Increased requirements for Scope 3 reporting and energy certificates

Carbon reporting for data center on-site emissions (Scope 1) and purchased energy (Scope 2) is now fairly well understood. However, there is still some confusion regarding value chain emissions (Scope 3) and there are also different viewpoints on how to use energy attribute certificates (EACs) to improve sustainability ratings. This report reviews 11 leading frameworks for carbon reporting with regards to EACs and Scope 3, including their sector-specific guidance (if any) for data centers.

KEY POINTS

• Reporting frameworks increasingly require the use of EACs to claim renewable energy consumption and, as a result, EAC quality systems are becoming more important, for example, the European Energy Certificate System.
• Scope 3 reporting is increasingly expected — while the EU’s Corporate Sustainability Reporting Directive already mandates Scope 3 reporting, California’s recent climate rule (Senate Bill 253) goes a step further by mandating reporting for all Scope 3 categories in which an organization has emissions, however small.
• Scope 3 reporting should not be used to compare carbon emissions between data center operators due to differences in inventory methodology and the Scope 3 categories covered, among other factors.
• International financial reporting standards used in 140 jurisdictions globally are accompanied with sustainability disclosures that, when considered financially material, require Scope 3 carbon reporting and the use of EACs to claim renewable energy use. This is likely to widen such disclosure requirements to new geographies.
• Organizations should look out for updated reporting guidance, including from an ongoing revision of the foundational Greenhouse Gas Protocol referred to by several reporting frameworks.