Top 3 challenges with Scope 3 reporting according to our experts
“About half of institutional investors say a lack of robust ESG data is ‘holding back’ their organization’s further adoption of ESG”, according to a recent global survey by Capital Group.
Investors increasingly require companies to disclose non-financial key performance indicators around environmental, social, and governance ("ESG") matters. They use these metrics to assess risks and screen investments across specific impact categories.
“ESG is an increasing area of focus for institutional and wholesale investors globally” said Jessica Ground, Capital Group’s Global Head of ESG. “While investors appreciate the importance of ESG integration...they also report that the lack of robust and consistent data is the main challenge when investing in ESG.”
U.S. ESG funds under management reached a combined value of $330 billion in September 2021, and they will only continue to to attract more capital in the future.
Many praise the importance of ESG integration into investment strategies. Others view ESG as a hoax - a crafty way of slapping a “sustainable” label on an organization without any effort to substantiate the claims.
While hype and controversy may continue to surround ESG, one thing is certain - companies need to ensure that they are reporting accurate and consistent data to stakeholders.
The “E” in ESG
One metric that has become ubiquitous with ESG is Scope 3 Emissions, more formally known as the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting framework. Since it deals with greenhouse gas emissions, it falls under the “Environmental” pillar of ESG.
Scope 3 emissions quantify a company’s indirect greenhouse gas emissions throughout the corporate value chain. This includes everything from the impact of purchased products and services to transportation and distribution all the way to end-of-life treatment of sold products. In total, there are 15 Scope 3 categories that need to be accounted for (although not every category may be relevant to organizations).
While most large organizations report Scope 3 emissions to some degree, the pressure for more detailed and robust disclosure is growing. This places corporations in a tough position, because Scope 3 emissions are notoriously difficult to fully capture.
Corporations will need to carefully analyze their upstream and downstream supply chains to gather the data needed to meet stakeholder demands.
Water, Water Everywhere and Not a Drop to Drink
Today, corporations and stakeholders are drowning in data. Some of it is good, some bad. Some of it is just useless noise. Knowing which is which is a challenge for companies expected to report on Scope 3 emissions.
Here are three challenges reporting companies can expect in the near future:
1. Reliance on Value Chain Partners
As mentioned previously, companies will need to carefully analyze their upstream and downstream supply chains. This means starting with a full inventory of all upstream and downstream activities as they relate to the fifteen Scope 3 activity categories.
However, many companies have extremely complex operations that may involve dozens of suppliers and numerous products sold through a variety of channels.
A large number of supply chain partners can be difficult to manage. Reporting companies may struggle to ensure all relevant partners are accounted for and that they’re providing sufficient information. In some cases, partners may not be motivated to provide complete data in a timely manner, so companies will also need to closely manage and engage them in the process.
In addition, the reliance on value chain partners results in less influence from the reporting company over data collection, management and quality control. They may also lack transparency into partners’ data collection and calculation processes, which reduces the overall quality of information exchanged.
2. Data Gaps
Reliance on supply chain partners can also contribute to noticeable data gaps in the Scope 3 inventory.
Supply chain partners may be unable to provide all of the information required for Scope 3. This could be attributed to a lack of primary activity data (e.g. pounds of waste diverted to recycling in stores), or a lack of knowledge about sourcing secondary data (e.g. industry averages for retailer recycling rates gathered from public databases).
Furthermore, if the Scope 3 boundary is not properly defined and communicated to partners, they could be unintentionally omitting activity categories from their data collection and calculation process.
Even if data is available, partners may be hesitant to provide this information. Data privacy and intellectual property are at more risk than ever. As a result, partners may be unwilling to disclose confidential information for fear of privacy breaches and legal ramifications.
3. Poor Data Quality
When data is obtained by partners, there is no guarantee that it is high quality or encapsulates the right scope of information.
Many companies lack access to primary activity data, and need to rely on secondary data and underlying assumptions. While this may provide a ballpark estimate for emissions, investors may demand more transparency and reasoning behind the use of secondary data.
Furthermore, supply chain partners might lack the experience in greenhouse gas accounting to provide accurate data. If the scope of information requested is not properly understood, partners could be gathering the wrong activity data. On top of that, partners may fundamentally lack the knowledge needed to properly calculate emissions and assure the data for accuracy.
