The Conundrum of Scope 3 Emissions for Corporate Reporting

Regulators must urgently address scope 3 emissions measurement and disclosure in financial statements. Despite being the largest type of emissions, scope 3 has received little attention from firms, regulators, and researchers. The SEC’s proposal for standardized disclosure may enhance transparency, but adopting the GHG Protocol raises concerns about costs and benefits. Reliable measurement models are needed, and academic research is essential to assessing financial relevance and improving estimation methods.