Exporters may be asked to monitor supply chains' indirect emissions

The Indian government is deliberating whether exporters should monitor indirect emissions throughout their supply chains as foreign partners impose stricter environmental standards and global production networks grow more interlinked. Officials discussed extending Scope 3 emissions, which encompass indirect emissions from a company's value chain, to all trading nations, not just those implementing Carbon Border Adjustment Mechanism (CBAM) rules like the EU and the UK.

Measuring Scope 3 emissions is far more complex than tracking emissions that directly result from a company's activities or from the energy it consumes. A government official emphasized that measuring these indirect emissions, which are inherently challenging to quantify, report, and reduce, necessitates a uniform approach across all countries due to the interconnected nature of global value chains.

However, no final decision has been made on the matter. The National Institute of Transforming India (NITI Aayog) noted in its report on pathways to a low-carbon economy that any inclusion of Scope 3 disclosures should be phased in gradually and proportionate, starting with large firms in high-impact industries to prevent imposing excessive compliance costs on micro, small, and medium enterprises (MSMEs) and lesser suppliers.

Currently, Indian exporters of iron and steel, aluminium, cement, fertilizers, electricity, and hydrogen products are already required to adhere to the EU's CBAM, which measures direct and indirect greenhouse gas emissions under Scopes 1 and 2 of the Greenhouse Gas Protocol.