by, Cyril Garcia, Head of Global Sustainability Services and Corporate Responsibility – Member of the Group Executive Board
The past few years have seen major strides toward sustainability across industries. Corporations are increasingly embracing the crucial role they have to play in decreasing emissions. There are still challenges to face, including in reporting Scope 3 emissions. Solutions are everywhere, however, and companies may even find a profit in the challenge.
In the last couple of years, organizations have progressed steadily on sustainability. Executives are increasingly aware of sustainable alternatives to traditional business practices – and they’re starting to implement them. There is still room for improvement, particularly in tracking Scope 3 emissions, now required by many regulations.
Newcomers to Scope 3 reporting face a costly and resource-intensive road towards accurate reporting. They also face heavy consequences if their reporting is inaccurate or insincere. But there is good news: no matter which solutions an organization implements, data collection and reporting get easier with practice.
Accountability to regulators, consumers, and the climate are not the only key drivers of sustainability initiatives. There’s also the profit margin. At Capgemini, we’ve found that sustainable performance actually does yield a financial advantage. This is especially true for sustainability frontrunners – those making significant progress in sustainability issues.
Profit, legal compliance, environmental accountability, and bolstered consumer trust: turns out, the rewards of Scope 3 reporting far outweigh the challenges.
For many Companies, there’s a Long Road Ahead
The EU’s Corporate Sustainability Reporting Directive (CSRD) requires regular reports on environmental and social impact – including Scope 3 emissions. But are companies ready? In a survey conducted by the Capgemini Research Institute for our latest report on sustainability business trends, almost all executives who are required to report for the CSRD in 2025 said their organizations are prepared to disclose Scope 1 and 2 emissions. However, Scope 3 emissions are proving more challenging. Amongst those submitting their first CSRD report in 2025, many are not fully ready to disclose Scope 3 emissions. Only about half of executives told us they are ready to report upstream Scope 3 emissions – and only a third are prepared to report downstream emissions.
Scope 3 emissions come from external parties both up and down the value chain. This means collecting accurate and reliable data can be particularly challenging. Without accurate data, organizations struggle to report. Without accurate analysis, organizations struggle to advance their sustainability journeys. The big question is: how to get started?
The road to successful reporting seems long to many organizations. We’ve found that the best ways for companies to prepare are to start early and to commit to creating long-lasting methods of data collection.
Challenges up and Down the Value Chain
Companies struggle to accurately measure and report Scope 3 emissions for many reasons. For instance, Scope 3 may be an organization’s largest emissions category. An executive from a large European telecom operator told us that their emissions are almost entirely made up of Scope 3, meaning tracking and reporting them becomes a sizeable burden to the company. Similarly, Sven Jensen of Hellmann Worldwide Logistics told us that, “Regulations drive progress in sustainability, but the increased workload and substantial costs required to comply are major obstacles.” Many organizations work on sustainability issues in silos, without overarching strategy or governance. Companies might also have limited influence over suppliers, who might face their own challenges in emissions tracking. Becoming a sustainable business is a long process, demanding widespread transformation.
Regulations play a key role in helping companies meet their sustainability goals, but executives have told us those regulations don’t include tracking manuals. There is available guidance for Scope 3 tracking, including the Partnership for Carbon Accounting Financials (PCAF). The PCAF is helpful, an executive from a US-based financial services company told us, but it does not cover everything. Companies must learn, plan, and budget differently if they want to gather accurate and reliable emissions data.
AI, More Effective Partnerships, and Third-party Agencies offer Solutions
Scope 3 measurement and reporting is no longer a wish list item; increased regulations have made it a business imperative. Our findings show that most organizations recognize the value of emissions data, but they may not be leveraging it fully. For example, a 2022 report by the Capgemini Research Institute found that more than half use it only for reporting. What if that data could be harnessed to actually make a difference?
At Capgemini, we’ve found a number of efficient ways for organizations to collect and use their emissions data. These include implementing Generative AI, focusing on sustainability earlier in relationships with vendors, and recruiting third-party agencies.
Gen AI can be Costly but Rewarding
For example, the Capgemini Research Institute found that more organizations are using generative AI models to meet their sustainability goals (65% in 2024 versus 56% in 2023). Most of them say generative AI’s environmental impact is a boardroom topic. Organizations must consider generative AI’s business value, including the costs and complexity of implementation. They must scrutinize its impact on GHG emissions, electricity usage, and water consumption. Another report published by the Capgemini Research Institute found that a third of organizations are monitoring the environmental effects of their use of generative AI. Executives agree, however, that the benefits outweigh any negative environmental impact this technology might have.
The European telecom operator mentioned earlier also told us they are already harnessing their emissions data not just for reporting but for action. The company uses generative AI “to optimize network capacity and reduce energy consumption,” and is committed to using it to cut Scope 3 emissions and enhance ESG reporting and analysis moving forward.