Product Intelligence: The Truth is Out There
Addressing the challenges associated with Scope 3 emissions begins with a solid foundation of transparent, verifiable activity data. Smarter Sorting gives retailers an easy way to access primary activity data and ensure robust Scope 3 reporting.
In 2021 alone, the Product Intelligence Platform (the central place for retailers to get fast answers on every important detail on the products they carry, including waste codes, transportation regulations and disposal classifications) was adopted by 1,223 brands and 24 major retailers.
The Product Intelligence Platform delivers product-level insights to help retailers aggregate data and calculate Category 1 (Purchased Goods and Services) Category 11 (Use of Sold Products), and Category 12 (End-of-Life Treatment of Sold Products) emissions.
In addition, the Back of Store System complements the Product Intelligence Platform by providing real time primary data for waste that can be directly plugged into Category 5 (Waste Generated in Operations) calculations.
By quickly accessing data, retailers can reduce the need to rely on secondary data to estimate emissions. This may also decrease the need to inundate supply chain partners with information requests and ensures that data is more complete and accurate. Plus, the data can be shared with manufacturers to help them fill in end-of-life data gaps for their own Scope 3 reporting.
As supply chains and corporate operations increase in complexity, reporting Scope 3 emissions will continue to be challenging for retailers. But with direct access to primary activity data, navigating the complexities of Scope 3 is becoming much easier.
Gone are the days of struggling to meet stakeholders’ demands for accurate, complete, and transparent ESG reporting. Retailers now have a viable solution to start showcasing real impact where it matters.
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Smarter Sorting and Feeding America Launch Data-Sharing Technology to Help Retailers
Smarter Sorting and Feeding America Launch New Data-Sharing Technology to Help Retailers Reduce Food and Packaged Goods Waste
Smarter Sorting and Feeding America® provide retailers with a real-time data connection with food banks to reduce food and consumer goods going to waste when they could easily be donated
AUSTIN, Texas and BOULDER, Colo., Sept. 20, 2022 /PRNewswire/ -- Smarter Sorting, a consumer goods data and sustainability company, today announced an integration with Feeding America's MealConnect platform to help retailers reduce food waste and donate more to hunger-relief organizations. Smarter Sorting helps retailers handle products with data intelligence — from the shelf to the back of the store, and then distributed as donations to local food banks within the Feeding America network. Retailers can now send instantaneous, automated updates about donation packages. The data-led work ensures better accuracy, visibility, and product lifecycle planning for retail donors and food banks.
The Smarter Sorting and Feeding America partnership is a testament to the ways technology and forward-thinking individuals have the power to affect real, positive change. Costco, a partner of Feeding America, helped pilot the new service. This integration for Costco not only provides actionable, real-time data to food banks, but it also closely aligns with their initiatives to be a supportive arm to the local communities where their employees and members live and work. Furthermore, this integration helps Costco's sustainability goals, specifically their work to divert 80% of their waste.
"Food and consumer goods that could be donated go to waste because there has been no real-time visibility into what is available and where it's located. Retailers and food banks need a better way to understand what donations are ready for pick up to ensure perfectly good products that can't be sold find their way to people who need them the most," says Jacqueline Claudia, CEO of Smarter Sorting. "Our real-time API connection with Feeding America breaks the mindset that it's hard to scale donations and reduce waste without disrupting normal operations."
Tony Pupillo, senior director at Feeding America, says, "Retail donations are Feeding America's largest donation source, recovering over 1.67 billion meals from retail locations in 2021. It might seem like a no-brainer that unused, edible food and essential household items from retailers could be recovered by food pantries, but unfortunately, numerous barriers can make the process inefficient and cumbersome. Offering a glimpse into what items are available prior to a donation pickup creates a more seamless donation pickup and operation overall. Now, with Smarter Sorting's API integration with Feeding America's MealConnect Platform, retailers enjoy a more seamless opportunity to give back and combat waste."
Food recovery has historically faced logistical challenges that have made communication and reporting between retailers and food pantries highly complicated. Smarter Sorting's work with 24 national big-box retailers, such as Costco, offers a solution for retailers to make significant contributions to a global food waste problem without slowing down existing operational procedures and rewarding community donations with new efficiencies.
The Food Sourcing Compliance Officer, Linda Golebiewski, of God's Pantry Food Bank in Lexington, Kentucky, says, "The ability to know four pallets of potatoes are going to be donated allows us to prepare the cook at the soup kitchen in advance of setting a menu. What Smarter Sorting and Feeding America have done has changed the way we do meal planning, engage with our community partners, and impact our communities overall."
