This year, the European Union finalized its corporate social responsibility reporting directive for listed companies, with rules being phased in over the next year. In the US, the Securities and Exchange Commission has been deliberating on a proposed set of disclosure rules since the spring of 2022 and is expected to finalize them this fall. 2024 promises to be a transformative year for public companies when it comes to reporting on strides made toward greater environmental sustainability.
In preparation for this new era, large publicly held entities and smaller companies alike have ramped up measurement and reporting around environment, safety, and governance. Compass Datacenters is among them. And, as rules for reporting unfold, our organization is exploring a fourth category of reporting that focuses on the “why” and “how” of decreasing greenhouse gas (GHG) emissions. And we encourage other companies to do the same. This fourth category would discuss the processes and technologies that drive those efficiencies to reduce GHGs.
Current reporting methodologies focus on scope 1, 2, and 3 emissions – the different kinds of emissions created across an organization’s value chain, including its suppliers and customers. But what if environmental performance was evaluated and reported more broadly than based on direct and indirect sources of GHGs stemming from a company’s operations; in other words, measuring the GHG emissions that are avoided through innovation and efficiency? This is an emerging concept known as scope 4 emissions.
Current reporting methodologies are centered on activities that generate emissions.
Scope 4: A Story Worth Telling
Focusing solely on emissions generation only covers one part of a company’s good environmental stewardship. Companies doing the right thing to avoid emissions can and should get credit for good work beyond corporate sustainability reports tacked onto annual financial filings. We believe these avoided emissions should fall under an additional category, known as scope 4, that includes the following elements:
Of the above categories, making changes to the products selected and the means and methods by which your company builds will be particularly impactful toward achieving lower-emitting, more sustainable structures. The following changes to how Compass builds led to some significant environmental achievements.
Reporting on these products, means, and methods for reducing emissions tells a more holistic sustainability story and helps others in the value chain identify and adopt best practices for their operations. The more companies share solutions, the more demand is created, and the cost of implementing new tools and technologies decreases.
Taking meaningful steps toward the shared goal of reducing carbon emissions to the atmosphere and slowing the pace of global warming requires more than just measuring the generation of emissions. There is good reason to report on the products, processes, and technologies deployed to eliminate GHGs from operations as we work to protect the planet.