Data on value chain emissions will help

It's time for GoI to move forward with the plan requiring all exporters to provide emissions data across their full value chain. This ambitious, progressive proposal is challenging as accounting for value-chain (Scope 3) emissions is difficult, and MSMEs already struggle to account for direct (Scope 1) and indirect (Scope 2) emissions. With net-zero targets and climate-trade concerns gaining importance, accounting for value-chain emissions is necessary. Authorities must work with industry and other stakeholders to develop a multi-year, phased roadmap, with big companies taking the lead, and provide MSMEs with adequate, predictable support to build capacity and systems needed to track emissions up the line.

The EU and Britain's carbon border adjustment mechanisms (CBAMs) require exporters to account for carbon embedded in the goods they import. As more countries introduce CBAMs, the need for data will increase. Indian exporters should get a head start. While collecting value-chain emissions data is onerous, it can help identify decarbonisation opportunities, reduce CBAM levies and lower manufacturing emissions. As India's emissions trading framework, including the Carbon Credit Trading Scheme, matures, this head start will help create a level playing field for domestic industry.

For exporters to provide Scope 3 data, multiple industry segments will have to build capacity and systems to capture it. Clear timelines, phased implementation, with big companies leading the way, and support from government, industry associations and industry leaders for MSMEs will be integral to success. Rather than rejecting the proposal, industry and government should join forces to develop a viable delivery plan and turn a challenge into an opportunity.