Almost 10 years of dual reporting of Scope 2: chaos or comparability?

Abstract

Investors, regulatory bodies, customers, and other stakeholders are increasingly concerned about climate change and demand meaningful, comparable and consistent corporate Greenhouse Gas (GHG) Emission Scope 1 and 2 data. Companies are responding to these demands by disclosing their annual GHG emissions and setting ambitious climate targets to reduce their impact on the environment. In 2015, the GHG Protocol has introduced a dual reporting method for estimating Scope 2 emissions and has started a review process to update its standards. Based on an in-depth analysis of corporate Scope 1 and 2 carbon disclosure from 2019 to 2023 of 102 companies in the European chemical and pharmaceutical industry, the study reveals that there exists heterogeneous disclosure practices of market- and location-based Scope 2 GHG emissions, which do not comply with the requirements set by the GHG protocol. Moreover, the analysis has identified several accounting issues and a lack of transparency when setting a reduction target and reporting progress against it. The results imply that the dual reporting method itself does not necessarily represent a problem, but the missing clear distinction of the Scope 2 methods used in corporate carbon disclosure. Based on the findings, implications for research, policy makers and standard setters are provided.

Keywords

• Scope 2
• carbon accounting
• carbon disclosure
• science-based targets
• Q56
• Q01