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- 94% of Singapore companies are not fully measuring Scope 3 emissions.
- Only 27% believe their Scope 3 targets are highly achievable.
- Education and resources are critical barriers to progress.
A new report by Schneider Electric and the Institute of Singapore Chartered Accountants (ISCA) reveals a critical issue: 94% of Singapore companies are not fully measuring and analyzing Scope 3 emissions. This deficiency hampers their readiness for the upcoming climate-related disclosures required from 2025 and 2027.
The report, titled “Counting to 3: Navigating Singapore’s Emissions Journey Together,” explores the perspectives of over 500 senior business leaders involved in sustainability strategies. These leaders represent a range of company sizes, from small and medium-sized enterprises (SMEs) to large multinational corporations, and come from various industries.
Understanding Scope 3 Emissions
The report highlights a significant gap in understanding Scope 3 emissions, which are the indirect emissions resulting from activities like manufacturing and transportation of materials. Only 39% of respondents claim a strong understanding of Scope 3 emissions, compared to broader awareness of Scope 1 and 2 emissions. This gap is particularly noticeable among less senior team members: 58% of board members and 51% of C-level executives claim strong knowledge of Scope 3, while only 27% of senior managers report the same.
Roles and responsibilities also affect knowledge levels. For instance, 47% of those in General Management and 42% in Sustainability roles have a strong grasp of Scope 3 emissions, whereas only 33% of those in Operations & Supply Chain do. The report notes, “Senior executives have increased access to briefings on emissions management,” emphasizing the need for equal knowledge distribution across all functions to implement necessary changes effectively.
Knowledge Deficits and Inaction
Despite 76% of business leaders completing feasibility studies to understand their organization’s readiness to measure, report, and manage Scope 3 emissions, only 6% fully measure and analyze these emissions. This is a stark contrast to the 52% and 30% measuring Scope 1 and Scope 2 emissions, respectively.
Confidence in meeting Scope 3 targets is low, with only 27% believing these targets are highly achievable, compared to 40% for Scope 1 and 31% for Scope 2 emissions. Leaders from larger businesses are more likely to have set Scope 3 targets (54%) than those from small businesses (31%).
Further findings reveal that only 32% believe their organization’s net zero targets are achievable. However, 64% of those whose organizations have not yet set emissions targets believe they should have done so. Business leaders adopting science-based targets (SBTis) are more likely to drive meaningful action within their organizations, helping define a clear and credible path to sustainability success.
Organizational Segmentation
The report identifies four groupings of organizations in Singapore based on their progress in managing Scope 3 emissions: High Adopters (10%), Moderate Adopters (30%), Low Adopters (38%), and Emerging Adopters (22%). Financial Services and Education & Professional Services industries have the highest portion of High Adopters, followed by Energy & Mining and Manufacturing. Conversely, Food, Hospitality & Tourism is the industry with the highest number of Emerging Adopters, with 50% of respondents in this grouping.
Barriers to Progress
A lack of human and financial resources, commercial motivation, and technological infrastructure are cited as the top barriers to advancing Scope 3 emissions reduction agendas. High and Moderate Adopters identify human resources and expertise as major obstacles, while Low and Emerging Adopters point to technological infrastructure as the primary barrier.
Yoon Young Kim, Cluster President, Schneider Electric Singapore and Brunei, stated, “Scope 3 presents the next frontier of emissions management. Education is critical for advancing Singapore’s green agenda. Schneider Electric is committed to helping partners strategize, digitize, and decarbonize. Government and private sector collaboration is essential for achieving net zero.”
Accountants’ Role in Sustainability
Accountants possess the skills necessary for effective sustainability reporting, including financial reporting, data collation, and analysis. Kang Wai Geat, Divisional Director, Professional Standards, ISCA, said, “Sustainability is reshaping the accountancy profession. Accountants must upskill to help organizations advance their emissions agenda. Consistent and comparable sustainability reporting will support informed decision-making.”
Related Article: EMA Enhances Energy Management System to Boost Singapore’s Grid Resilience and Sustainability
Greenhouse gases (GHG) are categorized into three groups by the Greenhouse Gas Protocol: Scope 1 emissions stem directly from an organization’s activities; Scope 2 emissions cover indirect emissions from buying and using power; and Scope 3 emissions come from upstream and downstream activities, such as the manufacture and transportation of materials in the construction industry.
This report underscores the urgent need for Singapore companies to enhance their understanding and management of Scope 3 emissions. Education, resource allocation, and technological advancements are critical for achieving sustainability targets and meeting future regulatory requirements.