Only one transitional provision in ESRS 1 refers directly to Scope 3 emissions reporting. This is paragraph 137, which refers to Appendix C. Appendix C contains a table according to which companies with an average of 750 employees or fewer may not disclose Scope 3 data in the first reporting year. This transitional provision is completely unambiguous and easy to apply; it is difficult to subject it to any interpretation. However, it only applies to selected smaller companies and only for one year.
And what about other (larger) companies and capital groups? Here, we need to look at the transitional provision concerning the value chain. After all, Scope 3 emissions are based in part (and to a large extent) on information and data from the value chain. The transitional provision concerning partial exemption from reporting information on the value chain is in section 10.2 of ESRS 1. Paragraph 133 is of key importance here.
Emissions in scope 3 are a metric, so let's look at point (b) of this paragraph. It exempts us from taking into account information from the value chain in the first three years, unless... other EU regulations require it. In this situation, we need to refer to Appendix B to ESRS 2, as it contains all the data points resulting from other EU regulations. Among them, we find data points relating to emissions in all three scopes; what is more, they are required by as many as three sources of law. Since we have found Scope 3 emissions in Appendix B to ESRS 2, it follows that we cannot apply the three-year exemption described in paragraph 133(b) of ESRS 1 to these data.
Of course, it may be that we are unable to collect 100% from the source data value chain necessary to calculate Scope 3 emissions. The EU legislator has anticipated this situation and therefore included the second sentence in Article 19a(3) and Article 29a(3) of the CSRD. This sentence is also reflected in paragraph 132 of ESRS 1. If we are unable to collect a complete set of source data, we must disclose this fact, describe what we did to collect the data, why we were unsuccessful, and what we plan to do in the future to improve data completeness.
What about emissions in scope 3? We calculate them based on data we have internally within the organization, publicly available data, and data we have managed to collect. The rest is estimated. The estimation of metrics is subject to the provisions described in section 7.2 of ESRS 1 and, of course, like everything else in the report, verification in relation to the qualitative characteristics of information, explained in detail in Appendix B to this standard.
The above analysis only applies to emissions in scope 3, which are a metric. In the first set of thematic standards for similar metrics, there are very few that require data from the value chain for their calculation. The situation is different for disclosure requirements regarding policies, actions, and targets, but that is a topic for discussion in one of our future newsletters.
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