Our Blog Series:

Sustainability is The Ultimate Bottom-Line Strategy

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It's time to stop doing sustainability as a project, initiative, or task force and recognize it as a core value that needs to be measured alongside traditional metrics like price, quality, and customer satisfaction. In this series, we show how achieving sustainability goals has a clear return on investment (ROI), leading to more sustainable operations, a stronger brand, and ultimately, winning in the marketplace.

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Contributions of the GHG Protocol

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Over the last two decades, the WRI and WBCSD have laid the foundations for a modern carbon accounting system and developed the vocabulary and scopes used by private and public organizations becoming a de-facto global standard for calculating greenhouse gas emission inventories¹ .

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‍Limitations in the use of the GHG Protocol

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‍Scope 3 may represent 80% of total carbon inventory² but less than 25% of US companies reported Scope 3 emissions³. Corporate Sustainability Reports often omit half of their total emissions as well. 

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Complementary and voluntary frameworks required by investors also fall short on Scope 3: 

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• Global Reporting Initiative (GRI⁴) standard 305. Companies are not required to disclose full or most material Scope 3 emissions to be compliant 

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• Sustainability Accounting Board (SASB⁵) does not require Scope 2 and Scope 3 in their reporting 

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• Integrated Reporting Framework (IR⁶) does not specify which types of GHG emissions to report and remains silent on Scope 3 emissions 

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Contributions of CDP 

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Besides sustainability corporate reports, thousands of companies disclose their carbon inventories via Climate Change questionnaires to CDP. 

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CDP formerly known as the Carbon Disclosure Project houses a comprehensive database based on voluntary, self-reported data on sustainability actions and indices. 

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It is important to remember that CDP Climate Change Questionnaires are based on the GHG Protocol, which suffers from the same limitations in use listed above. 

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We’ve created a comparison chart to help visualize the differences. 

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Misuse of CDP data derivatives

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Investors also misuse ad-hoc indices partially based on CDP data or similar:

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• MSCI⁷ builds on CDP and evaluates the weighted carbon intensity of 15,000 indices, but only divides Scope 1 and Scope 2 emissions by corporate sales

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• TruCost⁸ S&P Carbon Efficiency Index accounts for Scope 1 and Scope 2 emissions and Scope 3 from first-tier suppliers only. 

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• TruCost S&P Dow Jones Sustainability Index resorts to general public information and industry-specific questionnaires. Furthermore, Scope 3 data is not directly incorporated in the S&P indices.

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We have made much progress in developing a common language, frameworks, and indices to tackle the challenge of climate change across organizations worldwide. 

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However, it is important to understand the limitations of the current systems and metrics, which although well-intentioned, frequently fall short in assessing the massive contribution of Scope 3 emissions, particularly around upstream supply chains.

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¹ Green, J. F. Private standards in the climate regime: the greenhouse gas protocol. Bus. Polit. 12, 1–37 (2010)

² Matthews, H. S., Hendrickson, C. T. & Weber, C. L. The importance of carbon footprint estimation boundaries. Environ. Sci. Technol. 42, 5839–5842 (2008)

³ Blanco, C., Caro, F. & Corbett, C. J. The state of supply chain carbon footprinting: analysis of CDP disclosures by US firms. J. Clean. Prod. 135, 1189–1197 (2016).

⁴ https://www.globalreporting.org/standards/media/1012/gri-305-emissions-2016.pdf

⁵ https://www.sasb.org/wp-content/uploads/2020/10/GHG-Emmissions-100520.pdf

⁶ https://www.integratedreporting.org/wp-content/uploads/2015/03/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf

⁷ https://www.msci.com/our-solutions/indexes

⁸ https://www.spglobal.com/spdji/en/documents/additional-material/faq-trucost.pdf