Companies, Investors Overlooking Major Financial Risks from Unmeasured Scope 3 Emissions: BCG, CDP Report

A report by Boston Consulting Group (BCG) and CDP reveals that most companies and investors are not measuring or targeting reductions in Scope 3 emissions, leading to significant unreported financial risks. Titled “Scope 3 Upstream: Big Challenges, Simple Remedies,” the report found that Scope 3 emissions, on average, are 26 times higher than combined Scope 1 and 2 emissions. Despite their significance, companies are more likely to measure and set reduction targets for Scope 1 and 2 emissions than for Scope 3. This oversight results in substantial unreported risks, with the manufacturing, retail, and materials sectors facing a potential carbon liability of over $335 billion by 2030. Only half of companies evaluate financial risks from upstream emissions, and just a third of investors have climate-related policies for investee companies. The report emphasizes the importance of having climate-responsible boards, engaging with suppliers, and implementing internal carbon pricing to effectively manage Scope 3 emissions. Addressing these emissions is essential for maintaining regulatory, reputational, and operational stability. Resources: https://www.esgtoday.com/companies-investors-overlooking-major-financial-risks-from-unmeasured-scope-3-emissions-bcg-cdp-report/