SCOPE 3 REPORTING
PIONEERING THE PATHWAY TO SCOPE 3 REPORTING RIGHT: Far reach means big impact which must be addressed with accurate calculations to allow for decarbonisation.
RIGHT: Scope 3 emissions include indirect GHG’s from a company’s value chain, upstream or downstream.
After realising that the current guidance for companies to measure their greenhouse gas (GHG) emissions left a gaping hole of unknowns for the brand licensing industry, Products of Change (POC) rallied its resources and connections.
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In collaboration with South Pole, POC has created a pioneering body of work to support the industry to measure, and therefore reduce, its GHGs. POC and South Pole have now submitted their final report ‘Guidance for Calculating GHG Emissions for Brand Licensing – Technical Brief’ to the World Resource Institute (which runs the Greenhouse Gas Protocol). The recommendation is that ‘Scope 3 Category 14: Franchises’, be expanded to include brand licensing, with the relevant information and guidance specific to this particular strain of business. Helena MansellStopher, founder and CEO of Products of Change, commented, “As brand owners begin to track and disclose their environmental impact, they are now exploring the responsibilities tied to their licensed products. The existing guidance from the Greenhouse Gas Protocol under Category 14 does not account for the brand licensing business model.” The reason for brand licensing’s omission from the GHG guidance seems even more remiss when its size is taken into account. The global sales revenue in the brand licensing sector reached $356.5 billion in 2023, marking a 4.6% growth from the 2022 figure of $340.8 billion. Notably, this CAGR outperforms that of the general retail sector by 3.7%. “We have been working as a cross-sector group over the past year to develop a comprehensive methodology. In October, we proudly submitted
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our methodology to the World Resources Institute and are eagerly awaiting their feedback. We hope that our approach will be adopted as part of the global Greenhouse Gas Guidelines’ realignment in 2026,” said Helena. CONSULTING THE INDUSTRY In May earlier this year, POC and South Pole hosted four workshops as part of a consultation process with the POC community and brand licensing industry, garnering feedback from relevant industry stakeholders on the proposal of new guidance. Eight key stakeholders were consulted: LEGO, Disney, BBC, Paramount, Jamie Oliver Group, Manchester City FC, Microsoft, and ASDA. Sine Møller, sustainability transformation director, LEGO, commented, “After I spent two weeks in Scope 3 workshops with super knowledgeable colleagues, trying to understand where licensing would fit into the reporting landscape, it was clear that nobody had thought about the licensing model in the protocol. “I don’t blame the clever people who have created the methodology across Scope 3 because it’s a difficult business model to understand, from a financial and ownership perspective. “My frustrations gave me the clarity that resulted in me calling Helena, to say ‘it simply can’t be right, but nobody has thought this through. Let’s talk to [industry] peers because