20 December 2022 (Updated 31 August 2023)

What’s the issue?

Scope 3 greenhouse gas (GHG) emissions are important to investors’ understanding of transition risk. However, the measurement of Scope 3 emissions is more complex and significantly less mature than Scope 1 and 2 measurements. Additionally, obtaining data from the value chain to enable reporting at the same time as the financial statements could be a big challenge for many companies.

The International Sustainability Standards Board (ISSB) has provided mechanisms to support companies in disclosing Scope 3 emissions. These disclosures are important to investors’ understanding of transition risk, but disclosing data about a company’s value chain can be a challenge.

What are the requirements?

The climate standard1 requires disclosure of absolute Scope 1, 2 and 3 GHG emissions. Companies will follow measurement guidance in the GHG Protocol Corporate Standard2, and disclose Scope 3 emissions under the categories included in the GHG Protocol Value Chain Standard2.

To support companies with data availability and quality concerns with reporting Scope 3 emissions, the following mechanisms have been provided under the standard.

scope diagram

What’s the impact?

Companies will need to provide Scope 3 emissions disclosures. Despite initial transition reliefs, companies will need to ensure they are prepared and have the appropriate data, processes, systems and controls in place to meet the reporting requirements.

The ISSB has provided support via implementation guidance, proportionality measures and a framework for measurement. However, it is important for companies to start preparing now as reporting may be an iterative process, with Scope 3 disclosures improving over time.

Actions for management

  • Take stock of your GHG inventory and understand your value chain as a starting point using existing guidance from the GHG Protocol Standards.
  • Identify potential sources of data, making use of primary data where appropriate.
  • Assess whether any existing systems, processes and controls are sufficient to support quality Scope 3 emissions disclosures.
  • For financial institutions, monitor developments around financed and facilitated emissions, a key component of Scope 3 emissions for these companies.
  • For companies that are also in the scope of EU or US requirements, monitor whether those requirements will align with the ISSB’s agreed approach.


1 IFRS S2 Climate-related Disclosures.

2 The Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (2004) (the GHG Protocol Corporate Standard) provides guidance for companies preparing a greenhouse gas emissions inventory. The Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011) (the GHG Protocol Value Chain Standard) provides guidance on the categories of Scope 3 emissions. We refer to them together as the GHG Protocol Standards. Measurement of greenhouse gas emissions under the climate standard is determined with reference to the GHG Protocol Corporate Standard.

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