A new push

The days of quietly bypassing reporting on Scope 3 greenhouse gas emissions—notoriously slippery to calculate—aren’t just nearing their end. They’re hurtling toward it.

Reporting on Scope 3 will be more widespread once the EU Corporate Sustainability Reporting Directive enters into force. Its standards guide companies to disclose Scope 3 emissions if these are deemed material to the organization. For most companies, it is hard to imagine that they aren’t.

Both the International Sustainability Standards Board (ISSB) and the US Securities and Exchange Commission (SEC) have proposed including Scope 3 in their reporting requirements. This isn’t just externally driven change. Customers themselves— especially multinationals— are demanding more data, more transparency, and more-standardized communication around how their suppliers operate. Pressure is coming from all sides, and investors are taking note. The message is unmistakable, and one we already believe at Nilfisk: We can no longer afford to treat what customers want as separate from what the planet needs.

Many of us are already ramping up efforts to get needed infrastructure in place to ensure Scope 3 compliance and build the capacity for reporting. While we do 2 so, it’s worth taking a moment to ask a crucial question: How will Scope 3 data, once gathered, be used to convey useful information? Or, more simply, how will we make sure that Scope 3 accountability efforts work the way we want them to?

 

Right now, there are some cracks in the foundation.

The catch - 22

At Nilfisk, we’re keen to take leadership in accounting for—and reducing—the biggest chunk of our climate footprint with a sharper focus on Scope 3 emissions. But if policymakers and standard developers aren’t savvy in figuring out how to guide calculation and communication of this category of emissions, they risk ushering in a new era of misdirected or insufficient action. That means both disappointing customers and wasting time we cannot afford to waste. This risk is particularly clear if we look at how product durability currently influences Scope 3 emissions calculations.

After Nilfisk introduced the first electric vacuum to the European market back in 1910, our brand soon became known for equipment that was built to last. Yet today, when we want to communicate our climate efforts to consumers, we’re discovering that an extended product lifespan isn’t an advantage.

In the popular independent global SBTi initiative, Scope 3 emissions from product usage (Category 11) focus on “Lifetime CO2 emissions.” In its current form, that calculation can disincentivize companies from making products with high durability. Simply, an individual product that lasts for fifteen years will inevitably wind up with a higher lifetime carbon emission rating than one that burns out and is discarded after five years. And with the remarkable credentials behind the SBTi, including the World Wide Fund for Nature (WWF), CDP, World Resource Institute, and the United Nations Global Compact, it’s a respected and influential resource. In Denmark alone, the number of companies committed to SBTi has doubled in the last year. A similar explosion has been seen globally.

Staying a step ahead...

We need to find a more nuanced way of evaluating Scope 3 GHG emissions from product usage. Considering both the rapid growth SBTi is experiencing, as well as the push to include Scope 3 reporting elsewhere, we risk compromising the essential sustainability journey if we don’t act now. Failing to recognize and reward durability in the current push for Scope 3 reporting wastes time by undercutting other sustainability goals, such as circular economy initiatives like take-back and refurb solutions that reduce consumption of natural resources. It’s also a poor use of our collective time from a purely administrative point of view since the EU Parliament has already turned its eye to regulations for product and component durability.

....And stepping up

Scope 3 reporting is complex that’s no secret. But a great many things worth doing are complex. At Nilfisk, we want to push our industry. We’ve set an ambitious Scope 3 target focused on smarter, more energy-efficient, and ultimately more sustainable products. Nilfisk is committed to reducing our greenhouse gas emissions from the use of sold products by 48% per gross profit unit in 2030, based on product usage. To accomplish that, going forward all new product platforms must demonstrate energy efficiency improvements of 25% compared to old platforms. At the same time, we can’t and won’t neglect durability. Moving forward, we’re focusing on modularly constructed equipment with long lifespans. When repairs are needed or new technology yields smarter, more sustainable versions of specific modules parts can more easily be switched out. We’re also turning our energy to understanding how customers use our products. By doing so, we can start building up service as an even larger part of our business with consumer education and proactive maintenance programs to further reduce emissions. It’s worth repeating: We can no longer separate what customers and investors want from what the planet needs. Here, durability matters just as much as emissions. The next, necessary step is making sure Scope 3 reporting reflects that or, even better, rewards it. Only by doing so can we help ensure that this kind of reporting provides genuine insight into the way a company does business.

NILFISK IS COMMITTED TO REDUCING OUR GREENHOUSE GAS EMISSIONS FROM THE USE OF SOLD PRODUCTS BY

 

48%

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