Harmonizing corporate carbon footprints

The study addresses the challenge that corporate greenhouse gas accounting—especially scope 3 emissions across the value chain—remains inconsistent, incomplete, and often incomparable across firms and reporting channels. Despite widespread use of the GHG Protocol and growing pressure from stakeholders, companies frequently underreport scope 3 emissions and apply divergent boundaries and category coverage. Prior evidence suggests scope 3 dominates total corporate footprints in many industries and is frequently underdisclosed. The purpose of this paper is to develop and apply a harmonization framework that quantifies omitted scope 3 emissions arising from three error sources—reporting inconsistency, boundary incompleteness, and activity exclusion—and to demonstrate its impact through a case study of major technology firms. The research highlights the importance of standardized, comprehensive scope 3 measurement for credible decarbonization strategies and stakeholder decision-making.

The paper reviews existing corporate carbon accounting and reporting frameworks: the GHG Protocol (scopes 1, 2, 3 and 15 scope 3 categories with minimum boundaries), and voluntary reporting standards such as GRI, SASB, and the Integrated Reporting framework. While these standards acknowledge scope 3, they often do not mandate comprehensive scope 3 disclosure. CDP collects voluntary disclosures aligned with GHG Protocol categories but allows firms to determine relevant categories and disclose selectively. Financial data providers (e.g., MSCI, S&P/Trucost) commonly emphasize scope 1 and 2 and only partially incorporate scope 3, limiting comparability. Prior academic work identifies frequent underreporting and methodological issues in scope 3 estimation, including discrepancies between corporate reports and CDP submissions, incomplete boundaries due to data gaps and methodological choices (process-based vs input-output vs hybrid), and omission of relevant categories. The literature underscores that categories 1 (Purchased goods and services) and 11 (Use of sold products) often dominate scope 3, yet disclosure is inconsistent across industries and firms.

The authors develop a framework to harmonize corporate carbon footprints by quantifying omitted scope 3 emissions from three sources: (1) reporting inconsistency (differences between corporate reports, CR, and CDP submissions), (2) boundary incompleteness (figures that do not meet GHG Protocol minimum category boundaries), and (3) activity exclusion (relevant scope 3 categories without reported figures). Scope 1 and 2 are assumed complete and consistent. Total harmonized footprint CF_Harmonized = E_Scope1 + E_Scope2 + E_Scope3total, where E_Scope3total = E_Scope3CR + E_Scope3omitted and E_Scope3omitted = E_Scope3RI + E_Scope3BI + E_Scope3AE. Reporting inconsistency is computed as E_Scope3RI = max(E_Scope3CDP − E_Scope3CR, 0). Boundary incompleteness: each scope 3 category is assessed against the GHG Protocol minimum boundary. For incomplete categories, adjusted emissions are estimated using peer-based, category-specific carbon intensities derived as the median of ratios (category emissions to category-specific emission predictors) across peers with complete data. Adjusted emissions e_i,adjusted = P_i × I_i, and omission due to boundary incompleteness equals the sum over categories of (e_i,adjusted − e_i,initial) for those flagged incomplete. Activity exclusion: for relevant categories with no reported figure (and not justified as non-existent), added emissions are estimated analogously (e_i,added = P_i × I_i), summed across excluded categories. Data sources include 2019 CDP Climate Change responses and contemporaneous corporate reports for company emissions, methodologies, and justifications, plus company KPIs as emission predictors. Case study sampling: firms from the Forbes Global 2000 (2019), focusing on the technology sector’s IT Software & Services (ITSS) and Technology Hardware & Equipment (THE) industries. Semiconductor firms were excluded due to smaller peer group size. Inclusion required a valid 2019 CDP response, yielding 22 ITSS and 34 THE firms. Analyses compute industry-level and company-level harmonized footprints and decompose omissions by error source and scope 3 category.

