New PACT Framework set to drive sustainable and transparent supply chains

Aiming to improve carbon disclosure transparency across the value chain, the Partnership for Carbon Transparency (PACT) framework aims to enable companies to securely share accurate Scope 3 emissions data more easily.

Find out why supply chain emissions must be measured and disclosed accurately to achieve PACT alignment, and how CarbonChain can help you access accurate carbon emissions data.

What is the Partnership for Carbon Transparency (PACT)?

The Partnership for Carbon Transparency (PACT) is the first global framework designed to facilitate the sharing of standardized and accurate Scope 3 emissions data across value chains. 

Launched in June 2022, PACT is hosted by the World Business Council for Sustainable Development (WBCSD) and aims to better unite stakeholders across the climate ecosystem to improve carbon transparency.

Based on the premise that “no organization can create emissions transparency on its own”, PACT will allow different accounting and emissions technology solutions to securely exchange data more easily, thereby boosting collaboration and transparency across product supply chains.

Why is PACT focused on supply chain carbon emissions?

To reach net zero, many more businesses worldwide will need to measure and disclose their greenhouse gas (GHG) emissions, as a first step towards reducing them. This is why PACT has focused on boosting emissions reporting transparency across the value chain — supply chain emissions are the most substantial part of a company’s carbon footprint, sometimes over 90%.

Many organizations increasingly recognize that their environmental impact and risks extend beyond direct operations. Yet challenges in accessing accurate and reliable emissions data remain. Companies that source carbon-intensive commodities — such as logistics firms, trade finance providers, commodity traders and metal manufacturers — also face mounting pressure to report and reduce emissions across their supply chain. 

More and more companies are reaching out to carbon accounting experts like CarbonChain to help measure and report accurate Scope 3 emissions data. Our carbon intelligence platform also models decarbonization pathways to future-proof your business and stay ahead of your competitors.

With companies using different approaches to calculate and disclose their emissions, PACT aims to tackle one of the main challenges relating to carbon disclosure, and sustainability reporting more generally: interoperability, i.e. the ability to easily share, access and understand data received from multiple sources and then integrate that data for analysis. 

For example, the IFRS Foundation and European Financial Reporting Advisory Group (EFRAG) — organizations who helped develop two different sustainability reporting standards — recently published interoperability guidance to enable companies to apply both sets of standards, including detailed analysis to align climate-related disclosures. PACT aims to follow this approach by helping efficiently package emissions data and enable it to be understood by different technology solutions.

How is the PACT framework structured?

PACT’s overarching Pathfinder Framework addresses the challenge of sharing consistent product carbon footprint data across the value chain. 

Building on existing standards, it provides guidance on accounting, verification, and exchange of product carbon footprints (PCFs), aiming to create more granular, comparable, and consistent emissions data.

The PACT framework leverages methods and standards for the calculation and allocation of product-level emissions, including:

• Greenhouse Gas Protocol Product Life Cycle Accounting and Reporting Standard
• Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Standard (GHG Scope 3 Standard)
• ISO Standards: 14044/40; 14067; 14025
• European Commission's Product Environmental Footprint (PEF) method and Product Environmental Footprint Category Rules (PEFCRs)

Alongside the Pathfinder Framework Guidance, PACT’s other specifications include:

• The PACT Pathfinder Network — bringing together stakeholders committed to aligning with PACT’s vision; and
• The Pathfinder Data Exchange Protocol, a standardized method for companies to efficiently and securely share product carbon footprint data between supply chain partners.

How does PACT align with other carbon accounting frameworks and legislation requirements?

• While PACT’s focus is on Scope 3 emissions, it aligns with the ISSB Standards as well as the California climate disclosure rules legislation, both of which require Scopes 1, 2 and 3 emissions to be measured in accordance with the GHG Protocol Corporate Standard. 

• Companies reporting through the European Sustainability Reporting Standards (ESRS) framework, must disclose a full corporate carbon footprint — including Scope 3 emissions — to align with the EU’s CSRD legislation. 
• While Scope 3 emissions are not required to be disclosed under the US SEC Climate-Related Disclosure Rules, it is nevertheless strongly advised for all companies to calculate a complete corporate carbon footprint, as this will help pinpoint carbon hotspots, supercharge emissions reductions, track progress to net zero, and fulfill sustainability-related customer, shareholder and investor requests.

How companies can prepare for PACT

To align with PACT, organizations will need:

1. Accurate product carbon footprints (PCFs), which follow globally accepted standards;
2. Scope 3 data to ensure these PCFs are comprehensive;
3. Data formatted in a manner which can feed into PACT-aligned systems;

A PCF will help commodity traders and manufacturers to inform their decarbonization efforts, validate low-carbon claims and provide market decision makers with accurate information.