You’re probably aware of the Green Claims Directive, the EU Deforestation Regulation, and the SEC’s Climate Disclosure Guidelines. These are just a few examples of recent regulation around climate reporting.
While some may find supply chain monitoring a nice-to-have, it’s quickly becoming a need-to-have as regulation increases.
The EU’s recent Green Claims Directive
aims at prohibiting claims such as “net-zero” or “carbon neutral” unless they’re backed by third-party verified data. To comply with the EU’s Green Claims Directive, “a company will need to have a robust environmental claims management framework that focuses on integrity, transparency and verification of data.”
The SEC’s proposed Climate Disclosure Guidelines
would require companies to disclose “indirect emissions from upstream and downstream activities in a registrant’s value chain (Scope 3).” If the company has set public climate goals, they must disclose “relevant data to indicate whether the registrant is making progress toward meeting the target or goal and how such progress has been achieved, with updates each fiscal year.”
The EU’s regulation on deforestation-free products
requires companies to know and provide the exact locations from which they source certain commodities to ensure no deforestation has taken place since December 31, 2020.
The common thread among these regulations is that inaccurate data opens companies up to regulatory risk.
And while much regulation is in the proposal stage, now is the time to get reporting systems into place. Waiting to do so will create a headache, especially for large organizations for whom data collection, reporting, and changes in governance will require significant internal effort.