• Across 56 tech companies, harmonization reveals a total omission of 391 MtCO₂e per year between self-reported and harmonized scope 3 emissions, comprising 202 MtCO₂e upstream and 189 MtCO₂e downstream omissions. Overall, self-reported emissions of 360 MtCO₂e more than double to 751 MtCO₂e after harmonization.
• Reporting inconsistency: Half of the tech firms report lower scope 3 in CRs than CDP. Gap observed for 68% of ITSS firms and 38% of THE firms; some THE firms disclosed no scope 3 in either channel.
• Boundary incompleteness: Of 380 category-specific scope 3 figures reported, 15% are incomplete (violating GHG Protocol minimum boundaries), affecting 33 companies (11 ITSS, 22 THE) across 1–8 categories per firm, often in upstream categories (e.g., business travel, purchased goods/services).
• Activity exclusion: 282 relevant categories are omitted across 18 ITSS and 29 THE firms; notably, 30% omit Category 1 (Purchased goods and services) and 43% omit Category 11 (Use of sold products).
• Industry-level impacts (2019): • ITSS: Harmonized emissions nearly double (+39.5 MtCO₂e). Increase decomposition: 60% reporting inconsistency, 19% boundary incompleteness, 20% activity exclusion. • THE: Harmonized emissions more than double (+351.5 MtCO₂e). Decomposition: 31% reporting inconsistency, 24% boundary incompleteness, 55% activity exclusion.
• Firm-level impacts: Deviations range from +0.06% to +185×, with a median quadrupling upon harmonization—highlighting strong skewness and poor comparability of self-reported footprints. In ITSS, about one-third of firms exhibit all three error types; in THE, 21% exhibit all three, 41% two types (often boundary incompleteness plus activity exclusion). Median increases by error type: ITSS reporting inconsistency ~200%, boundary incompleteness 83%, activity exclusion 117%; THE reporting inconsistency 76%, boundary incompleteness 21%, activity exclusion 32%.
• Category contributions: Most omitted emissions originate from Categories 1 (Purchased goods and services) and 11 (Use of sold products); Category 2 (Capital goods) contributes notably (10%) in ITSS.
• Companies with progressive pledges (e.g., Microsoft, Google, Apple) show smaller gaps (<20%).

The findings demonstrate that current corporate scope 3 accounting is often inconsistent across channels, incomplete relative to GHG Protocol boundaries, and prone to omitting relevant activities—resulting in substantial understatements of corporate carbon footprints. The harmonization framework addresses the research objective by quantifying these omissions and producing more comparable footprints across firms. The large observed gaps undermine the credibility of emission baselines, complicate target setting, risk assessment, and evaluation of decarbonization strategies by firms and investors. Concentration of omissions in a few categories suggests prioritizing standardization and assurance for high-impact scope 3 areas. The study argues for stronger, clearer, and potentially binding reporting requirements to reduce inconsistencies (e.g., aligning CR and CDP disclosures) and to mandate fuller scope 3 coverage, possibly via industry-specific standards. Enhanced transparency for scope 1 and 2 globally would also facilitate more accurate scope 3 aggregation across value chains and support policy instruments such as border carbon adjustments. While the harmonized estimates improve comparability at industry level, they cannot fully replace detailed company-specific accounting due to methodological and regional heterogeneity. Nevertheless, they provide actionable insights into where corporate disclosures most frequently fall short and how to focus improvements.

The paper introduces a framework to harmonize corporate carbon footprints by systematically correcting for reporting inconsistency, boundary incompleteness, and activity exclusion in scope 3 accounting. Applied to major tech firms, the framework reveals that corporate reports omit roughly half of total emissions, with most omissions arising from a small set of scope 3 categories. The study underscores the need for standardized, comprehensive, and potentially binding disclosure requirements to improve data quality, comparability, and the effectiveness of decarbonization strategies. Future research should extend the analysis across sectors (e.g., oil and gas) and time, enlarge samples to refine peer-based intensities, and evaluate the impact of evolving reporting standards and regulations. Continued integration and consolidation of voluntary frameworks, possibly in conjunction with international standards bodies, could accelerate convergence toward consistent, decision-useful carbon disclosures.

• Scope 1 and 2 emissions are assumed complete and consistent; any errors there are not corrected.
• Harmonization relies on peer-based, median category-specific carbon intensities and emission predictors; results depend on peer group composition, similarity of expense structures, and data availability.
• Secondary data and adjustments cannot capture all firm-specific operational and regional differences; estimates mix methods and regional characteristics.
• Sample restricted to technology sector firms with valid 2019 CDP responses; semiconductors excluded due to small peer group, limiting generalizability.
• Determination of category relevance for activity exclusion follows a strict rule (unless explicitly stated non-existent), which may over-include in some cases but was chosen to enhance comparability.
• Reporting channel comparison treats CDP as generally more comprehensive; cases where CR exceeds CDP are set to zero inconsistency, potentially understating inconsistency in the opposite direction.