By Foster Tshiluvhu, head of Compliance at CMS South Africa
For years, South African boardrooms viewed sustainability through a relatively narrow lens. Success was measured by reducing “on-site” impact – relatively simple things like switching to LED lighting, optimising HVAC systems or investing in a solar array to mitigate the instability of the national grid. These are critical steps, addressing Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased energy).
Foster Tshiluvhu, the head of Compliance at CMS South Africa. Supplied by CMS South Africa
But as sustainability reporting matures from what could be argued as a “nice-to-have” marketing exercise into a rigorous compliance requirement, a new reality has emerged around what is really needed. For most South African organisations, the bulk of their carbon footprint, as much as 80% and upwards, resides in Scope 3.
The reach of Scope 3
Scope 3 emissions are the “everything else” of the carbon world and are more complex to both identify and mitigate. It’s the emissions inherent in the goods we buy, the logistics of moving them, the business travel we undertake and crucially, how products are eventually used and disposed of.
In the South African context, this is particularly complex. Our economy is built on intricate, often informal, and geographically vast value chains. When local retailers source produce, their Scope 3 profile includes the diesel burnt by a small-scale farmer’s tractor in Limpopo and the refrigeration emissions of a long-haul truck travelling to a distribution centre in Gauteng.
From compliance to resilience
Why does this matter now? Beyond the looming shadow of the Carbon Tax Act and evolving JSE sustainability disclosure requirements, Scope 3 is a proxy for business resilience.
If a supply chain is carbon-intensive, it is also financially vulnerable. As global carbon pricing mechanisms, like the EU’s Carbon Border Adjustment Mechanism (CBAM), take effect, South African exporters who haven’t mapped their Scope 3 emissions may find themselves priced out of international markets. It is no longer just about reporting on environmental impact but rather reporting on the viability of our business models in a decarbonising global economy.
The challenge of the SA value chain
Mapping these emissions in South Africa presents unique hurdles. Many of our SMEs, which form the backbone of larger corporate supply chains, do not yet have the resources to provide granular emissions data.
Companies often struggle with the data gap. But the shift is moving from estimation to engagement, which is a necessary first step. Leading South African firms are partnering with suppliers to drive efficiency. This is where the social and environmental intersect: by helping a local supplier transition to cleaner energy or more efficient logistics, a corporation is not just lowering its Scope 3 footprint but strengthening the local economy and reducing its own operational risk.
The path forward
To master Scope 3, South African businesses should adopt a three-tiered approach that prioritises materiality, standardised data collected and embeds sustainability in procurement. Start by identifying which of the 15 Scope 3 categories are most significant to your specific sector, then move toward international frameworks like the GHG Protocol to ensure reporting is defensible and comparable for investors. And bear in mind that the purpose of compliance, ultimately, is to influence what happens next. To this end, contracts must begin to reflect carbon performance as a key KPI alongside price and quality.
Scope 3 is ultimately a call for collaboration and for local businesses, it presents a test of how well we truly understand the ecosystems in which we operate.