International climate action must be guided by clear, credible data. When it comes to climate mitigation targets, this means accurate greenhouse gas (GHG) emissions accounting and verification.
There’s a lot more to producing high-quality emissions disclosures than crunching numbers, however. Organizations have to set up policies and processes for gathering emissions data from across business lines and physical facilities. They also have to introduce governance and accountability mechanisms to ensure the collection and reporting of this data is properly supervised.
Moreover, organizations have to think carefully about how emissions reporting fits in with their broader climate and business strategies. Do they want to follow sector-specific best practices? Then they have to get to grips with the reporting methodologies and verification practices of their industry peers. Perhaps they want to establish credible net-zero emissions targets and plans. If so, then they have to learn about different target-setting methodologies and identify decarbonization actions aligned with best practices, organizational values, and business objectives.
In this blog, we explore some of the challenges facing emissions reporting and how they can be overcome.
Challenges facing emissions reporting
Governments and companies alike face obstacles gathering and reporting their emissions data. Some are inaccurately reporting their emissions because of internal governance shortcomings and the use of flawed carbon accounting methods.
For example, some countries are overstating the amount of emissions absorbed by their forests, peat bogs, and other natural carbon sinks. A Washington Post report from 2021 says Malaysia released 422 million metric tons (mt) of GHG in 2016 but only reported 71mt of emissions to the United Nations Framework Convention on Climate Change (UNFCCC) that year. Malaysia used a methodology that allowed it to claim its forestry sector absorbed 341mt of emissions that year, almost four times the amount claimed by neighboring countries.
According to research, the underreporting of methane and fluorinated gas are also driving inaccurate emissions disclosures. These represent between 57mt to 76mt of GHG more than what’s been reported to the UNFCCC. That’s equivalent to 1.6 billion tons and 2.1 billion tons of carbon dioxide-equivalent emissions. The undercounting of these emissions is occurring in many sectors, including oil and gas, agriculture, and human waste because of poor control policies and recordkeeping. Moreover, several countries are not reporting their fluorinated gases at all.
At the company-level, emissions reporting is largely voluntary and often guided by frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD). These frameworks don’t mandate accountability mechanisms to ensure their emissions reporting is accurate. A lack of regulations surrounding emissions reporting, an absence of auditing, and weak penalties — if any — also contribute to the problem.
Beyond numbers: actions to improve reporting
The United Nations High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities recently published a report for organizations on how to set and attain net-zero targets. Among its recommendations, the report said organizations should increase transparency and accountability around their emissions disclosures.
To accomplish this, the Expert Group says that companies should work with policymakers and standard-setters to promote uniform emissions reporting and “ensure comparability of disaggregated greenhouse gas emissions data.” It further recommends that large companies seek evaluations of their climate disclosures, “including opinion on climate governance, as well as independent evaluation of metrics and targets, internal controls evaluation and verification on their greenhouse gas emissions reporting and reductions.”
Besides following these recommendations, companies have the power to cultivate best practices in emissions reporting by collaborating with their peers, regulators, and civil society. In the process, they can also raise the collective understanding of how to calculate and report emissions. Companies can get behind industry-led initiatives focused on uniform carbon accounting, too. For example, the financial sector can rally behind the Partnership for Carbon Accounting Financials (PCAF), a coalition of financial institutions that created a standardized approach to accurately report the emissions of loans and investments.
At the company level, boards and managers can establish emissions reporting workflows and assign responsibilities to ensure their emissions reporting is accurate. Assigning accounting and GHG data verification roles to senior managers should ensure the right processes and policies are in place to relay emissions information to the relevant decision-makers.
Technology has a role to play improving emissions reporting, too. One recent initiative dedicated to this challenge is Climate TRACE (Tracking Real-Time Atmospheric Carbon Emissions), an environmental analytics tool founded by former US Vice President Al Gore, as well as several nonprofits and tech companies. The platform uses satellite imagery and machine learning to collect country and sector-level emissions data from around the world. This data is then made freely available through an online portal, helping to increase transparency and emissions data access.
Climate TRACE’s goal is to keep governments and businesses accountable for their emissions reporting. The platform’s GHG inventory, which includes emissions data based on 72,612 global sources, shows actual emissions are significantly greater than those reported by companies — particularly in the oil and gas industry. In fact, the sector’s emissions make up half of the 50 largest emissions sources in the world and are estimated to be up to three times higher than the amount that companies self-report.
Governments and organizations should seek to incorporate third party datasets like those offered by Climate TRACE into their own emissions reporting workflows. These can serve as an independent check on their own calculations and give external stakeholders confidence that their emissions data has been benchmarked appropriately.
How can Manifest Climate help?
Fragmented carbon accounting methods, an absence of regulatory frameworks for emissions disclosures, and a lack of accountability measures have resulted in an inaccurate picture of global emissions.
This is where Manifest Climate comes in. Manifest Climate embeds intelligence to help companies manage, understand, and communicate their climate-related financial risks and opportunities.
Manifest Climate assesses how organizations disclose climate actions, including GHG emissions, and identifies opportunities for improving reporting based on best practices. By providing insights on how industry peers are reporting their climate-related governance, strategy, risk management, and metrics and targets — and by communicating global climate-related trends — Manifest Climate helps position organizations to look beyond the numbers towards action.