Vendor Partnerships are Key
The transformation some organizations need to accurately measure Scope 3 emissions demands coordination, commitment, and an overhaul of their operating model. Organizations must work closely with vendors both up and down stream to track carbon emissions. They can even select vendors based on their sustainability markers to ensure a smooth partnership. Coordinating with vendors might mean a heavier workload, but it is a shared workload. Working together means smarter, more efficient focus on what data is really needed and how to turn it into action. At Capgemini, we believe the best way to do this is through technology. Major cloud-platform providers have already developed tools to support Scope 3 data collection and analysis. Once the data is all in one place, the opportunities for implementation are unlimited.
Third-party Tools Help in all Areas
For more objective, accurate, and reliable sustainability reporting, over 75% of sustainability frontrunners rely on external third-party agencies, compared to only 56% of beginners. External agencies can also help organizations benchmark their progress or audit their sustainability. The CSRD actually requires reports to be verified by an accredited third-party1.
Additionally, third parties can help organizations identify inefficiencies, design adjustments, and implement changes to cut emissions. Colgate-Palmolive is one organization relying on tools from a third party to address the challenges of carbon accounting: Chief Sustainability Officer Ann Tracy told us the company is implementing the Watershed sustainability data platform for enhanced accounting and automation.
Whichever solution an organization implements to ease the strain of Scope 3 measurement, data collection and reporting become easier with practice. And with data comes the opportunity for action.
Consumer Opinion Matters
Scope 1, 2, and 3 reporting is not only important to regulators. We’ve found that three-quarters of consumers globally agree that corporations have a larger role to play in reducing emissions. Consumers are also increasingly scrutinizing the sustainability of organizations – and they’re no longer fooled by greenwashing.
More and more executives are aware that their organization’s efforts towards sustainability might appear insincere to the public. Countries are increasingly developing regulatory standards to make sure companies do not over-inflate their sustainability credentials. And as regulation tightens and cases of greenwashing come to light, public and media scrutiny grows. Companies suspected of greenwashing risk hefty fines from regulators as well as negative press coverage, which can hurt an organization’s credibility and brand status – bad for employees and other stakeholders alike.
Under this stricter scrutiny, organizations should be particularly careful when making sustainability claims. Consumers – Gen Z and Millennials, in particular – are much better informed nowadays, easily validating or discrediting sustainability claims. More than half of consumers (particularly Gen Z at 80% and Millennials at 83%) distrust corporate environmental claims. And consumer statistics show they will not only stop buying from companies whose claims they doubt – they will also get their friends and family to do the same.
Accurate, evidence-backed reporting to standards like the CSRD will be a key way for companies to build trust with both regulators and consumers. Another is to go above and beyond to convey this information to consumers. Take the example of Oatley, a Swedish food company which focuses on oat-based dairy alternatives: In 2023, Oatley made carbon footprint labels (using statistics calculated by a third party) a part of the packaging for its Oatgurt (oats-based yoghurt) products in North America2. This put their sustainability credentials front and center to build trust with consumers.
Don’t Wait – Start Today
Scope 3 reporting is both challenging and deeply necessary. The urgency around control of Scope 3 reporting is no longer just about accountability to our changing climate. Consumers and regulators alike are demanding accountability. They believe corporations have a larger role to play in decreasing emissions – and they’re right. We have no time to spare in accelerating our sustainability practices. The best time to start was yesterday; the second-best is today.
For detailed recommendations on Scope 3 reporting and more, refer to the Capgemini Research Institute’s report “A world in balance 2024: Accelerating sustainability progress amidst geopolitical challenges.” Visit our website to download the report for more insights on business and sustainability in 2024 and beyond.
About Capgemini
As a leading strategic partner to companies around the world, Capgemini has leveraged technology to enable business transformation for more than 50 years. They address the entire breadth of business needs, from strategy and design to managing operations. To do this, the company draws on deep industry expertise and a command of the fast-evolving fields of cloud, data artificial intelligence, connectivity, software, digital engineering, and platforms.
Learn more: https://www.capgemini.com/no-no/
About Cyril Garcia
With more than 25 years of experience in consulting across industries, Cyril has been at the forefront of the development of new services for Capgemini Group and its clients.
He joined Capgemini in 1993 and led numerous transformation projects, then held the positions of Director of Group Strategy, Capgemini Consulting France and Spain, and CEO of Capgemini Consulting. In 2018, he launched the new Capgemini Invent brand and the “Invent for Society” initiative embracing society-driven projects delivering positive impact.
Cyril Garcia was appointed Global Sustainability Services and Corporate Responsibility Head in early 2023. He is responsible for the integration of sustainability across Capgemini’s portfolio of client services, notably around sustainable enterprise transformation and climate tech. Cyril is also driving the Group’s own sustainability agenda and its Corporate Social Responsibility activities. Cyril has been a member of the Group Executive Board since 2018.
References
1 Official Journal of the European Union, “Directive (EU) 2022/2464 of the European Parliament and of the Council,” December 2022.
2 Food Dive, “Oatly debuts carbon footprint labeling on U.S. products,” January 2023.