About Feeding America
Feeding America® is the largest hunger-relief organization in the United States. Through a network of more than 200 food banks, 21 statewide food bank associations, and over 60,000 partner agencies, food pantries and meal programs, we helped provide 6.6 billion meals to tens of millions of people in need last year. Feeding America also supports programs that prevent food waste and improve food security among the people we serve; brings attention to the social and systemic barriers that contribute to food insecurity in our nation; and advocates for legislation that protects people from going hungry. Visit www.feedingamerica.org, find us on Facebook or follow us on Twitter.
About Smarter Sorting
Based in Boulder, Colo., Austin, Texas, and Los Angeles, Smarter Sorting helps companies make, market and move consumer products better. Its customers include national discount club stores and supermarkets, as well as the brands they sell. The company's customers use its Product Intelligence Platform to gain product insights and identify how to best handle regulated consumer products across the supply chain to remain compliant, avoid fines and reduce their environmental impact. The company has been honored with awards for innovation, impact and employee experience including: Fast Company's World Changing Ideas and Most Innovative Companies, Built In's Best Place to Work, as well as a Real Leader Impact Award and the SEAL Sustainable Innovation Award. Smarter Sorting is an Unreasonable Impact company. www.smartersorting.com
About God's Pantry Food Bank
The mission of God's Pantry Food Bank is to reduce hunger by working together to feed Kentucky communities. Working through more than 450 food pantries and meal programs the Food Bank serves 50 counties across Central and Eastern Kentucky. God's Pantry Food Bank distributed nearly 41.8 million pounds of food to many of the more than 250,000 neighbors facing food insecurity, including nearly 13 million pounds of fresh produce in fiscal year 2021. For more information, visit us at www.godspantryfoodbank.org.
Media Contact:
The news team: press@smarterx.com
Governor Newsom signs legislation to revisit necessity of aquatic toxicity testing
This press release was originally published by the National Stewardship Action Council on September 15th, 2022
For Immediate Release:
GOVERNOR NEWSOM SIGNS LEGISLATION TO REVISIT NECESSITY OF AQUATIC TOXICITY TESTING
Retailers, Environmental, Clean Air, and Animal Protection Groups Thank Legislature and Governor for Taking Steps to End Unnecessary Fish Testing and Incineration.
(SACRAMENTO) – Tuesday afternoon, Governor Gavin Newsom signed into law California’s Assembly Bill 1793 by Assembly member Dr. Bill Quirk, which will require the Department of Toxic Substances Control (DTSC) to review the continued value of acute aquatic toxicity testing, or “aquatox” testing on live fish, which determines if waste is hazardous to the aquatic
environment. The law will also require DTSC to evaluate alternative testing methods such as calculation-based methods (otherwise known as computational toxicology) and submit a report to the Board of Environmental Safety that includes recommendations on next steps.
“We were happy to sponsor a bill that benefits so many, including the communities most impacted by incineration plants or hazardous waste landfills where these products have previously been burned or buried,” said Heidi Sanborn, Executive Director of NSAC.
Currently, retailers must understand both federal and state toxicity regulations to sell and manage consumer products compliantly or are subject to hefty fines. When faced with California’s complicated hazardous testing criteria, many retailers will skip the hazardous evaluation process altogether and the waste must be presumed as toxic. Therefore, instead of conducting “aquatox” testing, the status quo for many retailers is to “play it safe” and consider all potentially hazardous waste as “hazardous”, which includes returned, cruelty-free, and unsellable products.
“The replacement of the “aquatox” test with a new calculation-based methodology means Smarter Sorting’s retail clients stand to save millions of dollars a year on the unnecessary incineration of returned and non-saleable products, plus the ability to divert some of these products away from waste altogether and donate or reuse them. Moreover, brands soon could accurately classify their product without the requirement of animal testing” said Jacqueline Claudia, Chief Executive Office for Smarter Sorting.
California is the only state that still requires the “aquatox” test on live fish, with other states having already taken action to allow for toxicity to be calculated rather than physically tested. An antiquated 30-year-old California testing requirement, AB 1793 will finally result in an evaluation of whether modern, calculation-based methods are more appropriate.
“The fish test was last updated over three decades ago. It leads to innocuous products being treated as hazardous waste,” said Assemblymember Dr. Bill Quirk. Specifically, preliminary data demonstrated that many household products fail the “aquatox” test, including nearly all soaps and shampoos. Requiring that these relatively innocuous products be managed as hazardous waste increases businesses’ costs and the burden on low-income communities where hazardous waste facilities are often located.
