Study finds that most companies are misreporting CO2 emissions

25 October 2021 Consultancy.eu 4 min. read

Over nine out of ten companies globally fail to comprehensively measure their total greenhouse gas emissions, according to a new report by Boston Consulting Group.

To assess the ability of companies to measure their carbon emissions, Boston Consulting Group collected and analysed responses from executives at 1,290 organisations (across nine sectors) who have full or partial decision-making responsibility for tracking and reducing their emissions. 

The researchers looked at all types of emissions: Emissions produced by a company’s own activities, both scope 1 (direct emissions from company facilities and vehicles) and scope 2 (indirect emissions such as purchased energy); and external emissions produced along a company’s value chain such as purchased goods, transportation and distribution (known as scope 3 emissions). 

According to the executives surveyed, 91% of companies fail to measure the full scope of their emissions. 

Why are emissions not been measured appropriately?

The report uncovers four reasons why emissions are not been measured comprehensively. 

1) emissions are not exhaustive
81% of respondents omit some of their internal emissions in their reporting, and 66% of respondents do not report any of their external emissions:

Companies are not measuring their emissions exhaustively

2) emissions are not accurate
Respondents estimate an average error rate of 30% to 40% in their emissions measurements:

Companies are not measuring their emissions accurately

3) emissions are not reported frequently enough
53% of respondents say they have difficulty in making and tracking decisions due to infrequent measurements:

Companies are not measuring their emissions frequently and automatically

4) emissions are not populated automatically
86% of respondents still record and report their emissions manually using spreadsheets, and only 22% of respondents have automated processes

Companies want to be able to measure more o en, but this will require new AI-based tools

The case for change

Commenting on the ‘reporting gap’ uncovered by the report, Sylvain Duranton, the global leader of BCG Gamma and a co-author of the study questioned: “When companies aren’t able to understand their baseline emissions levels, how can they expect to track their emissions and set the right targets?” 

“If organisations are to halve their emissions by 2030 in accordance with the Paris Agreement – and eventually achieve net zero – they must be able to measure exhaustively, accurately, and frequently. Without understanding the full extent and composition of their internal and external emissions, they cannot know where to focus their reduction efforts.” 

The better a company measures its emissions, the more it can reduce them

He added that clear evidence has been found that better measurement and reporting leads to a more effective reduction program. “The better a company measures its emissions, the more it can reduce them,” Duranton remarked. 

Technology can serve as a major driver of improving the collection, measurement and reporting of emissions. Charlotte Degot, a managing director and partner at Boston Consulting Group said: “New AI-supported tools can play a crucial role in taking companies to the next level of measurement and reporting and, ultimately, to significant reductions.”