In January 2019, Natural Resources Canada released a discussion paper that, while perhaps under the radar for many outside policy circles, signaled a potentially significant shift in how large firms—particularly those in energy-intensive sectors—will be expected to account for supply-chain emissions. The paper focused on Scope 3 greenhouse gas emissions, those indirect emissions that arise across supply chains rather than from a company’s own operations. To some, the paper read like a gentle nudge. To others, it was the first step in what they suspect will become mandatory reporting frameworks within a few years. Either way, the writing was on the wall: firms that delay in preparing for Scope 3 disclosure requirements risk finding themselves on the back foot when regulations harden.
Large firms, especially those in mining, oil and gas, and heavy manufacturing, may already feel the complexity of tracking direct emissions. But Scope 3 adds an entirely new layer of difficulty, involving suppliers, contractors, and often long, intricate procurement chains. The discussion paper didn’t set hard rules—yet—but it invited input on potential models for future reporting obligations. There was a clear, if understated, message. Regulators are moving in this direction, and companies should start laying the groundwork now.
One obvious starting point is Canada’s open Clean Fuel Registry, a resource that can help firms begin building a data-driven understanding of the upstream emissions associated with their fuel purchases. It’s not a complete solution, of course. But by linking fuel procurement records to upstream emission factors found in the registry, firms can begin to piece together the outlines of their supply-chain carbon footprint. Some may argue the registry wasn’t designed for this purpose exactly, and they’d be right. Still, in the absence of a dedicated Scope 3 data platform, creative use of available tools is necessary.
The mechanics of such a linkage are, admittedly, a bit messy. Procurement teams would need to ensure that records of fuel purchases—down to the product and supplier level—are digitized and structured in a way that facilitates cross-referencing with the registry’s emission factor data. This might require upgrades to enterprise resource planning systems, or at least enhancements to existing reporting modules. And then comes the challenge of verifying that the upstream factors used are applicable and current. There’s little point in precise matching of procurement data if the emission factors themselves are out of date or insufficiently granular. Some firms have already started assigning dedicated staff or external consultants to this task. Others are still figuring out how best to approach it. There’s no one-size-fits-all solution, and frankly, no guarantee that efforts made now won’t have to be revised as regulations firm up.
Beyond the technical hurdles, there’s a broader question of how firms communicate their progress—or lack thereof—to stakeholders. It’s not just regulators watching, after all. Investors, customers, and civil society groups are increasingly attuned to supply-chain emissions as part of the wider ESG (Environmental, Social, and Governance) landscape. For this reason, some companies have begun drafting what might be called “Scope 3 readiness” summaries. These aren’t formal reports in the regulatory sense, but rather public-facing documents that outline the steps a firm is taking to prepare for future disclosure obligations. At best, they help demonstrate proactive engagement with the issue. At minimum, they provide a platform for dialogue with stakeholders who are, rightly or wrongly, growing impatient for transparency.
A template for such a summary might include a map of the company’s major supply categories, a description of data-collection efforts underway, and an honest assessment of gaps or challenges. It could also outline intended next steps, whether that’s piloting supplier engagement programs, investing in upgraded tracking systems, or collaborating with industry peers on shared methodologies. Some firms might worry that exposing the incompleteness of their current efforts risks reputational harm. There’s certainly that possibility. But the alternative—silence—could be interpreted as indifference, which is arguably more damaging in today’s climate.
Of course, none of this is happening in a vacuum. The Canadian policy conversation is informed by developments elsewhere, from Europe’s increasingly stringent disclosure rules to investor-driven initiatives in the U.S. and beyond. There’s a growing sense that supply-chain emissions accounting will soon be not a differentiator, but a baseline expectation for companies seeking to maintain access to capital and markets. The discussion paper may have been framed as a consultation, but it also served as a signpost, pointing towards the likely direction of travel.
Firms that recognize this early and begin the painstaking work of supplier-level data collection will be better positioned not just for compliance, but for competitiveness. The process is unlikely to be smooth. Data gaps, resistance from suppliers, and technological challenges are almost inevitable. And the regulatory environment itself remains in flux, which can make even well-intentioned efforts feel provisional. But the alternative—waiting for final rules before acting—could leave firms scrambling to catch up, at far greater cost and with far less control over the narrative.