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New Scope 3 report sent to the SEC ahead of Climate Week

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Orbitas, who provide data to the US government and work with seven other countries, are releasing a new report ahead of Climate Week that assesses the financial risks US businesses and investors face from overseas Scope 3 deforestation emissions in vital commodities such as beef, coffee, palm oil, cocoa, and rubber imported into the US. The report highlights that the total value at risk to US investors across three different scenarios ranges from $7.28 billion to $114.98bn.

The report is being sent to the SEC this evening (13 September). The report authors have been engaging governments on climate related financial risks and regulations, including mandatory climate emission disclosures for several years. Specifically with the US government they’ve engaged the FDIC, CFTF, SEC, and Federal Reserve. Other governments engaged include Canada, Finland (as co-chair of the Coalition of finance ministers during Glasgow period), Germany, UK, Chile, Brazil, and Mexico.

Additionally, they engaged with the International Sustainability Standards Board which does call for Scope 3 emissions disclosures for companies measured in accordance with the Greenhouse Gas Protocol. Orbitas directly has worked with governments, investors, commodity traders and producers in Indonesia, Peru and Colombia on the issues of climate related financial risks and the risks of emissions disclosures in the EU and US on their agricultural sectors.

As the US Securities and Exchange Commission considers the final design of its climate emissions disclosure rule, it is vital that investors and US businesses consider the financial risks of Scope 3 deforestation emissions, their impact on reputation, and climate and biodiversity impacts on future agricultural production. The costs to the value chain for these commodities from Scope 3 deforestation emissions is significant as retail prices of imported beef might increase 700 percent.

The Scope 3 deforestation emissions from these commodities imported into the US in 2019 were greater than the emissions from entire countries including the Democratic Republic of the Congo, Nicaragua, or Panama. Our analysis identifies specific highlights where there are significant financial risks, including beef imports accounting for 53% of the total Scope 3 imported deforestation emissions, with Brazilian Beef products accounting for 64% of this total. 

Here’s the full report.

A full breakdown of the potential value chain at risk for all commodities covered in the report is shared below.

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US climate damage costs as a percentage of the total revenue at risk:

All scenarios

Chain value, damage, all scenarios   
 Scenario 1Scenario 2Scenario 3
CO2 price/ton (USD)34.196.31,160
Beef21%59%712%
Coffee7%21%249%
Rubber, natural2%5%61%
Palm oil (HS 1511)2%5%58%
Cocoa (HS 1801)1%4%43%
Total/higher climate damage costs in value chain as a % of total5%15%184%

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