The supply chain challenge in energy and utilities
Some of the key challenges of decarbonizing your supply chain:
- A lack of carbon knowledge: Many energy and utilities providers don’t understand what a carbon footprint is or how to begin measuring their emissions. Educating them in this regard is therefore crucial.
- The sophistication of the supply chain: Many energy and utilities providers supply chains are formed of multiple tiers of suppliers – which makes it difficult to get a good depth of measurement.
- A lack of data accuracy: In upstream supply chains, most emission estimates focus on the organization as a whole. They would have to be translated into product level emissions to be easily compared. At the moment, there is no standard methodology for this.
- Limited trust among value chain partners: Some suppliers are wary of sharing detailed carbon data as they fear it could lead to the breakdown of their cost structures.
The disclosure challenge
There are a number of voluntary and mandatory climate disclosures affecting energy and utilities providers. Here are the most important ones:
Corporate Sustainability Reporting Directive (CSRD):
- Scope: Large companies and all listed companies, including SMEs.
- Requirements: Report on double materiality (impact on performance and the
- environment), detailed disclosures on climate change, social rights, governance, and more.
- Standards: European Sustainability Reporting Standards (ESRS).
- Timeline:
- 2024: First reports for large public-interest entities.
- 2025: First reports for other large companies.
- 2026: First reports for listed SMEs, small credit institutions, and captive insurance.
Find out more.
International Sustainability Standards Board (ISSB):
- Scope: Recommended for all companies, increasingly mandated by governments and regulators.
- Requirements: Disclose governance, strategy, risk management, and metrics & targets related to sustainability risks and opportunities.
- Standards: ISSB framework.
- Timeline: Varies by jurisdiction; many companies already voluntarily adopting.
Find out more.
UK Streamlined Energy and Carbon Reporting (SECR):
- Scope: Large UK companies and LLPs.
- Requirements: Report on energy use, GHG emissions, and energy efficiency actions in directors’ reports.
- Standards: SECR guidelines.
- Timeline: Annual reporting as part of company reports.
Find out more.
