1 in 5 companies have disparities between CDP GHG emissions reporting and their Sustainability Reports

Roughly 20% of instances showed significant variations of over a 50% difference in their values

The study, conducted by Clarity AI's Research team, encompasses around 1,500 data points from more than 850 companies that disclosed climate data to the CDP in 2022. The analysis revealed that one in every five companies disclose different GHG emissions in the CDP questionnaire and in their Annual or Sustainability reports.?

This pattern was the same for both Scope 1 and Scope 2 emission values. While 10% of the discrepancies were smaller than a 10% difference, roughly 20% of instances showed significant variations of over a 50% difference in their values.

NOTE: Data shown for 1,473 data points from 859 companies that disclosed climate data to the CDP in 2022 and within their Annual or Sustainability reports. Source: Clarity AI and CDP

The research indicates that external verification is key to ensuring asset managers have access to trustworthy data. The data shows that the discrepancy rate drops from 27% for non-verified companies to 15% for verified companies.?

Furthermore, discrepancies were found to be more prevalent in emerging economies compared to Europe and North America. Specifically, companies from Asia exhibited higher discrepancy rates (31% compared to ~14% in Europe and North America).

These differences are explained by human errors in 80% of the cases when companies report to the CDP, or by the use of inconsistent reporting methodologies – for example when companies report only their headquarters’ emissions to the CDP and their full emissions in their own reports.

Patricia Pina, Head of Product Research and Innovation at Clarity AI, said: “As the world transitions to a low-carbon economy, investors recognize the need to incorporate environmental, social, and governance (ESG) factors into their investment decisions. The widely recognized Carbon Disclosure Project (CDP), which runs a global disclosure system, plays a key role in ensuring the availability of accurate data for Greenhouse Gas (GHG) emissions.?

Despite the advancements and great progress in GHG emissions disclosure, some challenges around data quality still remain. Corporates are navigating a number of known reporting challenges but it is critical that asset managers have access to trustworthy data; they need confidence and consistency in the GHG emissions data they use.”

Access the full research by Andres Olivares del Campo, PhD and Berenice Altobello :