The challenges of scope 3 emissions shared at the 6th meeting of the BIMCO ESG Network

Published: 17 December 2024

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The 6th meeting of the BIMCO Environmental, Social and Governance (ESG) network took a dive into the murky waters of the measuring and reporting of scope 3 GHG emissions- which are considered to be indirect GHG emissions from all sources, whether upstream or downstream of a value chain, and which are not owned or controlled by the reporting entity directly.

The meeting, attended by over 30 BIMCO members, kicked off with a poll to gather how advanced those in attendance were with their accounting for scope 3 emissions. The poll showed that whilst many felt that accounting for these GHG emissions was important for their company that progress was minimal- with a lack of data from suppliers, lack of methodologies and low levels of resourcing highlighted as the major limiting factors. So just how do you get started?

A presentation from Øistein Jensen from Odfjell provided a scene setter. It was highlighted that the total GHG footprint of a company is becoming ever more important and there is an increasing awareness of the need to take a full value chain approach- both knowing about the GHG footprint of suppliers and encouraging them to make reductions. A changing regulatory background is also having an impact and leading to a sense of urgency with the US Securities and Exchange Commission and the EU Corporate Sustainability Reporting Directive leading the way. And this happening alongside the IMO work on the life cycle of fuels raising awareness of the need to look at the impact of not just of burning the fuel in the ship but the extraction, production and transportation to the ship. There are all elements increasingly featuring within the company’s decision-making processes.

It was raised that that is near-impossible at present to get accurate and detailed emissions information across the supply chain and as such Øistein advocated, as a starting point, using a spend-based method as described in the GHG protocol – with the network recognising you have to start somewhere. There was some optimism that a maturity will develop across the supply chain as companies at a minimum begin to understand their scope 1 (eg fuel consumption) and scope 2 (purchased electricity) emissions and become able to provide such information readily and on request. This should enable a move from a spend-based method to a more accurate activity-based method.

A potential increase in data sharing from across the supply chain will also raise an additional challenge of needing to have in place systems to collect all this information across multiple suppliers and in such a way that, at some point in the future, they may be audited. In turn, broader ESG initiatives are likely to require an even higher level of scrutiny of suppliers- with not only emissions being looked at but also human rights records and broader environmental footprints. This topic of supply chain due diligence will form the basis for the next meeting which will take place on Tuesday 14 January at 1100 UTC and any members with an interest in the topic would be warmly welcomed.

Finally, who accounts for and reports emissions remains a hotly-debated topic we have previously reported on in this article.

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