Net-Zero Asset Owner Alliance calls for regulatory mandates on Scope 3 disclosure

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🗞️ Driving the news: The UN-convened Net-Zero Asset Owner Alliance (NZAOA) has called for regulatory mandates to standardize Scope 3 emissions disclosures
• Their latest report emphasizes overcoming data quality issues and inconsistent accounting, which hinder climate strategies
• Scope 3 emissions, comprising three-quarters of many companies' total emissions, are a critical focus for achieving net-zero goals

🔭 The context: With regulations like the EU’s CSRD and emerging frameworks in Japan and California, there’s growing urgency for standardized Scope 3 disclosures
• Barriers include data inconsistencies and double-counting risks, complicating integration into portfolios
• The NZAOA paper provides a five-step action plan to improve disclosures, focus on significant emission categories, and set clear reduction targets

🌍 Why it matters for the planet: Scope 3 emissions dominate most companies’ carbon footprints, so addressing them is essential to global decarbonization efforts
• Clear disclosure and reliable data enable asset owners to drive effective climate strategies, reducing emissions across entire value chains
• Regulatory mandates are seen as pivotal for achieving systemic change and accountability

⏭️ What's next: The NZAOA advises asset owners to adopt the five outlined steps, focusing on engagement with high-emission sectors and investments in corporates with Scope 3 targets
• Policymakers are urged to implement top-down regulations for standardized disclosures
• Progress in these areas will strengthen climate action in the financial sector and beyond

💬 One quote: “Our paper highlights the need for credible and comparable Scope 3 data, or else we will not see necessary carbon reductions in the real economy,” - Udo Riese, Global Head of Sustainable Investing at Allianz Investment Management

📈 One stat: Scope 3 emissions account for approximately 75% of most companies’ total emissions.

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