What Factors Facilitate Environmental Practices Through the Supply Chain? The Case of Scope 3

Using data from a survey of Japanese manufacturing firms, we identified the determinants of a firm’s choice to measure Scope 3 emissions, which are all indirect emissions that occur in the supply chain of firms, including both upstream and downstream emissions. Our result shows that the firms that were asked by stakeholders, such as investors and consumers, to reduce GHG emissions tend to measure more Scope 3 categories. Additionally, for these firms, requests for information disclosure from their customers have a stronger effect on measuring Scope 3 emissions. In the case of measuring Scope 3 emissions, which requires cooperation with suppliers and customers, requests from downstream of the supply chain play an important role. We also found that being subject to Carbon Disclosure Project (CDP) or answering to CDP questionnaire induces firms to measure Scope 3 emissions.