulatory framework will be essential if the UK is to deliver on its ambition to become a world-leading Net Zero-aligned Financial Centre. Scope 3 emissions account for an estimated three-quarters of company-level emissions and it is essential that they are reported.
E3G is pleased to provide feedback to the Department of Energy Security and Net Zero’s “Scope 3 Emissions in the UK Reporting Landscape”. The consultation closed on the 14th December 2023.
Summary
Scope 3 information has high value and widespread uses for market actors including the business itself, investors, and lenders. Although many UK businesses have conducted Scope 3 reporting for several decades, the UK still has a large disclosure gap that must be addressed.
In setting out the role of Scope 3 disclosures within a broader sustainability disclosures regime (SDR), regulators should prioritise interoperability with requirements in other jurisdictions. We recommend that the UK adopts the ISSB approach to Scope 3 disclosure when setting out disclosure requirements. This will unlock investment opportunities between jurisdictions and reduce the reporting burden for multinational companies.
Key recommendations in the E3G response
1. The UK should as soon as possible provide forward clarity to the market on its plans to provide a single, overarching and coherent Sustainability Disclosures Regime for businesses on sustainability disclosures.
2. The UK should not delay in implementing its commitment to adopt ISSB S1 and S2, which will ensure interoperability of UK requirements with those of other jurisdictions.
3. The UK should:
- Take steps to increase the accessibility and utility of Scope 3 information. This includes ensuring consistency of response format and developing clear, machine-readable data tags.
- Ensure that both large listed and non-listed companies are required to disclose their Scope 3 emissions, in order to create a level playing field across the economy.
- Embed Scope 3 disclosure requirements in a timely wider package of SDR reforms including disclosure of mandatory transition plans and against a science-based green taxonomy.
