Corporate carbon accounting practices are ‘failing’ to support effective decarbonisation, a peer-reviewed academic paper supported by Cambridge-based climate technology company Neutreeno has suggested.
According to the paper, Credible, scalable, actionable: Principles for Scope 3 emissions measurement and supply chain decarbonisation, which was published in the One Earth journal, the data behind many corporate climate targets is fundamentally ‘broken’, relying too heavily on industry average estimates rather than actual emissions.
This, in turn, limits corporates’ ability to identify where emissions reductions can be achieved, in turn undermining progress towards climate targets.
Scope 3 emissions
In addition, Scope 3 emissions, which account for the majority of a company’s carbon footprint, are typically the most difficult to measure, as they involve emissions generated by third parties.
‘More than three-quarters of a company’s emissions sit in its supply chain, and that’s exactly where the data falls apart,’ the researchers note. ‘They rely on industry averages that can be off by tenfold: the equivalent of reporting $10 million in revenue when the real figure is $100 million. Nobody would accept that with financial reporting, so why should it be any different for emissions data, where the stakes are far higher?’
As the researchers suggest, while current reporting methods may satisfy regulatory disclosure requirements, they are insufficient in providing actionable information for businesses eager to reduce their emissions footprint.
“We should be measuring carbon for one reason, to reduce it. Right now, we can’t. The system is broken,” said Dr. Spencer Brennan, lead author and founder of Neutreeno.
CSA Principles
To address this, the researchers propose a framework known as the CSA Principles, which both ‘aligns with current standards, but redefines what good emissions data looks like’.
Under this approach, all emissions data has to be three things at once – credible, i.e. backed by quality metrics that show where the data can be trusted and where it cannot; scalable, able to move across entire supply chains; and actionable, offering concrete ways to change how products are actually made.
In the paper, the researchers urge policymakers, regulators, investors and businesses to embrace a principles-based approach, rather than simply meet reporting obligations, or worse, take their foot off the accelerator altogether.
‘Governments on both sides of the Atlantic are pulling back when people need them to step up. […] With that oversight fading, few companies are on track to hit their climate targets, and none are truly held to account,’ they note. Read more here.
