I’ve previously mentioned how we are on the brink of a new revolution in the manufacturing industry: manufacturing energy transformation. This is in response to the proposed legislation concerning compliance with new emissions reporting.
In March 2022, the Securities and Exchange Commission (SEC) issued a proposal for companies to report their greenhouse gas (GHG) emissions to investors in an effort to improve ESG transparency and reduce their carbon footprint. This rule will apply to any public company that has already developed transition plans or publicly set climate-related goals to disclose their Scope 1, 2 and 3 emissions to investors.
This announcement sounded alarm bells for manufacturers and their supply chain leaders. Although this rule is not in effect yet, a March 20203 survey conducted by PwC and Workiva found that “70% of business leaders report they are not waiting for the…SEC to finalize the climate disclosure rules and will proceed with compliance regardless of when they become U.S. law.”
These regulations are tricky for businesses because manufacturers don’t have easy access to GHG emissions data—especially Scope 3 emissions, which come from upstream and downstream emissions of a product and across the supply chain. Scope 3 includes third-party emissions such as transportation, distribution, waste, energy and fuel, leased assets and travel. In many cases, the data may not exist, and manually collecting it will prove to be labor-intensive, challenging to update and difficult to audit.