Industry-specific ESG reporting, Scope 3 challenges and assurance

Sector Reporting and Carbon Accounting

The ESG reporting landscape for resource-intensive industries in 2026 is defined by escalating regulatory and operational pressures driven by an expanding matrix of global mandates. Key regulatory developments, including the European Union’s Omnibus Directive integrating the Corporate Sustainability Due Diligence Directive (CSDDD) and Corporate Sustainability Reporting Directive (CSRD), alongside the crystallization of the Carbon Border Adjustment Mechanism (CBAM) costs and intensifying U.S. state-level mandates such as California’s CARB climate transparency rule, have collectively raised the bar for mandatory due diligence, expanded disclosure scopes, and heightened liability risks.

Escalating Regulatory and Operational Pressures in 2026

EU Omnibus Directive (EU 2026/470):
Published on February 26, 2026, this directive consolidates and updates ESG-related legislation by harmonizing CSDDD and CSRD frameworks. It mandates:

Mandatory due diligence on human rights, environmental and climate risks across entire value chains, explicitly targeting mining and resource-heavy sectors.
Expanded disclosures covering Scope 1, 2, and 3 emissions, biodiversity impact, and social governance metrics.
Toughened civil liability regimes with penalties capped at 3% of net worldwide turnover, substantially increasing the stakes for non-compliance.
Imminent delegated acts and implementation guidelines expected to refine operational details.

Carbon Border Adjustment Mechanism (CBAM):
CBAM has moved from theoretical policy to tangible cost impact. For example, aluminium extrusion imports into the EU now face a €230 per ton CO₂-equivalent charge, signaling a direct financial consequence for carbon-intensive imports. This cost factor is forcing mining exporters and resource companies to:

Integrate carbon pricing into capital allocation, tax planning, and supply chain costing.
Engage proactively with phased implementation timelines or seek regulatory exemptions to mitigate trade disruption risks.

California Air Resources Board (CARB) Climate Transparency Regulation:
California’s new climate transparency rule requires entities doing business in the state to disclose detailed greenhouse gas emissions—including significant Scope 3 emissions—adding a complex layer to U.S. ESG compliance amid a fragmented regulatory environment.

UK Sustainability Reporting Standard (SRS) and IFRS S1/S2 Adoption:
The UK fully operationalized its SRS in February 2026, aligning with ISSB’s IFRS S1 and S2 standards. This establishes ESG disclosures as financially material, audit-ready components integrated alongside traditional financial statements, raising expectations for rigor and transparency.

Asia-Pacific ISSB Adoption:
Singapore and Australia have mandated ISSB standards for large issuers, reinforcing global harmonization efforts for finance-focused, audit-ready ESG disclosures.

U.S. ESG Landscape Fragmentation:
The U.S. continues to grapple with mixed federal and state-level ESG mandates. Besides California’s CARB rule, states like New York have passed stringent greenhouse gas disclosure laws, demanding regionally tailored compliance strategies supported by sophisticated data management.

Heightened Assurance and Liability Demands

The AICPA Auditing Standards Board (ASB) has proposed updates to attestation standards specifically addressing sustainability assurance, aiming to enhance the credibility and scope of independent verification.
Assurance now routinely extends beyond Scope 1 and 2 emissions to Scope 3 emissions, biodiversity, water stewardship, and supply chain claims, reflecting investor and regulator demands for comprehensive verification.
Regulatory liability reforms, particularly under the EU Omnibus Directive, amplify civil penalties and reinforce the imperative for audit-ready, verifiable disclosures.
The growing complexity of ESG reporting has driven the adoption of SOX-like governance controls over ESG data systems, including multi-tier validation, access management, and continuous audit trails, elevating ESG data integrity to the level expected of financial reporting.

Persistent Scope 3 and Lifecycle Emissions Challenges

Scope 3 Emissions Data Gaps:
Capturing indirect upstream and downstream emissions remains a major challenge due to:

Fragmented, multi-tier supply chains.
Inconsistent methodologies.
Supplier capacity constraints that limit data availability and quality.

For instance, leading companies continue to exclude certain Scope 3 categories owing to supplier non-compliance, underscoring widespread industry hurdles.

Supplier Capacity Building:
Regulatory bodies and industry initiatives, such as the EU’s detailed procurement guide for SMEs, target supplier empowerment to close data gaps and improve reporting reliability.

