Scientific Beta

The consideration of value chain emissions is important as they represent a material source of emissions which companies can be incentivised to reduce, and it can improve the assessment of transition risk and opportunities. However the reporting of these indirect emissions remains voluntary in most jurisdictions and is sparse. While pull and push factors suggest increased data availability in the medium term, reporting standards are not intended to support cross-company comparisons. Data providers offer value chain emissions estimates but these typically take insufficient consideration of corporate circumstances to support intra-sector comparisons.

The consideration of value chain emissions is important as they represent a material source of emissions which companies can be incentivised to reduce, and it can improve the assessment of transition risk and opportunities.

However the reporting of these indirect emissions remains voluntary in most jurisdictions and is sparse. While pull and push factors suggest increased data availability in the medium term, reporting standards are not intended to support cross-company comparisons.

Data providers offer value chain emissions estimates but these typically take insufficient consideration of corporate circumstances to support intra-sector comparisons.

Investors should treat the integration of value chain considerations into asset selection with extreme caution lest they should encourage greenwashing. Value chain emissions may be used to guide overall policy, implement sector allocation or initiate engagement with companies. Value chain considerations may still be included into asset selection via specific, security-level performance metrics and/or corporate commitment to decarbonisation. Investors should also advocate for value chain emissions disclosure in their policy and issuer engagements.