Navigating the Changing Regulatory Landscape for Scope 3 Emissions
Kristen Mierzejewski, Senior Consultant at Acclaro Advisory.
The first in a series of articles from the Sustainable Facilities Management Index (SFMI) around Scope 3 in FM.
Scope 3 Emissions are notoriously complex and difficult to address, presenting significant challenges across all industries, including Facilities Management. With increasing pressure from governments, regulators, shareholders, and clients, FM providers are having to look more closely at their indirect emissions and devise new ways to tackle them.
The emergence of CSRD and ISSB
The evolving regulatory landscape adds another layer of complexity. Recent regulations, like the EU’s Corporate Sustainability Reporting Directive (CSRD), and global frameworks, like the International Sustainability Standards Board (ISSB), are setting new expectations for companies to report on their Scope 3 emissions. In the UK, the government is currently determining how to incorporate ISSB standards into the upcoming UK Sustainability Reporting Standards (SRS), with plans to consult on the proposed legislation early next year. Last year, the government launched a Call for Evidence to gather feedback on Scope 3 emissions reporting, signalling its intent to standardise and strengthen sustainability disclosures.
In the EU, 2024 is a pivotal year for companies that fall within the scope of CSRD, as it marks the first reporting period for material sustainability impacts, including Scope 3 emissions. For most companies, this will mean adopting a full value chain approach, requiring them to identify and address indirect emissions. The demand for detailed and transparent reporting is no longer optional, and this represents a significant shift towards more comprehensive disclosures to ensure regulatory compliance.
Challenges for FM providers in aligning with Scope 3 reporting demands
For FM providers, these changes will bring significant challenges. Many companies currently lack the internal capacity or expertise to measure and report on Scope 3 emissions effectively. A lack of accurate and granular data from suppliers is a significant hurdle, and gathering data requires significant resource and time. Unlike emissions directly controlled by the organisation, Scope 3 emissions entail extensive engagement across the supply chain. Companies that have not regularly tracked their Scope 3 emissions before may be unaware of the data they need to collect or lack the tools to analyse it.
Many FM companies are often driven by compliance needs, focusing on minimising costs rather than integrating sustainability into their core strategies. The patchwork of various regulations, each with different reporting requirements, can make it difficult to establish a consistent approach. Meanwhile, as FM clients adopt their own sustainability goals, and begin reporting on their emissions in line with regulations such as CSRD or frameworks such as ISSB, FM providers are likely to face growing demands to provide robust Scope 3 data as part of their services.
How the SFMI can help with Scope 3 emissions for FM
The SFMI (Sustainable Facilities Management Index)’s Scope 3 Framework for Facilities Managementprovides the industry’s first standardised approach to emissions measurement. This is an important step toward standardising emissions reporting across the FM sector, helping providers align with regulatory requirements and build a foundation for meaningful action.
Building on the success of the framework, the SFMI will launch the next phase of their Scope 3 Research Project in February 2025. This phase will focus on developing a Scope 3 emissions tool with input from FM providers and representatives from professional institutes such as IWFM, RICS, and IEMA. Project Partners will gain the ability to report emissions transparently, engage effectively with value chains and clients, and respond to growing demands for data. This competitive edge will not only help FM providers stand out amongst their peers, but also prepare them for regulatory changes.
As the regulatory landscape continues to evolve, FM providers have an opportunity to position themselves as decarbonisation leaders, and to get ahead of evolving regulation. By addressing Scope 3 proactively, they can not only ensure compliance but also position themselves as trusted partners for clients and stakeholders. With the right tools and strategies, the FM industry can transform these challenges into opportunities, driving impactful change across their operations and supply chains.
Please get in touch with the SFMI to find out more about becoming a partner.
