Microsoft Cloud for Sustainability will soon support Scope 3 reporting capabilities, General Manager Shefy Manayil Kareem (pictured, top of page) disclosed in a blog.
The rollout involves Microsoft Sustainability Manager, a tool that "enables customers to store, calculate, and report all 15 Scope 3 categories" as part of a technology preview this month (June 2023). The tool has supported Scopes 1 and 2 since its general availability in June of 2022.
Why Technology Partners, Businesses Need Microsoft Scope 3 Reporting Capabilities
The Microsoft Cloud for Sustainability enhancements arrive ahead of key compliance mandates that are expected to impact businesses worldwide starting in late 2023 and in 2024.
Among the regulations to watch:
- October 2023: The SEC is striving to announce its climate disclosure regulations by this time. The proposed SEC rules would require all publicly listed companies to disclose Scope 1, Scope 2 and Scope 3 climate information. Still, it's safe to expect a political pushback against the expected SEC regulations.
- 2024: Under the European Union's Corporate Sustainability Reporting Directive (CSRD), roughly 50,000 companies are subject to mandatory sustainability reporting. The figure includes non-EU companies that have subsidiaries operating within the EU or are listed on EU regulated markets, KPMG notes. For companies with the year-ending December 2024, the first CSRD reports will be due in 2025.
Meanwhile, U.S. technology partners need help ramping on up sustainability know-how. Among the proof points: When it comes to sustainability expertise, U.S.-based partners trail their counterparts in Europe and Asia-Pacific, according to research from Canalys.
Amid that backdrop, Microsoft and rival ESG software developers have been working to ensure their platforms support Scope 1, Scope 2 and Scope 3 reporting. At the same time, Microsoft has been ramping up its sustainability partner ecosystem.
Definition: What Are Scope 1, 2 and 3 Emissions?
According to our Sustainability Glossary:
- Scope 1 involves emissions from sources that an organization owns or controls directly – for example from burning fuel in our fleet of vehicles.
- Scope 2 involves emissions that a company causes indirectly when the energy it purchases and uses is produced. For example, if a company has a fleet electric vehicles, then the emissions from the generation of the electricity they're powered by would fall into this category, according to National Grid.
- Scope 3 involves emissions up and down a company's value chain.
Microsoft did not disclose pricing or specific general availability dates for the Scope 3-level reporting capabilities.