ISM® Study Indicates Slow Pace of Scope 3 Reporting
Scope 3 emissions have been the biggest source of contention during the U.S. Securities and Exchange Commission’s (SEC) protracted discussion on proposed climate disclosure rules. A survey by Institute For Supply Management® (ISM®) Research & Analytics indicates a similar glacial pace of Scope 3 data collection and reporting at many companies.
ISM’s 2023 Sustainability Study found that this year, 23 percent of supply management organizations will begin or continue reporting Scope 3 emissions — which encompass supply chains end to end and make up the largest share of most companies’ greenhouse gas (GHG) emissions. Seven percent will begin collecting data in 2023, and another 7 percent plan to develop processes to do so.
Nearly half (44 percent) are not accounting for Scope 3 data and do not plan to this year, an eyebrow-raising figure considering the SEC’s (albeit lengthy) deliberations and the climate policies being debated or enacted overseas. Scope 3 tracking is complex, involving lower-tier suppliers and reporting models that are still evolving.
SEC chair Gary Gensler noted that such disclosures aren’t “as well developed” in repeated hints that the Scope 3 rules could be scaled back. A final action was expected as Inside Supply Management® went to press, but a further delay was possible. “Again, I don’t want to get ahead of staff recommendations, but I think even when we made the proposal, we took different approaches to the levels of disclosure (Compared to Scopes 1 and 2),” Gensler said in a March interview.
Among other study findings, 61 percent of respondents indicated their companies have sustainability goals at the supply management department level or above, and 37 percent reporting “measurable benefits.”
Among the 11 ISM Principles of Sustainability and Social Responsibility, the pillars with the most important measurable metrics, according to respondents, are Financial Integrity and Health & Safety.