Carrying forward a spend-based Scope 3 estimate versus a partial supplier-data revision
Kestrel Foods plc prepares its first IFRS S1 and IFRS S2 disclosures for the year ended 31 December 2025, having previously reported under GRI. Agricultural commodities are its largest emissions source. A 2024 Scope 3 screening using supplier spend-based factors produced 4.1 million tCO2e, of which purchased goods were 3.6 million. In 2025 a pilot with 22 key suppliers using primary activity data covering 9% of purchased volume suggests the spend-based estimate overstates emissions for those commodities by roughly 30%. Scope 1 and Scope 2 are metered and externally verified. The board has approved a 2030 target covering Scope 1, 2 and 3 and a transition plan with USD 180 million of committed capital expenditure. The CFO wants to carry the 2024 estimate forward unchanged to protect comparability; the sustainability lead wants to publish the revised supplier-based estimates. The audit committee asks whether material estimation uncertainty justifies describing the Scope 3 figure as not currently disclosable.
1. How should Kestrel treat the 2025 supplier-based data in its IFRS S2 Scope 3 disclosure, and what must accompany the reported figure?
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Issue. IFRS S2 requires Scope 3 emissions to be disclosed when the category is material, measured in line with the GHG Protocol Corporate Standard. The standard does not require precision; it requires a faithful, explainable measurement.
Reasoning. Kestrel already holds better evidence for 9% of purchased volume. The relief that allows prior-period data to be used applies to data lags where the underlying facts are unchanged; it is not a licence to ignore superior evidence the entity now possesses. Mixing supplier-specific data with spend-based factors is acceptable, but the hierarchy must be applied consistently by category and the mix must be transparent, otherwise the trend line becomes an artefact of which suppliers were engaged.
Conclusion and disclosure. Report the best available estimate, do not blend selectively to flatter the trend, and disclose: (a) the measurement methods and the proportion of each category based on primary activity data versus spend-based factors; (b) the main inputs and assumptions; (c) the direction and scale of likely measurement error; (d) any change in method or data source compared with the prior period. The 2030 target must be measured on the same basis as the reported inventory, so the interaction with the target baseline needs to be stated explicitly.
2. The audit committee proposes labelling Scope 3 as not currently disclosable because of estimation uncertainty. Assess that proposal.
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Framework test. IFRS S1 and S2 anticipate estimation. Reliability is achieved through disclosure of method and uncertainty, not by withholding the number. The conformity mechanisms in the standards (explaining why information cannot be provided, and the time-limited transition reliefs) address situations such as unavailable information or specific first-year accommodations. Neither is a general exemption for imprecise data.
Application. Kestrel faces ordinary Scope 3 measurement uncertainty, not an inability to measure: it has a screening estimate for the full inventory and primary data for a subset. Describing the figure as not disclosable would be a mischaracterisation that removes decision-useful information from users and would conflict with the requirement to give a faithful representation of the entity's emissions profile.
Practical answer. Publish the estimate with a clear statement of method, coverage and uncertainty, and explain how the programme to improve data quality will evolve. If a specific category genuinely cannot be estimated, disclose that fact, the reason and the plan, category by category, rather than suppressing the whole inventory. The committee's legitimate concern about precision should be met by labelling the figure as an estimate and quantifying sensitivity, not by withdrawal.
3. Reconcile the CFO's comparability argument with the sustainability lead's revision. What must the 2025 report show?
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Two different things are being conflated. Comparability is a requirement to present information consistently and to explain changes, not a requirement to freeze an estimate that has been shown to be wrong. Under IFRS S2 the entity must apply its measurement approach consistently; where the inputs, data sources or methods change, that is a change in estimate or method whose nature and effect must be disclosed.
Reasoning. Publishing the revised figure without explanation would break the trend; publishing the old figure while holding better data would misstate the inventory and undermine the credibility of the 2030 target. The defensible route is to report the revised figure and to disclose the effect of the change, so users can reconstruct the comparable trend.
What to show. (1) The 2025 inventory using the improved data, with methods and data coverage disclosed. (2) A restated 2024 comparative, or an explicit reconciliation between the previously reported and revised figures, with the reason for the revision. (3) Confirmation that the target baseline is on the same basis, or the effect of any difference. (4) A statement that revision arose from improved data, not from a change in operational boundary, so users do not read the movement as performance.