The climate crisis is intensifying, but so too is the movement to decarbonize. The past two decades have seen a concerted push by governments, investors and consumers to hold companies accountable for their carbon footprint with corresponding efforts in the business community to track and report their Scope 1 and Scope 2 emissions.
More recently, there has been increased scrutiny on Scope 3 emissions, the indirect emissions that are produced by a company’s supply chain.
Measuring and reporting on Scope 3 emissions is critical to any climate or decarbonization goal as they typically make up 70–90 percent of a company’s total carbon footprint. Yet, they can be extremely challenging to accurately measure and report as they lie beyond the company’s formal span of control.
In this report, we examine the current equilibrium between strategic and 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. It provides an analytical overview of the Scope 3 emissions reporting landscape in the region, delivering insights into one of the defining corporate themes of our time, and a look at how companies in Asia Pacific are responding.
The report is based on research led and compiled by Professor Neale O’Connor, La Trobe University Business School and the Pacific Basin Economic Council. This includes analysis of the published ESG reports of 338 companies listed on six major stock exchanges in Asia Pacific. The organizations can be categorized into eight broad areas of business: construction and industrial; utilities and energy; minerals and mining; automotive; healthcare and biochemical sciences; retail and F&B; electronics; others (including information & media services, transportation and logistics, and conglomerates).
Unlocking the Scope 3 opportunity in Asia Pacific
A view of Asia Pacific companies' progress on net zero targets, Scope 3 emissions reporting, and their strategic, voluntary, and compliance efforts.
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The majority of Scope 3 emissions are international in origin, so Asia Pacific companies play a significant role in providing accurate global supply chain emissions data due to their widespread geographic presence. The Scope 3 emissions of large US companies are often linked to manufacturing operations in regions like China, India, North and Southeast Asia. This indicates that more resources and expertise will be required in this area. An emphasis on corporate governance, executive incentives, and partnerships with NGOs while sharing responsibility for reporting will likely increase in the coming decades.
The transition from spend-based to supplier- and product-based carbon measurement strategies underscores the importance of robust supplier relationships. Such partnerships are essential for fostering transparent information sharing, ensuring accurate reporting, and facilitating collective action to reduce environmental impact. Ultimately, improved emissions measurement drives strategic value and supports the shift from greenwashing to genuine sustainability efforts.
Reporting on Scope 3 emissions presents an opportunity for companies in Asia Pacific to drive sustainable business practices throughout their supply chains. By accounting for direct and indirect emissions, companies can identify areas for improvement, promote transparency, and foster collaboration with suppliers and customers. It is a crucial step towards achieving regional sustainability goals.
Scope 3 reporting requires Asia Pacific companies to transform their internal operating models, so they can accurately capture and report on their supply chain emissions. They will also need to create new supply chain strategies and adjust their external business models to reduce their emissions and progress towards a Net Zero target.
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