Lifecycle Emissions Blind Spots:
Emissions from product use and end-of-life stages are under-reported, creating incomplete sustainability assessments.

Technology Enablement: ERP, Middleware, and AI Governance

To meet these challenges, mining and resource companies are turning to modernized technology solutions that embed sustainability data rigorously into operational and financial systems:

ERP Modernization:
Platforms like SAP S/4HANA Cloud are integrating agentic AI capabilities to automate data collection, validation, and scenario modeling. This enables real-time, audit-ready carbon ledgers tightly aligned with financial planning and risk management.
Middleware and Distributed Ledger Technologies:
Solutions such as Hashgraph’s TrackTrace provide immutable, transparent emissions data trails across complex supply chains, facilitating compliance with CBAM, ESRS, and other reporting mandates.
Interoperable APIs:
Tools like the TRACES API and GeneCapsule enhance data exchange efficiency across supplier networks, crucial for managing multi-jurisdictional emissions data flows.
SOX-Compliant AI Governance:
Given Gartner’s warning that up to 40% of AI sustainability initiatives risk failure without proper oversight, companies are instituting SOX-aligned AI governance frameworks—embedding continuous monitoring, transparent audit trails, and risk mitigation controls for AI-driven ESG data processes.
Digital Product Passports:
These passports document provenance, emissions profiles, and carbon credit retirements, enhancing supply chain transparency and mitigating greenwashing risks.

Strategic Imperatives for Resource-Intensive Sectors

Mining and resource companies must urgently:

Harmonize ESG data infrastructure globally to ensure consistent, audit-ready disclosures across diverse regulatory regimes.
Embed SOX-style governance controls over ESG data management to maintain data integrity and audit readiness.
Expand third-party assurance engagements to cover broader ESG metrics, including Scope 3 and lifecycle impacts.
Integrate carbon pricing, voluntary carbon markets, and CBAM considerations into financial and tax planning.
Strengthen procurement and contracting frameworks to demand transparent, verifiable ESG data from suppliers.
Invest in supplier capacity-building initiatives to close critical data gaps upstream.
Leverage AI-enabled ERP and middleware platforms to automate, validate, and audit ESG disclosures efficiently.
Prepare for intensified liability risk by ensuring robust disclosures and internal controls aligned with evolving regulatory mandates.

Forward Outlook

As one sustainability leader noted:

“Embedding Scope 3 disclosures, despite regulatory uncertainty, is no longer optional — it’s a business imperative that drives operational efficiency and market resilience.”

The convergence of regulatory enforcement, emerging assurance frameworks, technology innovation, and market scrutiny places ESG reporting at the heart of corporate strategy and operational resilience for resource-intensive industries. The crystallization of CBAM costs (e.g., €230/t aluminium), California’s CARB transparency rule, and the EU’s omnibus directive collectively signal an era where carbon and sustainability data are inseparable from financial and operational decision-making.

Mining firms that harness technological agility, governance rigor, and strategic foresight will not only comply with expanding mandates but transform ESG reporting into a competitive advantage—leading the global transition to sustainable resource management in a complex, demanding environment.

Selected Supporting Articles

"Beyond compliance: How primary carbon data drives smarter sourcing" — Emphasizes verified, product-level emissions data as critical for supply chain leadership.
"When regulation meets reality: What 2026 means for Scope 3 reporting" — Details practical challenges and solutions in mandatory Scope 3 disclosures.
"CARB approves climate transparency regulation for entities doing business in California" — Outlines California’s landmark climate disclosure rules.
"CBAM to lead upto €230/t additional cost for aluminium extrusion imports..." — Provides key CBAM financial impact data.
"Auditing Standards Board proposes changes to attestation standards" — Describes evolving assurance frameworks for sustainability disclosures.
"Why Migrate to S/4HANA in 2026? Ten U.S. Business Drivers You Can No Longer Ignore" — Discusses ERP modernization imperatives.
"Hashgraph Launches TrackTrace for EU Compliance" — Highlights middleware solutions for traceable emissions data.
"Compliance Scorecard v10 delivers context-driven AI for explainable compliance decisions" — Examines SOX-compliant AI governance tools.

In sum, the 2026 ESG reporting environment for resource-intensive sectors demands an integrated approach combining regulatory mastery, operational discipline, advanced technology, and assured data governance. Mastery of these elements will define industry leaders in the era of mandatory, audit-ready ESG disclosures.

Sources (59)