Jun. 09, 2022
June 9, 2022 Three major challenges with the evaluation and reporting of Scope 3 emissions are 1. It will be rare that any firm whose products are fixed saleable items (walk through Walmart store and everything is a product with a firm who manufactures or sells it) that Scope 3 CO2eq results will not be hugely dominant in the total organization emissions (as noted on page 162 of the proposal). This is fundamentally because all products are made from the chemicals-in-commerce list and virtually all of these, the supply chain dominates the CO2eq emissions therefore the product Scope 3 will do the same. 2. Having the results of Scope 3 CO2eq emissions provides almost no guidance of whether these can be reduced in a transition to a lower carbon economy. This is because these emissions come from the thermodynamic laws on how chemicals are made (across the supply chains) and these have little latitude for change. Further as the Environmental Genome (https://protect2.fireeye.com/v1/url?k=31323334-50bba2bf-3132d782-4544474f5631-8fc2f361e37085f6&q=1&e=fa7112de-2c65-4cbc-b8bd-497741d4fa67&u=http%3A%2F%2Fwww.environmentalgenome.org%2F) has evaluated nearly 2,000 of the chemicals-in-commerce, the use of electricity is typically in the range of 5-10% and so the transition of our electrical grid will have little reduction in overall CO2 emissions from all the chemicals used in the trillions of products from reporting firms. As a side note, this is the only database to actually estimate the chemical fugitive emissions in manufacturing. We are not aware of any significant transition to lower CO2eq across the broader chemicals-in-commerce system and hence the likelihood of significant long-term results for firms selling or manufacturing product s seems low. Hence the Scope 3 results meant to capture CO2eq emissions outside the firms boundary are not predictive of impacts from future decarbonization changes. This is true for both the fossil derived chemicals and those from the inorganic ores (like semiconductor chemicals). These are almost all outside the boundary of the reporting firm. 3. One available approach to creating the data on CO2eq for chemicals and subsequently for the products using these chemicals is dependent on the assumption of a quantitative relation between cost of a product and the environmental footprint (CO2eq). This is referred to as economic input/output analysis. These results has proven to be so poorly related to the actual field data on CO2eq emissions (inaccurate by 400% - 1,000%) as to be of little investment value that is assigned to any given product or in this case the Scope 3 results for a corporation. If this approach is used for the Scope 3 data, the registrant risk in certifying these results will be high and probably unacceptable. This will also reduce the credibility of the overall SEC effort to provide value in the future transition to decarbonization. There are however other more directly-related approaches and databases for these chemical CO2eq footprints based on the underlying process life cycle analysis for manufacturi ng each chemical and then use in the products for the Scope 3 arena. The critical key to obtaining Scope 3 CO2 emissions is with the availability of the CO2eq data for all of the ingredients in products, namely the 100,000 chemical-in-commerce used in all products. This gap is an opportunity for the SEC to selectively use the safe-haven concept for those firms that can demonstrate that they are directly contributing to the development of these data. That is, funding the studies to obtain these data. This is a refinement of the safe-haven provisions to be considered for change from the current proposal.