Carbon accounting differences can halve a company’s reported footprint, study finds
Companies can, in theory, appear to cut the carbon footprint of their supply chains in half simply by changing how they calculate emissions, according to a new paper. Researchers found that differences in accepted accounting methods can change how companies crunch their climate numbers and make it difficult to distinguish real emissions cuts from differences […]
In a new study, researchers have uncovered that companies can manipulate their reported carbon footprints by adjusting the way they account for emissions, potentially leading to a two-fold reduction in the emissions figures. The research, conducted by Ramana Gudipudi, a guest lecturer at the European School of Management and Technology in Germany, reveals that variations in accounting standards can significantly impact how companies' climate data is calculated.
This makes it challenging to discern genuine emission reductions from mere differences in calculations. Gudipudi highlighted that companies can essentially choose their preferred set of numbers to showcase, thereby influencing their public perception of climate progress. According to the analysis, which examined 401 European companies, 62.5% of the year-to-year variation in supply chain emissions could not be attributed to changes within the business or industry, nor to changes in emission intensity.
In contrast, direct emissions alone accounted for less than 5.5% of this variation. The lack of transparency, coupled with multiple possible baselines and calculation methods, obscures the true extent of companies' efforts to reduce their carbon footprint. Gudipudi emphasized the need for greater transparency in reporting, as the current system prevents clear assessment of genuine decarbonization efforts by businesses.
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