Scottish Government Improvement Plan – Response to Environmental Standards Scotland Investigation – Climate Change Delivery Improvement Report

Challenges and risks of introducing mandatory reporting

Mandating the reporting of all relevant scope 3 emission categories in the absence of an accurate solution could have unintended consequences. The absence of standardised data sets could potentially lead to inaccurate calculations and a variety of assumptions and estimates being made which could lead to varying results. This could, in turn, result in the reporting adding no or little value and being detrimental to the reporting framework. It may also risk the goodwill of those being most diligent in their climate change reporting.

In 2023 ClimateXChange, Scotland's centre of expertise on climate change, published a report^[9] on driving emission reductions through the public sector supply chain, specifically looking at scope 3 emissions from procurement. In addition, the annual Sustainable Scotland Network analysis report 2022-23^[10] suggested that emissions resulting from procurement can potentially account for 70% of a public body’s services and works, and that targeting these specifically could therefore significantly reduce emissions.

The ClimateXChange research concluded that spend-based methodologies are used most widely. These methodologies conflate spend with emissions, applying a conversion factor to every pound spent on a category of goods or services. Using such methodologies can result in a focus on simply reducing financial spend, which may not result in any emissions reductions, e.g. buying the same goods for a cheaper price. They may also actively discourage investment in higher quality, more energy efficient products and services, which tend to have a higher monetary cost. Mandating the reporting of procurement emissions at this time could, therefore, result in unintended negative consequences and driving the wrong type of behaviour and decision making. Further work would be needed to avoid this and before any introduction of mandatory reporting of procurement emissions.

There is also a risk that a blanket mandate to report on all relevant categories of scope 3 emissions could become an exercise in measurement rather than providing the information needed to support more effective targeting of emissions reduction actions. This Plan sets out how reporting of different categories might have an impact.

LAs have increasingly stretched resources, and any introduction of additional reporting of emissions will need to acknowledge the amount of resource required, the limited data which is available, and the current lack of availability of calculation tools that will be required to accurately report on all relevant scope 3 emission categories.

Mandating the reporting of scope 3 emissions also creates a risk of double counting where LAs have failed to set a clear reporting boundary and inventory and/or where LAs have shared or cross boundary facilities and services. This is not an insurmountable issue but is likely, for some LAs, to require investment in training to develop the necessary carbon accounting expertise.

Despite the above context and challenges with reporting, SG accepts the principle of ESS’s recommendation, and this Plan proposes a pragmatic and proportionate approach to introducing the mandatory reporting of scope 3 emissions by LAs.