California already had plans to broadly reevaluate its hazardous waste testing criterion via The Budget Act of 2022, which was signed into law in June and includes a Budget Change Proposal for DTSC to add 8 positions and $1.5 million annually to evaluate all existing California hazardous waste criteria. AB 1793 simply ensures the existing hazardous waste evaluation will include consideration of the “aquatox” criteria and alternatives such as calculation-based methods. AB 1793 received unanimous votes on both the Senate and Assembly Floors, and was signed by Governor Newsom on Tuesday, September 13th
Media contact:
Heidi Sanborn, Executive Director
National Stewardship Action Council
Heidi@nsaction.us
(916) 217-1109
Original Release published on: https://www.nsaction.us/
The Product Intelligence Platform™: The single source of truth for accurate product classification
At SmarterX, we put sustainability into action, especially when it comes to classifying consumer products.
Inaccurate, slow and error-prone classification methods leave:
- Retailers with uncertainty about store level product compliance
- Stakeholders vulnerable to regulatory fines and supply chain delays
- Shipping companies and regulated waste haulers with logistical dilemmas
A platform for peace of mind
The Product Intelligence Platform™️ is a secure, cloud-based database linking our retail partners and brands to fast and accurate regulatory product classifications.
The Product Intelligence Platform™️ is the place where products are classified. It's a platform for retailers and brand manufacturers to collaborate. Retailers can manage all their hazardous and regulated products. Brands have an easy, frictionless way to share their product data. The result: retailers and brands can make decisions using accurate product data.
We recently completed registration for all regulated products for a major retailer with 2,200+ stores. Products registered shot up over 30% in the past 3 months to meet the retailer's registration deadline.
"The registration process was very easy. I didn’t expect our products to be reviewed and approved so quickly - and yet they were. I am very happy with the Product Intelligence Platform!” - Edward Ro, Pureboost
Our Product Intelligence Platform™️ is at the heart of delivering impressive results in three key areas:
1) Accurate product classifications
Brands register their products by entering a few details to get the most accurate product classifications, without revealing confidential information.
2) Instant regulatory and compliance decisions
With the Back of Store System (BOSS), retailers get waste codes, transportation regulations and disposal classifications for every product on their shelves.
3) Detailed EHS reports and insights
Through Tableau dashboards and tracking of EHS/ESG metrics, retailers and brands can access a comprehensive suite of reporting and insights.
With our platform, registering products is simple. Brands can register products one-by-one, or in bulk. Check out our step-by-step product registration guide.
Data from the source
We collect a vast amount of data on everyday consumer products. Currently, we are in the process of registering the entire catalog (3,600+ products) of the world’s largest consumer goods company.
- We only collect product information from trusted sources to make sure we have the most accurate data.
- We only ask for information we need. Full product formulation and proprietary data is likely not required for accurate classification.
- We fill in the gaps with additional product data from trusted sources like SmartLabel, 1WorldSync or Salsify.
Mind your Rs and Cs: Classifications translated into Regulation and Compliance
We are the first to take a computational approach to product classifications. We use machine learning, computational chemistry and regulatory AI to marry our millions of product data points with over 7,000 rules and regulations, some of which are listed below:
Environmental Protection Agency (EPA)
International Air Transport Association (IATA)
Department of Toxic Substances Control (DTSC)
Department of Transportation (DOT)
California Air Resources Board (CARB)
National Fire Protection Association (NFPA)
Food and Drug Administration (FDA)
Occupational Safety and Health Administration (OSHA)
International Maritime Dangerous Goods Code (IMDG)
A Real Leaders Eco Innovation Award Winner
The Product Intelligence Platform™️ has been recognized by Real Leaders as a Top 50 winner in the 2022 Real Leaders® Eco Innovation Awards, a distinction that celebrates innovative environmental solutions for the greater good.
The Product Intelligence Platform™ is being used by over 1,600 brand manufacturers who supply some of the biggest US supermarket chains and one of the world’s largest warehouse clubs.
Placing product intelligence in the hands of retailers and brands, our Product Intelligence Platform™ is the platform you can trust.
Ready to join the Product Intelligence™ revolution?
See for yourself how SmarterX can help you with retail compliance, product insights, and building better supply chains.
