Bridging Gaps for Carbon Reporting in the Automotive Industry

By Qifan (Tony) Yang , Lead Research Analyst, Sustainable Mobility, S&P Global Mobility

For OEMs, new regulations in Europe and California provide an opportunity to bridge carbon reporting gaps in the automotive industry.

Listen to the Fuel for Thought podcast featuring Qifan in conversation with moderator Guido Vildozo .

Carbon reporting in the automotive industry is becoming increasingly important, as original equipment manufacturers (OEMs) face various regulatory pressures around the world. New sustainability measures enacted in 2024, like the EU’s Corporate Sustainability Reporting Directive (CSRD) and California’s SB 253, are urging OEMs to provide clearer and more accurate disclosures of their carbon emissions.

However, tracking and measuring carbon emissions is not an easy feat. One of the biggest challenges OEMs face lies in the complexity of reporting Scope 3 emissions — specifically, Scope 3 Category 11, which pertains to the emissions generated during a vehicle’s use phase through the end of its life.

This category often accounts for 75-80% of an automaker's total carbon footprint, making accurate reporting not just important, but essential. Although inconsistencies in geographic scope, vehicle types, and automaker assumptions complicate this task, standardized carbon reporting is an important opportunity for OEMs to remain in regulatory compliance.

Here are three of the biggest opportunities OEMs have for reporting standardization and transparency.

Geographic Scope: A Patchwork of Reporting

Carbon reporting in the automotive industry can be challenging in part because of the geographic scope of emissions data. Different regions have varying regulations, fuel types, and driving conditions, which leads to significant discrepancies in reported emissions.

For example, OEMs operating in areas with stringent environmental laws tend to report lower emissions compared to those in less regulated regions. This difference in geographic focus can create a misleading picture of an automaker’s overall environmental impact.

One of the biggest challenges OEMs face lies in the complexity of reporting Scope 3 emissions — specifically, Scope 3 Category 11, which pertains to the emissions generated during a vehicle’s use phase through the end of its life.

Take the top 10 automakers, for instance. Each one operates in multiple markets, yet their emissions data varies widely based on the regions they report on. This makes it challenging for stakeholders to compare emissions across companies and regions effectively. Having standardized methodologies and clearer guidelines across regions is critical for OEMs to reduce confusion and improve the credibility of their emissions disclosures.

Vehicle Types: The Complexity of Coverage

Another hurdle in carbon reporting is the variety of vehicle types included in emissions calculations. Automakers differ in which vehicles they choose to report on—some include only passenger cars, while others account for light commercial vehicles, motorcycles, and even specialized vehicles like aircraft and power products. This inconsistency adds another layer of complexity to emissions reporting.

For example, one major OEM we cited in our recent whitepaper, Driving Transparency: Navigating Scope 3 Category 11 Emissions Disclosures in the Automotive Industry, encompasses a broad range of products, including motorcycles and power equipment, which makes it difficult to compare its emissions with those of other manufacturers.

Similarly, a second OEM adjusted its reporting methodology to include company cars in its emissions calculations, resulting in a notable increase in reported emissions. Such variations in reporting practices can skew the data, leading to misinterpretations of an automaker's environmental performance.

Automaker Assumptions: Mileage and Well-to-Tank Factors

The assumptions that automakers make regarding vehicle lifetime mileage and well-to-tank (WTT) factors can further contribute to inconsistencies in emissions reporting. Different manufacturers estimate varying vehicle lifetimes, which can significantly impact the total emissions reported.

Standardized carbon reporting is an important opportunity for OEMs to remain in regulatory compliance.

For instance, an automaker that assumes a vehicle will last for 150,000 kilometers will report lower emissions than one that estimates a lifespan of 200,000 kilometers or more. This variance complicates direct emissions comparisons between companies.

Moreover, the exclusion of WTT emissions—those associated with energy supplies for vehicle operations—can lead to an underestimation of the overall emissions linked to vehicle use. One OEM’s decision to omit these emissions in its 2021 reporting is a prime example of how methodological shifts can distort the true environmental impact of a company’s products.

By focusing solely on tailpipe emissions and adjusting historical data, the company risks misrepresenting its decarbonization efforts and providing stakeholders with an incomplete picture.

An Opportunity for Standardization and Transparency for Carbon Reporting in the Automotive Industry

The challenges posed by geographic scope, vehicle types, and automaker assumptions highlight a new opportunity for standardized methodologies in carbon reporting. As regulations become more stringent and investor demand for transparency grows, it is crucial that OEMs adopt consistent approaches to emissions disclosures.

A Path Forward

Current inconsistencies with carbon reporting in the automotive industry are due to geographic discrepancies, variations in vehicle types, and differing automaker assumptions.

As the industry faces increasing scrutiny and regulatory pressure, OEMs have new opportunities to ensure accurate emissions disclosures by standardizing their methodologies and leveraging comprehensive datasets.

By embracing these strategies and tackling inconsistencies head-on, automakers can not only enhance their credibility but also align themselves with the growing expectations of consumers and investors alike — paving the way for a greener, more sustainable automotive landscape.

S&P Global Mobility provides comprehensive datasets that enable automotive stakeholders to self-report and benchmark their emissions accurately. By utilizing a unified methodology, automakers can improve the reliability and comparability of their emissions data.

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