The Determinants of Scope 3 Disclosure among Large Corporations

A company’s carbon impact extends across its entire value chain, both upstream and downstream. This is referred to as “Scope 3,” and it is essential to address climate change and provide true estimates of corporations’ carbon performance. However, the evaluation of Scope 3 emissions is a major challenge, because its calculation is poorly standardized and regulated. Publication trends vary widely across the globe and across sectors.This chapter discusses the evolution of environmental practices over the last ten years across more than 6,000 listed companies based in 4 major regions of the world. In particular, we examine several determinants of Scope 3 disclosure, their links with environmental scores from environmental, social, and governance (ESG) data providers, and the disparities between regions, sizes, sectors, and other company characteristics.We find that companies communicate strongly on value chain environmental policies both before and after Scope 3 publication. Disparities are very marked between regions of the world, particularly for less globalized and lower-capitalized companies. Moreover, companies publishing Scope 3 are generally those that already have a high environmental score and have been publishing Scope 1 data for several years.