Some larger companies have been reporting for many years, with the majority of companies providing emissions having started since 2021. This timeline is related to legislation requiring large companies to report their emissions. There has been extensive government led and sector led guidance on the required standards of accounting and reporting to be used. Whilst corporate compliance can and does vary, there is no oversight of corporate reporting quality or accuracy.
Early legislative adopters, being the UK and EU require reporting for large corporates, do not have a supporting compliance regime. There is no central government database of their reported data and critically, no oversight of accuracy, or compliance enforcement where data anomalies or incorrect submission formats are clearly evidenced. These can be as rudimentary such as combined Scope 1 & 2 emissions totals, no input unit references (kwh, fuel litres/type). Some are clearly high level estimates.
The UK provides an interesting contrast between the oversight of corporate emissions reporting and the ESOS reporting requirements. In our extensive experience of emissions reporting, there has been no client contact from a government agency in relation to the results presented to the public. This contrasts with ESOS, (largely the same reporting range as mandatory company emissions reporting), which is overseen by the Environment Agency. Our experience of first time ESOS submissions is that the EA have contacted clients to advise of requirements and related penalties for non compliance, within a short timeframe.
Companies who have undertaken reasonable or limited external assurance, delivered to international standards, have data that is most likely to deliver accuracy in Scope 1 & 2. The estimated nature of Scope 3 means that there is considerable variance in results deriving from the variable the impact of common methodologies used.
Companies with external expert reporting are likely to have more accurate numbers than those who choose to report internally. Those with sector estimates or estimated input numbers, even for Scope 1 & 2, are delivering outputs that are unlikely to be a reasonable reflection of their impact.
It follows that if corporate reporting for the basic level of Scope 1 & 2 compliance is poor, then the use of this data for Scope 3 impacts in for example, Purchased Goods and Services, or Investment emissions will be similarly poor. This increases the focus on data methodologies and data sources used by companies and the need for the best data sets to support reporting.
We are seeing a lot of restating of emissions and revisions of targets by companies. This is symptomatic of the use of poor data that has affected reported outputs and planning as companies better understand their impacts. It also underscores the fact that for many, their reporting and related target aspirations are not robust, irrespective of external target validation. This external target validation relies on base year data that does not require assurance, leading to validated targets that may often be compromised at the outset.
In summary, the corporate reports provided by companies, range from exceptional to distinctly average, with the latter outweighing the former. Company reports tell us a lot about the approach of individual companies, with data scores providing a good understanding of reporting quality. Reported restatements, lack of target progress transparency, missing mandated input data information and bespoke reporting formats/metrics, suggest that the numbers should be treated with caution, where not accompanied by at least a clear understanding of data quality, preferably via assurance.
They often tell us less about their progress and targets than is desirable. In delivering insights for clients on the current state of reporting and careful analysis of the corporate data used in our Ada platform, we aim to keep clients and the broader market aware of the good, the bad and the ugly of corporate reporting, to enable the best understanding of specific Scope 3 impacts and enabling action on engagement, optimised reporting and robust emissions reduction.
