What the proposed changes to scope 2 emissions guidance mean
Proposed changes to how companies report emissions from purchased energy could have wide effects.
Proposed changes raise questions about data, comparability and investment signals.
1. Balancing integrity, impact and feasibility
More accurate reporting is welcome, but only if the data and infrastructure exist to support it.
Feasibility matters
Ambitious requirements may not be achievable without granular grid data.
2. Scope 2 definition and data availability
Access to detailed grid and consumption data is limited in many countries.
Data gaps are widespread
Companies may struggle to comply consistently.
3. Location-based method: hierarchy and comparability
A clear data hierarchy would improve comparability.
4. Market-based method: hourly matching and deliverability
Hourly matching is challenging
Matching contracts to consumption hour by hour is difficult in most markets today.
5. Exemptions, legacy contracts and fairness
Disclosure of exemptions can protect comparability
Transparency about exemptions helps users interpret results.
6. Overall recommendations
Phase in changes, invest in data infrastructure and keep incentives for clean energy investment.
Summary
Changes to scope 2 guidance should improve accuracy without undermining feasibility or investment.
Related articles
IFRS 20 sets out reporting for regulatory assets and liabilities
The new standard on regulatory assets and regulatory liabilities aims to improve financial reporting for rate-regulated companies.
Impact of climate risk on banks and expected credit losses
Climate risks are prompting banks to strengthen their expected credit loss models. What banks can do.
Get ready for the new IFRS presentation and disclosure requirements
IFRS 18 introduces new presentation and disclosure requirements that will affect most companies reporting under IFRS.