Number of FTSE 100 firms referencing Scope 3 jumps almost 30%

FTSE 100 firms are stepping up their net-zero activity despite referring to ‘ESG’ less in their recent annual reports, according to a study by the law firm Irwin Mitchell.

The Beyond Words report analysed the frequency of phrases such as ‘ESG’, ‘decarbonisation’, ‘Scope 3’ in annual reports from companies in the FTSE 350. Although it found a 3% reduction in the use of the ‘ESG’ acronym among the FTSE 100, environmental terms such as ‘climate change’, ‘net zero’ and ‘decarbonisation’ appeared more frequently.

Of the FTSE 100 reports studied, there was a 26.8% increase in the use of these environmental terms. For example, the use of ‘Scope 3’ in recent annual reports compared to previous editions has risen from 633 to 966. Currently, 80% of companies in the FTSE 100 refer to Scope 3 emissions, indicating a significant rise.

An expectation that businesses are already integrating ESG into strategies may explain these results, Irwin Mitchell’s lawyers suggested.

Environmental law partner at Irwin Mitchell Keith Davidson, said: “Businesses of all sizes must prioritise climate action and sustainability to succeed in an evolving business landscape. For some, reporting on Scope 3 emissions is now a legal requirement, not just a voluntary commitment.

“Companies are now choosing business partners based on their environmental credentials and carbon reduction actions. If you’re unable to demonstrate climate action, you may risk losing clients.”