Oct 13, 2021
Over 90% of Firms Aren’t Measuring Emissions Correctly, BCG Says
(Bloomberg) -- Fewer than one in ten companies are measuring their greenhouse gas emissions correctly, according to Boston Consulting Group, highlighting a major hurdle in the race to net-zero.
Only 9% of companies have the ability to count their emissions frequently and accurately, the business strategy firm said in a study released on Wednesday. The research showed that 81% of companies don’t report emissions related to their own activities, while 66% omit emissions from their suppliers and customers. Over half of firms acknowledged an error rate of as much as 40%.
“If you were off by 40% on your financials, you would be put in jail,” said Mike Lyons, BCG managing director and partner. “If you’re so far off, that will catch the eye of shareholders and board members. You will get people fired and activists will say that you are not credible.”
The 1,290 organizations in the survey spanned Europe, Asia, North America and South America, covering industries from healthcare to finance. The companies had employee counts ranging from 1,000 to more than 100,000, and revenues from under $100 million to over $10 billion.
An alcohol company involved in the research failed to measure emissions related to their glass bottles, such as suppliers, materials and countries of origin. When they did, they found that emissions were 45% higher than initially measured. In another case, emissions at a U.S. housewares retailer were more than double than originally estimated once usage for ovens and microwaves were included.
“If they are not collecting and analyzing granular data and emissions factors, they can’t expect their measurements to be accurate,” said Sylvain Duranton, global leader of BCG GAMMA and a co-author of the report.
Some 87% of organizations want to ramp up the scope of their reporting but need better tools to do so. Only 11% of companies hit their emissions reduction targets over the past five years, the study showed.
Almost half of respondents said they need simulation tools to help predict future emissions, while others said they would like to have an artificial-intelligence tool to help calculate their carbon footprints automatically.
Charlotte Degot, a managing director at BCG who also co-authored the survey, says that accurate measurement through AI could slash a company’s emissions by as much as 40%. This can be achieved “through identifying the best initiatives, tracking results, and optimizing company operations,” she said.
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