Euro Businesses Flummoxed By Scope 3 Emissions

Half of European businesses fear they'll lose customers if they come clean about their greenhouse gas emissions, a third lack confidence in the accuracy of their carbon data, and and 40 percent will just take a fine as they can't be bothered with it.

Measuring and reporting emissions from commercial operations is increasingly important due to government regulations, and contractual obligations with biz customers require this data as part of their own emissions accounting processes.

Yet according to a report from cloud storage biz Wasabi, Scope 3 emissions – those caused by a company's supply chain and other indirect sources – are something of a blind spot that many firms are struggling with.

The research was conducted by Sapio Research in November 2024, based on responses from 1,200 business decision makers in the UK, France and Germany with visibility over their company's Environmental, Social and Governance (ESG) data.

It found that nearly eight in ten respondents are already undertaking Scope 3 reporting, however, only 66 percent were confident that emissions numbers relating to their IT were accurate. The finger of blame for this is pointed at tech vendors for not providing accurate and trustworthy data.

Although this might seem like little more than a bureaucratic exercise, the report claims that businesses are starting to hold suppliers accountable, with one in two saying they are unwilling to buy from tech vendors that cannot guarantee accurate emissions data.

Scope 3 emissions have proven to be a major headache for some of the biggest companies in the world. Last year, Microsoft revealed that it had increased its carbon dioxide emissions by nearly 30 percent since 2020, despite having a publicly stated goal of becoming carbon-negative by 2030. Scope 3 emissions from activities such as building new datacenters were the major cause of this.

Analysts and other researchers have pointed out that emissions from datacenters operated by the major cloud providers are likely much higher than reported, partly due to the emissions accounting practices in use at AWS, Google, and Microsoft.

Wasabi's research claims that most companies are keen to adhere to regulations such as the EU's Corporate Sustainability Reporting Directive (CSRD) and are hampered by a number of factors.

One of these is uncertainty over who takes overall responsibility for accurate reporting within a firm. For a third of businesses, the task is a joint responsibility across the whole executive team, while it falls on the CTO/CIO and IT department in a quarter of cases, and one fifth regard it as a task for the CEO or CFO.

Almost half of business decision makers indicated that they do not have full access to emissions data from their tech suppliers, 44 percent do not trust the quality and accuracy of the data they receive, and 39 percent of respondents claim their firm does not have the resources to capture and analyze the data for an accurate picture.

The research also found that 40 percent of companies say they are prepared to pay fines, as they do not see adhering to CSDR regulations as important enough.

This chimes with reports last year that issues such as the volatile energy market and rising costs were leading to many European firms pushing back on net zero commitments to focus efforts on their core business.

Wasabi's report offers three suggestions for businesses looking to improve emissions tracking, but all seem somewhat feeble.

The first is to hold tech vendors accountable by only working with those that support efforts to improve Scope 3 reporting, which the research found companies are doing already. Another is to upskill workers to better understand and interpret the data.

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The third is to pressure company leaders to take the issue more seriously and provide enough resources to manage Scope 3 reporting. Good luck with that if your top execs are among those that have chosen to focus on core business targets instead.

Archana Venkatraman, IDC Senior Research Director for Cloud Data Management, said the report mirrors what it sees across the industry in concerns around accuracy, consistency and quality of sustainability data.

"Organizations need to get their emissions data in order, to not fall behind in a competitive market and invest confidently for innovation-oriented business outcomes," she stated. ®