As an internal auditor tasked with managing ESG reporting and management for scope 3, it’s important to have a clear understanding of what scope 3 is and why GHG emissions reporting for businesses is important. In this blog post, we’ll cover these topics in detail and provide guidance on how to conduct ESG scope 3 auditing.
What is Scope 3?
Scope 3 emissions are indirect greenhouse gas (GHG) emissions that are a consequence of a company’s activities but occur from sources that are not owned or controlled by the company. These emissions can come from sources such as the production of purchased materials and fuels, transportation and distribution, waste disposal, and use of sold products and services. In other words, scope 3 emissions represent the full carbon footprint of a company’s value chain, from suppliers to customers. (Read more about Scope 3 inventory from the EPA.)
Why is GHG Emissions Reporting for Businesses Important?
GHG emissions reporting for businesses is important for several reasons. First, it allows companies to identify their carbon footprint and the areas where they can reduce their emissions. Second, it helps companies to measure and report their emissions to stakeholders, including investors, customers, and regulatory bodies. Third, it enables companies to compare their emissions with other companies in their industry and identify opportunities for improvement.
Furthermore, GHG emissions reporting is increasingly becoming a requirement for companies to operate in a socially responsible and sustainable manner. In fact, the Securities and Exchange Commission (SEC) recently announced that it will require public companies to disclose their GHG emissions and climate change risks in their annual reports.
How to Conduct ESG Scope 3 Auditing
As an internal auditor, you can help your company effectively manage its scope 3 emissions by conducting an ESG scope 3 audit. Here are some steps you can take to conduct a thorough and effective audit:
- Define the Scope of the Audit: Define the scope of the audit and identify the boundaries of the value chain you will be auditing. This will help you identify the key areas to focus on and ensure that you capture all relevant data.
- Collect Data: Collect data on the company’s scope 3 emissions, including emissions from purchased goods and services, transportation, waste disposal, and the use of sold products and services. This can be done by requesting data from suppliers, reviewing transportation and distribution data, and analyzing customer data.
- Analyze the Data: Once you have collected the data, analyze it to identify areas of high emissions and opportunities for improvement. This will help you prioritize your recommendations and develop a plan for reducing emissions.
- Develop Recommendations: Based on your analysis, develop recommendations for reducing emissions and improving the company’s sustainability performance. These recommendations should be actionable, measurable, and aligned with the company’s sustainability goals and objectives.
- Communicate Findings: Communicate your findings and recommendations to key stakeholders, including senior management, the sustainability team, and the audit committee. This will help ensure that your recommendations are implemented and that the company is on track to meet its sustainability goals.
ESG scope 3 auditing is an important tool for companies to manage their carbon footprint and improve their sustainability performance. As an internal auditor, you can help your company effectively manage its scope 3 emissions by following the steps outlined above. By conducting a thorough and effective audit, you can help your company meet its sustainability goals and operate in a socially responsible and sustainable manner.
Managing your ESG audits and GHG emissions reporting under Scope 3 is easy with EmpoweredESG and AutoAudit. Learn more about EmpoweredESG here. Learn more about AutoAudit here.