Emissions reporting in private equity has moved faster than the data underneath it. Most firms now report a portfolio-level scope 1 and scope 2 number. A smaller number report scope 3. The number of firms that can defend the scope 3 number in an audit is smaller still.
We report scope 1 and scope 2 emissions for every operating portfolio company, on a fiscal-year basis, within one hundred and eighty days of year-end. The data is collected by an independent consultancy, normalized against the GHG Protocol Corporate Standard, and signed off by the company's chief executive before publication.
We report scope 3 emissions for eleven of our twenty-six portfolio companies. The eleven are the companies where the upstream and downstream activity data is reliable enough to defend in an audit. For the remaining fifteen companies, we publish the categories of scope 3 we are working toward and the year we expect to report them.
The line between reliable and not reliable is specific. For a specialty distribution company, scope 3 category one (purchased goods and services) is reliable because the company buys a defined catalog from a defined set of vendors. Scope 3 category four (upstream transportation) is reliable because the company uses a defined set of carriers. Scope 3 category eleven (use of sold products) is not reliable because the company does not know how its customers use what they buy.
For a software company, scope 3 is dominated by category eleven: the emissions associated with running the software on customer infrastructure. That number requires the customer to report their own scope 3, which most customers do not do. We publish scope 3 for software companies only where the customer is a regulated utility or a public company with a published scope 3.
We will keep reporting the scope 1 and scope 2 numbers for every company. We will keep reporting scope 3 only where the data is defensible. If a reader wants a number we have not published, we will tell them why.