CSRD and Scope 1, 2, and 3 Emissions
CSRD Scope 1, 2, and 3 Emissions
CSRD and Scope 1, 2, and 3 emissions are closely intertwined. With the introduction of the Corporate Sustainability Reporting Directive, companies operating in the European Union must adhere to the new reporting requirements set by the ESRS, European Sustainability Reporting Standards. One of the ESRS requirements is to report scope 3 emissions.
What are the Scope 1, 2, and 3 Emissions?
CSRD and Scope 1, 2, and 3 are both integral parts of sustainability reporting. The Scope 1,2 and 3 are international classifications that categorise emissions. The Greenhouse Gas Protocol (GHG) defined the scopes as a standardised way of dividing emissions into three categories. The ESRS standards guiding corporate sustainability reporting (CSRD) use the same scope categorisation in their requirements.
Scope 1 Emissions:
- Scope 1 emissions consist of direct emissions from company-owned or controlled resources. Emissions are created directly from the company’s operations, and these emission sources are typically the easiest to control.
Scope 2 Emissions:
- Scope 2 emissions include all greenhouse gas emissions that arise from the production of energy purchased from another party. This includes emissions from producing purchased electricity, heat, steam or cooling.
Scope 3 Emissions:
- Scope 3 emissions cover all indirect greenhouse gas emissions that occur as a result of the company’s operations, but the emission sources are not directly owned or controlled by the company. These emissions include, for example, emissions caused by the supply chain, emissions from transport, emissions from the use of sold products and emissions from waste treatment. Scope 3 emissions are broken down into fifteen different emission categories.
The Connection Between Scope 1, 2, 3 Emissions, and CSRD
The CSRD is one of the actions implemented under the EU Green Deal and the sustainable finance action plan and aims to foster transparency by strengthening sustainability reporting and accounting. Through this goal, the CSRD helps investors identify companies engaged in sustainable activities.
CSRD expands the reporting detail compared with the requirements defined under the NFRD. Furthermore, companies are required to report their sustainability information following the new European Sustainability Reporting Standards (ESRS)
The CSRD mandates reporting on environmental, social, and governance (ESG) aspects. Companies must disclose Scope 1, 2, and, notably, Scope 3 emissions.
Is Scope 3 Reporting Required for CSRD?
Under the CSRD, Scope 3 reporting is required. Organisations must provide comprehensive information on their indirect emissions throughout the value chain. This will be one of the most time-consuming and challenging tasks that CSRD presents.
Each step of the process, from raw material sourcing to end-of-life disposal, contributes to Scope 3 emissions. Under the CSRD, companies must map this complex network. Transparency and cooperation from business partners across the value chain will be essential.
How can you benefit from a digital approach?
Ecobio Manager can provide effective platforms for auditors to find all primary and consolidated information, data sources, and calculation principles. Every step of preparing a sustainability statement must be transparent and traceable. Verification increases reliability and reduces greenwashing.
The EU’s new concept of sustainability reporting will increase the costs of annual management reporting and benefit businesses. The costs per preparer vary depending on the preparer’s characteristics, such as size and complexity.
Streamline CSRD Reporting with Ecobio Manager
Ecobio Manager is a thorough solution for CSRD sustainability reporting. It encompasses double materiality assessment, taxonomy classification, data collection, sustainability statement preparation, assurance, and streamlined delivery to publication. Designed by sustainability experts, Ecobio Manager ensures compliance with CSRD and ESRS standards, streamlining the reporting process.
