Science Based Targets Without Science Based Disclosure? Towards a Complete Carbon Data Science

More than 250 corporate have set themselves science based targets for their GHG emissions reduction and 44 of these have their targets already approved. However, what is the point of a science based reduction target when the GHG measurement most corporations disclose have been found to be (grossly) inaccurate? We explore this paradox through a critical review of the emissions accounting, reporting and footprinting of carbon dioxide (CO2) including plausibility checks of the CDP reporting of those firms with approved science based targets. We find that providers of carbon footprinting deserve considerable credit for educating asset managers and effectively building an industry, but the quality of corporate carbon accounting and reporting still poses significant challenges as exemplified by the significant inconsistencies in the CDP reporting of even those firms with approved science based targets. We conclude by highlighting the three main challenges that need to be overcome to be arrive at a Carbon Data Science of sufficient quality to allow for accurate progress measurement on science based targets. First, the vast majority of corporations need to be incentivised to report their carbon emissions accurately, coherently and consistently across reporting schemes. It is paramount that more than 53 firms worldwide start to report 100.0% greenhouse gas equivalent scope 1 and 2 emissions (Bloomberg, July 2016). Second, while it seems inevitable for corporations to use estimations in producing their carbon emission inventory, these estimations should be made in compliance with the precautionary principle (i.e. if in doubt, err on the side of the planet). The precautionary principle should equivalently be applied to estimations of carbon emissions by those corporations not (yet) reporting themselves. Third, from the perspective of an investor concerned about aggregating corporate carbon footprints, the issue of ‘double counting’ has to be addressed more succinctly. For instance a utility provider’s scope 1 is the scope 2 of many other firms and, consequently, some investors’ portfolio carbon footprint might be overstated