Why an Anticipated SEC Ruling on Emissions Presents a New Opportunity for Channel Providers

Upcoming Securities and Exchange Commission (SEC) climate-disclosure rules will likely present significant challenges for publicly traded companies as the impending ruling would require expanded reporting on Scope 3 emissions. While Scope 1 emissions represent a company’s direct emissions and Scope 2 is a company’s emissions based on the energy it purchases and uses, Scope 3 emissions refer to indirect emissions from sources not under a company's direct control—or simply put, their supply chain.

As there is increasing public, investor, and regulatory pressure for organizations to disclose their emissions, having access to comprehensive, accurate, real-time emissions data will be a priority for business leaders. This is especially true when considering the number of companies that have been accused of “greenwashing,” the practice of making vague or misleading claims about a company’s environmental performance. Greenwashing accusations threaten public opinion and the bottom lines of organizations, and Forrester estimates at least 10 companies will be fined $5M or more in 2023 for greenwashing.

As a result, organizations will be seeking partners that can help them provide accurate insights into their emissions.

This presents a unique opportunity for forward-looking channel providers and MSPs that start investing in new measurement tools and strategies. These providers will stand out as especially valued partners when this SEC ruling goes into effect.  

Channel providers can offer a range of services—from emissions measurement and reporting to emissions reduction strategies and implementation—that can help companies meet future SEC requirements while reducing their carbon footprint and contributing to the fight against climate change.

Why Tracking Scope 3 Emissions Is Crucial

According to the World Resource Institute, Scope 3 emissions account for most of a company's carbon footprint, making up 75% of companies' greenhouse gas emissions on average. Despite its significance, companies have historically been more focused on Scope 1 and Scope 2 emissions. However, the SEC's anticipated ruling is expected to change this dynamic, as companies will be required to disclose their Scope 3 emissions and strategies for reducing them. This would include reporting specific data about greenhouse gas emissions from a company’s supply chains, everything from ocean freight to manufacturing practices to packaging materials.

How Channel Partners Can Help

Channel providers can assist companies in assessing their suppliers' carbon footprint, offering guidance on choosing the most environmentally friendly options and implementing sustainability initiatives throughout their supply chain. For example, one of the critical ways that channel providers can help companies reduce their Scope 3 emissions is through the implementation of sustainable procurement practices. Sourcing materials and products from suppliers with environmentally responsible practices can reduce emissions at the source. Implementing environmentally friendly rack and stack processes can reduce resources and waste. Embedding circular economy strategies throughout a company’s supply chain can help meet climate targets by transforming the goods that are produced and used through repairing, reusing, and recycling.