Whitepaper: Recommended Inventory for Data Center Scope 3 GHG Emissions Reporting

Few, if any, organizations today operate without Information Technology (IT). These resources may come in the form of on-premise data centers, IT equipment in colocation data centers, or IT services from cloud service provider data centers. All of these must be accounted for to report the carbon footprint of your total IT resources. Organizations are making commitments on sustainability as part of their Environmental, Social, and Governance (ESG) programs, and reporting on sustainability as a supplement to financial reporting.

Many organizations have measured and reported direct emissions from their data center operations (known as Scope 1) and indirect emissions from energy consumption (known as Scope 2). However, accounting for and reporting on indirect emissions from a data center’s value chain (known as Scope 3) has been limited due to several challenges such as lack of direct control over value chain activities, lack of reliable supplier data, and lack of accounting and reporting methodologies. As a result, Scope 3 emissions disclosures are voluntary while Scope 1 and 2 are mandatory. However, many organizations are starting to realize that knowing their Scope 3 emissions is becoming important for their business. According to an IDC survey report 3 , 81.5% of respondents across all industries think Scope 3 GHG emissions/energy management is very important or important to their organizations’ sustainability initiatives. Meanwhile, omitting Scope 3 emissions may present potential risks for investors 4. We also see the United States is proposing rules to mandate, enhance, and standardize climate-related disclosures including Scope 35. As a result, we believe that accounting for and reporting on Scope 3 emissions will become mandatory in the near future.