Many software companies find calculating scope 3 emissions challenging, despite the fact that they typically represent a significant portion of their total GHG emissions. Factors driving the need for more comprehensive GHG accounting include customer demand for environmental performance, investor and lender demand for assessing environmental impact, reputation and brand value, talent attraction and retention, regulatory frameworks, and voluntary reporting initiatives.
By measuring and reducing scope 3 emissions, software companies can gain value, create competitive advantages, and mitigate environmental, market, and regulatory risks.
The purpose of this guidance is to assist software companies in accounting for their indirect greenhouse gas (GHG) emissions, known as scope 3 emissions. It provides a robust and credible approach based on the latest guidance, protocols, and standards available. The guidance aims to help software companies benchmark against peers, identify best practices, and take action to reduce their value chain emissions.
This guide specifically addresses scope 3 emissions for software companies and can be considered as a supplement to the previously published Greenhouse Gas Accounting and Reporting for The Private Equity Sector guidance, which covers scope 1, scope 2, and scope 3 emissions more broadly. Companies new to reporting should start with the previous guide. The structure of the document revolves around six key steps:
1. Establishing a governance structure,
2. Mapping the value chain and reporting boundaries
3. Collecting data and calculating emissions
4. Setting targets and tracking progress,
5. Reporting on progress
6. Taking actions to reduce scope 3 emissions.
Reducing GHG emissions associated with the full value chain is crucial in limiting global temperature rise. With the projected growth of the software sector, accounting for GHG emissions and adopting a low-carbon growth strategy becomes even more urgent.
Contributors
ERM Authors:
Susanne Baker - Partner, Emma Fryer - Partner, Tim Fleming - Partner, James Bone - Partner, Melanie Eddis - Partner, Ritu Kumar - Principle Consultant, Anna Ma - Principle Consultant, Zara Plummer - Senior Consultant.
ERM Researchers:
Andre Butemeyer, Cedric Lee Mang, Dean Smith, Lushanya Dayathilake, Rahul Gupta, Shneha Patel.
ERM and Sustainability Institute reviewers:
Aiste Brackley, Elizabeth Fergus, Jacco Kroon, Saloni Desai.
