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Unlocking the Scope 3 opportunity: insights from Asia Pacific businesses

In this latest annual report brought to you by the (PBEC) – Pacific Basin Economic Council, we examine the current equilibrium between strategic & voluntary initiatives at companies in Asia Pacific and compliance efforts in disclosing such emissions. The report assesses the progress and challenges faced by businesses as they strive to meet net zero targets in the coming years. This report provides an analytical overview of the scope 3 emissions reporting landscape in the region, providing insights into one of the defining corporate themes of our time, and a look at how companies in Asia Pacific are responding.

Measuring and reporting on scope 3 emissions is challenging for a variety of reasons, chief among which is that they occur outside of an organization’s direct control. Any efforts to measure and disclose requires emissions data from multiple participants in a company’s supply chains. The challenge is exacerbated in Asia Pacific (ASPAC) owing to the region’s famed complexity of supply chains, and the broader issue of a lack of standardization around scope 3 emissions.  This study showcases the state of scope 3 emissions reporting and disclosures in ASPAC by analyzing publicly available ESG reports from 338 companies listed on six stock exchanges, published between 2022-2023.

“This important and timely research highlights the attention that is being given to scope three emissions – a category that is wide ranging and can be hard to define, but that crucially in the Pacific Basin encompasses supply chains. The global pandemic showed starkly how interconnected and interdependent our world is. Ensuring the continuity, timeliness and quality of global supply chains has long been a focus for multi-national companies, but what is now increasingly coming to the fore is a new dimension of sustainability. It’s no longer enough to deliver the right goods, at the right time and at the right price, we now need to know about their sustainability too. That will pose data challenges, and indeed provide a use case for new technologies such as AI and blockchain which may prove particularly valuable to small suppliers. Without investment in these systems, and the human capability to use them, reliable sustainability information may be elusive. In this context, independent assurance becomes very valuable, as a means of assessing what you can trust. With the introduction of the EU Carbon Border Adjustment Mechanism, which will put a value on the carbon embodied in supply chains, the reliability of this information becomes business critical. ICAEW has been following these developments for many years and it is welcoming to see this latest report from PBEC to explore these important themes.
– John Boulton, Director, Policy ICAEW


“Measuring Scope 3 emissions accurately is a game-changer in facilitating the world’s transition to net zero, nature positive and socially just economies. This report provides a comprehensive and insightful overview of the way businesses across the Asia Pacific region are managing indirect emissions to improve their net zero impact. The report findings clearly demonstrate the opportunities that come from innovating for sustainability, including deeper and effective collaborations with stakeholders across sectors and within the value chain. The report also highlights a maturation of corporate governance to incentivise net zero leadership.”
– Richard Spencer Director, Sustainability ICAEW


“Most Asia-Pacific businesses’ emissions come from emissions outside their own walls, from their inputs, value chains, and sales processes, known as “Scope 3 emissions.” However, businesses have so far had limited visibility into these upstream and downstream emissions. This lack of data limits businesses’ ability to reduce their carbon footprint and respond to buyers that are interested in the carbon content of the products and services they buy.  This study usefully showcases experiences of Asia-Pacific multinationals in measuring and mitigating their Scope 3 emissions, and reviews emissions regulations in six large economies. The discussed corporate best practices provide guidance for the region’s small and medium-sized enterprises on their emissions management, and can help shape the surveyed firms’ strategies. For example, most companies could better incentivize executives to track and manage emissions key performance indicators. The study lists very helpful case studies on upstream and downstream green initiatives. This is the type of empirical and actionable information that is very much needed to pave the way to a net zero Asia-Pacific.”<
Kati Suominen, Research Fellow, Hinrich Foundation – Founder and CEO, Nextrade Group


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