Beyond Scope 3: Reframing Carbon Accounting for Real-World Impact

A while back, someone asked me what I thought about full-scope net zero targets. You know, the kind that includes every upstream, downstream, sideways emissions estimate you can possibly imagine.

I told them it’s a bit like trying to count every grain of sand in a storm.

Technically possible. Practically useless.

And not the thing that’s actually going to cut your emissions or move your business forward.

Here’s the reality: Scope 3 reporting is a mess right now.

There’s no standard way to do it, most of the data is guesswork, and regulators themselves are still figuring it out.

Meanwhile, the smartest companies I know are shifting gears.

Instead of chasing perfect carbon accounting across their entire value chain, they’re doubling down on what they can control which includes their operations, suppliers they know, energy they actually pay for.

They’re calling it Responsible Net Zero.

It’s cleaner, simpler, and, more importantly, it gets things done.

Why Even the Regulators Are Buying Time

There’s a reason this shift is happening and it’s not just companies getting tired of spreadsheets.

Even the regulators are backing off a bit.

Take California. When the state introduced Scope 3 disclosure requirements, everyone braced for impact. But what actually happened?

The California Air Resources Board came out and said: just do your best. They’re giving companies enforcement discretion, so as long as you’re acting in good faith and using data you can reasonably get your hands on.

And in the U.S., the SEC’s climate rules?

Still stuck. A federal court hit pause back in April 2024. So companies are in limbo, not sure what they’ll actually be required to report or when.

The message here isn’t that regulators don’t care.

It’s that they recognize what anyone dealing with Scope 3 already knows: It’s too complex, too dependent on other people’s data, and too easy to get wrong.

So while the frameworks catch up, some companies are doing something smarter.

They’re making progress where they have control and building climate programs that can hold up in the real world.

What Smart Companies Are Doing Instead

When the rules are vague and the data’s a mess, you’ve got two choices:

Wait around for clarity… or move with what you do know.

Some companies are choosing the second path not by giving up on emissions reductions, but by tightening their focus.

California Resources Corp made it official

They dropped their “Full Scope Net Zero” goal and replaced it with a “Responsible Net Zero” target.

Their reasoning? Too much uncertainty, not enough control. They’re now prioritizing emissions they can directly influence so things like operational energy use and efficiency projects.

BMO, the financial services giant, didn’t try to boil the ocean either

They built a screening tool to rank Scope 3 categories by size, risk, and influence.

So instead of throwing resources at every category equally, they focus on the ones that actually matter: where their actions can lead to measurable change.

This isn’t scaling back. It’s getting strategic.

And it’s starting to become the default for companies who want real results without wasting time chasing theoretical numbers.

Less Guesswork, More Action

Once companies stop trying to account for every distant emission, they can finally start making real progress at home.

Scotiabank is a good example.

They trimmed their Scope 3 reporting on purpose. Some categories were too small to matter or too hard to measure accurately.

So instead of pretending they had all the data, they focused on the areas where they could actually move the needle.

East West Bancorp took a different route

They brought in a third-party firm to track how the CARB rules were evolving.

They’re not in a rush to chase complexity. They’re setting up for a smarter rollout when the time is right.

This shift is also being supported by tech, the quiet kind that doesn’t show up in headlines. I’m talking about platforms that help operations teams track real-time energy use, manage facility-level emissions, and plug directly into procurement systems.

The throughline here is simple: The less time you spend on guesswork, the more time you have to cut actual emissions.

Investors Are Already Thinking This Way

It’s not just corporates making this shift. Investors have already started rethinking what “credible climate action” looks like.

Hamilton Lane, for instance, doesn’t try to evaluate climate risk across every imaginable variable.

They look at financial materiality, plain and simple.

If a climate factor directly impacts value, it’s in. If not, they move on. It’s a lens that puts business impact ahead of theoretical coverage.

Brookfield is doing something similar with their “Operationally Managed Investments.”

That’s a fancy way of saying: we’re focusing where we have actual control.

If they can’t influence outcomes, or if it’s just data collection without decision-making, it’s not a priority.

That’s discipline. And it’s how more investors are thinking about decarbonization: focus on what you can change, prove what you’ve done, and skip the theater.

Because in a world of uncertainty, clarity is a competitive advantage.

What I’d Do If I Were in the CEO Seat (Which I Am)

If I were advising a leadership team right now and honestly, I’ve been in a few of those rooms, here’s what I’d say.

Start by auditing your Scope 3 program.

What’s costing time and money but delivering no real emissions cuts?
What’s outside your control and what can you actually influence?

Once you’ve got that list, reallocate

Pull resources away from accounting gymnastics. Put them into energy retrofits, supplier programs, real-time tracking, and things your operations team can actually run with.

Then build a cross-functional team, not just your head of ESG with a giant task list.

You need finance, operations, procurement, and product. The people who move budgets and processes, not just policies.

And make sure your story holds up

When you talk to your board, frame this shift as operational risk management because it is.

With investors, show how this approach creates value and reduces volatility.

And with regulators? Lead with transparency. Show you’re acting in good faith, prioritizing what matters most, and not hiding behind offsets or fluff.

Last thing: Plan for scenarios.