Addressing Scope 3 Emissions

We have reached the midway point in our project, completing a presentation of our progress so far to the client and our class. Our project has evolved after meetings within our group and with our client, a leading venture capital firm focused on early-stage climate and sustainability companies. After hearing feedback on our midterm presentation from the class and our client contact, I feel our team has more direction as we look to the work ahead. 

As a team, we have tried to divide responsibilities and topics evenly based on areas of interest and relevant experience. Given my background in politics and policy, my research has focused primarily on the regulatory landscape surrounding scope 3 emissions reporting.  

One of the most helpful parts of the project thus far has been conducting interviews with experts in the field. We’ve been fortunate to have access to many Columbia professors with a wealth of experience and knowledge about our topic. 

Most recently, I was able to speak with a Professor at Columbia’s Law School, who is one of the foremost environmental lawyers in the nation. I came to the meeting with a question about a recurring theme I’d noticed in the scope 3 regulatory landscape.  

Thus far, legislation on scope 3 emissions has been limited to places like California, Singapore, and the EU.  Additionally, these policies only target $1 billion companies. That the initial tranche of scope 3 legislation targets billion-dollar companies makes sense. Tracking and reporting scope 3 emissions requires substantial resources that small and medium sized businesses don’t have, and it would be burdensome for them to comply with such regulations. 

However, I was curious what momentum, if any, there is to pass similar legislation in other countries and for companies that make less than $1 billion dollars. This question is particularly relevant for our client, who is interested in making the business case for scope 3 emissions. Part of that case – indeed, maybe the strongest argument – could be that there is legislative momentum on this issue around the world, so it’s better to invest in solutions now. The law Professor I spoke with had several valuable insights.

Companies making $1 billion or more account for a substantial percentage of emissions. From an impact perspective, regulating every billion-dollar company’s scope 3 emissions may solve nearly the entire problem. This is in large part because many of these companies serve as suppliers for small and medium sized businesses. For example, Exxonmobil may supply gas for a local delivery business. 

Putting on a similar impact lens, he also pointed out that even if no other states or countries passed scope 3 legislation, California and the EU make up enough of the global market that just those two jurisdictions alone would be enough to create a tectonic shift in the scope 3 landscape. We may not need other countries to pass similar legislation to solve the scope 3 emissions reporting problem.

The conversation led me to a new set of questions. Specifically, what percentage of scope 3 emissions would be covered by just the existing legislation targeting billion-dollar companies operating in the EU and California.

While desk research is a good starting point, speaking with experts in the field serves as a reminder that one-on-one conversations with people who have a deep understanding of the issues is always the best way to find information on a topic. Not just because they are able to answer questions one might have, but because they are often able to provide insights that lead to better, more targeted questions. 

This strikes me as true in the consulting world more broadly, and it is not surprising that large firms like BCG have in-house experts who can serve as resources on projects. Working on this project has also promoted me to think about the way consulting firms structure their projects. Our team has found success in dividing work up by topic, which allows us to become fluent in separate issues around scope 3. Given the breadth of the topic and limited time to work on it, it seems to me this is the most efficient way to tackle the project.

One issue this presents, however, is that everyone needs to understand each issue area in order to form a cohesive product. For the midterm presentation, for example, we all took responsibility for ¼ of the slides that corresponded with our topics. The idea was to prepare the slides separately, then meet as a group early in the week of our presentation to discuss how they would fit together to form a cohesive story. 

Unfortunately, several members of our team had last minute scheduling conflicts throughout the week, and we had to postpone our meeting twice. This left us limited time to understand the rest of the group’s slides and how they fit into the flow of a unified presentation. One lesson I took from this experience is to do more work establishing expectations and guidelines on the front end of project deadlines so that the team doesn’t have to build the plane in the air if there are unforeseen delays. 

Overall, I am happy with how our team has worked together, stayed on track, and prioritized the project despite busy individual schedules. We have established good communication and trust with our client, who has expressed an appreciation for the work we’ve done and for bringing up some of the challenges we’ve faced as the project goes on. I look forward to starting the next phase of the project and synthesizing what we’ve found so far into our final deliverable.