Publication of the July 1, 2022 decree on greenhouse gas emissions assessments: Scope 3 finally becomes mandatory!

The fight against global warming represents an increasingly important axis for the development of companies. Even more so for some of them, which were obliged to carry out a greenhouse gas assessment, i.e. an accounting of their emissions and therefore of their impact on the environment.

However, this accounting was not mandatory for all the emissions of an organization. Indeed, only scopes 1, direct emissions, and 2, indirect emissions linked to energy, were mandatory.

However, the law is changing for the better!

It was high time to stop ignoring 50 to 90% of corporate GHG emissions...

On July 1st, a decree relating to greenhouse gas emissions reporting was published. Companies subject to the accounting of their emissions will now have to include scope 3 in their report. Scope 3 concerns all indirect greenhouse gas emissions associated with an organization's activity (purchases of materials and services, transport, waste, use of products sold, end of life, etc.).

It therefore represents far more GHG emissions than Scopes 1 and 2, which only account for direct and indirect energy-related emissions.

However, until now, this scope 3 has not been included in the reporting obligations provided for by the Law for almost 10 years...

Scope 3 can represent up to 90% of greenhouse gas emissions. This is a lot of emissions that were not taken into account in the reduction strategy of a company. It was therefore important to include these emissions in an organization's reporting if carbon neutrality is to be achieved by 2050.

Specifically:

1. Revision of the French regulatory method for the GHG balance.

So what does this new decree say? From January 1, 2023, all significant indirect emissions (Scope 3) must be reported within the declaration of a GHG balance for all companies subject to the Extra-Financial Performance Declaration (EFR).

All companies with at least 500 employees or more are affected by the DPEF threshold:

• any listed company with a minimum balance sheet total of 20 M€ or 40 M€ net sales;
• any unlisted company with a minimum balance sheet total or net sales of €100 million

These thresholds are assessed at the group level and not at the level of the legal entities that make up the group.

This change in the law allows for the complete consideration of all emissions, including indirect emissions, of an organization. Without taking into account scope 3, 50 to 90% of GHG emissions were not taken into account. It is all the more important to take these emissions into account in order to be able to plan a quantifiable reduction action plan.

This is a requirement that this new decree also emphasizes.

2. Requirement for a transition plan

The decree of July 1, 2022 goes further, since not only does it make the complete GHG balance sheet mandatory, with integration of the 3 scopes, but it also makes the implementation of a transition plan or plan to reduce these emissions mandatory. The decree also requires that this transition plan be attached to the report. It must describe the actions implemented during the years following the previous GHG assessment, as well as the results obtained.

It presents separately, for direct emissions and for indirect emissions, the actions and means that the legal entity plans to implement during the years leading up to the establishment of its next balance sheet.

It indicates the overall volume of greenhouse gas emission reductions expected for direct and indirect emissions. 

A methodological guide will soon be published to specify all the methodological changes that accompany this new decree. 

This advance implies that now, not only a complete GHG assessment must be carried out, but it is also necessary to think about the actions to be taken to limit the impact of its company on the environment. This is one more step that the government is taking to effectively fight against global warming.

The GCI platform already integrates the scope 3

Since the beginning of its creation in 2012, GCI has affirmed its willingness to take into account the 3 emission scopes in its clients' reports. The platform is therefore already adapted to this new reform and will allow you to respond quickly to the inclusion of scope 3 in your reports.

Thus, GCI platform users are well prepared to meet these new requirements:

• Full consideration of Scopes 1, 2 and 3 and drafting of a regulatory balance sheet
• GHG emission factors from all available reference bases (Base Carbone®, Impacts®, Ecoinvent®, Defra, Inies,...)
• Tools for calculating emission factors for purchased products and services and provision of a specific database for supplier emission factors
• Global multi-year analysis, by scope, by regulatory item, and by Business Unit, of the low-carbon trajectory, with waterfall treatment of each item
• Development, implementation, management, monitoring and reporting of emission reduction action plans.
• Definition and monitoring of SBTI and SNBC trajectories

The platform allows you to carry out your assessment in three main steps, to visualize your reduction actions and to compensate for unavoidable emissions.