Knowledge Introducing Carbon Neutrality Initiatives by Region and Country – What Are the Risks of Delayed Action?（2/3）～Risks and Background Related to the Calculation and Disclosure of CO2 Emissions～

Calculating and disclosing CO2 emissions across the entire supply chain is one of the critical challenges in ensuring corporate sustainability and meeting regulatory requirements.

In many companies, Scope 3 emissions can account for up to 80% of total emissions. However, calculating and disclosing these emissions presents numerous risks and challenges. For example, many overseas operations lack robust data collection systems, and obtaining accurate information from local suppliers can require significant effort. Overcoming these hurdles requires companies to fully understand these risks and proactively develop strategic responses.

In industries with strict environmental regulations, such as manufacturing and the automotive sector, companies are actively demanding that their suppliers disclose more information. This can be seen in a growing movement to require Tier 1 (primary supplier) companies to calculate and provide their Scope 3 emissions data.

This trend is also cascading down to Tier 2 and Tier 3 (sub-supplier) levels, thereby increasing the need for parent companies to manage the entire supply chain. For example, one automobile company has built a system for tracking emissions across its entire supply chain through its “Green Procurement Guidelines” and now requires its partner companies to supply detailed emissions data.

Investors, financial institutions, and other stakeholders are increasingly scrutinizing companies’ environmental performance. In Europe, directives such as the Corporate Sustainability Reporting Directive (CSRD) require companies to disclose environmental performance information, including transparent CO2 emission data throughout their supply chains.

Furthermore, consumers are increasingly inclined to choose products with lower environmental impacts. Failure to properly calculate and disclose emissions data can lead to significant risks, including a decline in corporate value and a loss of competitive standing. This makes it essential for companies—across all locations—to adopt a strategic, company-wide approach.