1 in 5 Companies Have Disparities between CDP GHG Emissions Reporting and their Sustainability Reports
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NEW YORK ~ A new research conducted by Clarity AI, the leading sustainability technology platform, has revealed discrepancies in one in five companies between their reported CDP data and the emissions data reported in their own sustainability reports.

The study encompassed around 1,500 data points from more than 850 companies that disclosed climate data to the CDP in 2022. It was found that one in every five companies had different GHG emissions values in the CDP questionnaire and their Annual or Sustainability reports. 10% of the discrepancies were smaller than a 10% difference, while roughly 20% of instances showed significant variations of over a 50% difference.

The research indicates that external verification is key to ensuring asset managers have access to trustworthy data. The discrepancy rate drops from 27% for non-verified companies to 15% for verified companies. Discrepancies were found to be more prevalent in emerging economies compared to Europe and North America, with Asia exhibiting higher discrepancy rates (31%) compared to ~14% in Europe and North America.

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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."

She added: "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."

According to Clarity AI's research on 1,500 data points from more than 850 companies that disclosed climate data to the CDP in 2022, one fifth of them had discrepancies between their reported CDP data and emissions data reported in their own sustainability reports. These differences were attributed mainly due to human errors when reporting or inconsistent reporting methodologies such as only reporting headquarters' emissions instead of full emissions. External verification was found as key for asset managers having access to reliable information with discrepancy rate dropping from 27% for non-verified companies to 15% for verified ones. Discrepancies were also more prevalent among emerging economies such as Asia with 31%, compared with 14% from Europe and North America combined.

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