Within the scope of the methodology applied, three regional trends shed light on what businesses can do to achieve net zero

The Greenhouse Gas Protocol (GHG) is an accounting standard for greenhouse gas, and Scope 1 and Scope 2 cover direct emissions from owned or controlled sources, and indirect emissions from the purchase and use of electricity, steam, heating and cooling, respectively.

Scope 3 includes all other indirect emissions that occur in the upstream and downstream activities of an organization. Measuring Scope 3 emissions is critical to any climate or decarbonization strategy as they typically make up 70% to 90% of a firm’s total carbon footprint, yet can be challenging to measure and report as some of these areas fall outside the firm’s control.

In a new report on how some established businesses* in the Asia Pacific region have been coping with and progressing with net zero targets in the coming years, some trends were reported:

  • Scope 3 emissions disclosures are expanding in the region, with 62% of companies involved in the report engaging in some form of reporting on their indirect emissions. Overall supply chain environmental monitoring was still immature at the time of the study.
  • Businesses involved in the report were generally more focused on upstream emissions versus downstream emissions, as they typically had more control over their upstream suppliers than their downstream customers or logistics providers.
  • In South-east Asia, countries such as Vietnam and Thailand were witnessing growing awareness of the importance of ESG in supplier relationship management due to global market pressures and trade agreements.

The report^ by KPMG asserts that various developments will push businesses of the type covered in the study to consider how they tackle their Scope 3 goals. They should seek out capabilities to accurately and transparently measure and report their emissions, and approach emissions reporting requirements as a strategic opportunity to gain operational advantages and ensure readiness for future disclosure mandates. Over time, more and more organizations will reach into their value chains to understand the full greenhouse-gas impact of their operations and make strategic decisions that can truly impact the trajectory of the world’s climate and future.

*338 companies listed on six major stock exchanges in the region

^covering eight broad areas of business: 1. Construction and industrial (36); Utilities and energy (33); Minerals & mining (27); Automotive (26); Healthcare and biochemical sciences (56); Retail and F&B (65); Electronics (50); Others (incl. information & media services, transportation and logistics and conglomerate) (45)