Fast-moving regulations for manufacturers: A countdown to compliance

The dynamic landscape of environmental, social and governance (ESG) regulations presents constant challenges for manufacturers. Regardless of the jurisdictions in which they apply, regulations pose challenges based on the scope of activities they cover and the complexity of ensuring compliance. However, compliance is always more challenging when the runway for achieving compliance is short.

NTT DATA recognizes these challenges. We’ve been observing aggressive growth in ESG disclosure and sustainability regulations for some time. And we can illustrate the magnitude of the dilemma by considering just one state-level disclosure regulation among the multitude coming into play.

Scope 3 Disclosure: massive complexity meets tiny timeline

One critical aspect of ESG compliance for manufacturers is managing Scope 3 greenhouse gas (GHG) emissions. These emissions, stemming from external entities in a manufacturer's value chain, often represent the majority of a company's carbon footprint. While direct emissions (Scope 1) and indirect emissions from purchased energy (Scope 2) are relatively straightforward to measure, Scope 3 presents a more intricate challenge.

A regulation originating in California will apply to businesses that exceed a billion dollars in revenue and conduct business in the state. Specifically, those businesses are mandated to report Scope 3 emissions by FY26. Addressing Scope 3 can seem daunting for manufacturers, especially those with limited sustainability staffing and without the right tools to empower and speak to their work.

Complying with a single state-level regulation

Consider a single example from the torrent of ESG regulations emerging in the near-term. Complying with California’s Scope 3 disclosure regulation creates a wide-reaching set of targets to meet. For NTT DATA clients racing to comply, we begin by helping them understand, calculate and categorize emissions relevant to their operations. Even for our clients with a head start on compliance, their processes tend to be manual and face a siloed distribution of ESG data, and they greatly benefit from automation and advanced data management.

We further help them recognize the barriers to sustainability compliance, such as the need for adjustments in product development, sustainable raw materials and logistics. This can include facilitating collaboration with internal stakeholders to drive Scope 3 emission reduction.

More broadly, we help manufacturers identify solutions in data management, supply chain networks and packaging. These solutions help our clients align with California’s Scope 3 requirements and their overall sustainability goals.

A path forward

NTT DATA aims to ensure that our clients’ journeys toward sustainability are not a solitary venture. We offer empathetic and innovative strategies, guiding them through the intricacies of ESG compliance. Our goal is to enable our clients to make significant strides toward a greener future without disrupting their existing structures.

NTT DATA stands ready to support your organization in this endeavor, ensuring you can confidently meet these challenges and continue towards a sustainable future.

Learn more about how NTT DATA can help your organization navigate ESG compliance effectively.