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In recent years, CDP has become the preferred repository of voluntary, self-reported sustainability actions and indices data. For many companies, disclosing their carbon inventories enhances their reputation, creates a competitive advantage, and provides a mechanism to track progress while staying ahead of regulation. By making public commitments, leading companies join public stakeholders and society in the global fight against Climate Change.
CDP plays a crucial role by providing a structured framework via its Climate Change questionnaire and comprehensive dataset. However, a central data repository is advantageous if we understand reporting inconsistencies while comparing GHG inventories and carbon intensities between organizations.
Supply Chain, Sustainability, and Procurement professionals have recently resorted to carbon inventory and intensity indices to rank supplier performance without being aware of common intrinsic errors in self-reported CDP data. This article explores the source of those errors, mitigation, alternative data sources, and methods suitable for sustainable procurement.
Reporting errors can be grouped into three buckets (source, Figure 1).
Figure 1. Errors found in self-reported CDP data.
1) Report inconsistencies1.
CDP does not require consistency across communication channels (e.g., corporate reports). In addition, CDP’s evaluation scheme may give high-emitting suppliers a high score because of their future improvement plans instead of their current carbon intensity2.
2) Boundary incompleteness.
Only 25% of CDP disclosures account for Scope 3 emissions34, the source of up to 80% of all emissions for most industries.
3) Activity Exclusion.
Of “complete” CDP disclosures and by their own account, only 25% of companies report on all relevant categories, including Category 1 purchased goods and services, which frequently accounts for 50% of all Scope 3 emissions.
We must correct these errors before CDP company inventories and indices are used for decision-making. Kloopify uses an extension of the method described by Klassen and Stoll (Nature, 2021)5 to harmonize carbon footprints from suppliers. We independently close the carbon footprint gap from each error source to derive the combined correction effect.
Table 1. Key Performance Indicators for Scope 3 categories
Aside from harmonizing CDP disclosures and correcting its gaps, errors, and omissions, Kloopify has developed powerful methods to calculate emissions, focusing on what is most actionable by companies and organizations.
We start by taking a procurement-centric approach to emissions. We demonstrate that this is any organization's most impactful approach to reduce its footprint and achieve its goals and commitments. We explore this topic in a separate blog. This approach feeds high-quality granular data to carbon inventory reports but, more importantly, allows organizations to act on this information, triggering a transformation of the organization itself and its supply chain.
Progress toward sustainability goals is planned, monitored, tracked, and implemented by commodities, suppliers, and buy-spaces. This gives Procurement complete control and negotiation leverage, with the best information to advance toward departmental and organizational goals systematically.
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[1] Depoers, F., Jeanjean, T. & Jérôme, T. Voluntary disclosure of greenhouse gas emissions: contrasting the carbon disclosure project and corporate reports. J. Bus. Ethics 134, 445–461 (2016).
[2] https://www.cdp.net/en/scores/cdp-scores-explained
[4] https://www.cdp.net/en/supply-chain
[5] https://doi.org/10.1038/s41467-021-26349-x
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