Net Zero: Enhancing Companies’ CO2 Reporting
Research
09.11.2023
ZEW Mannheim and Stanford University Propose a Standardised Measurement and Reporting Framework
Over the past few years, many companies have committed to achieving net-zero CO2 emissions by 2050. This commitment requires reducing avoidable emissions and offsetting unavoidable ones by removing carbon from the atmosphere. However, there is currently no standardised approach to measure and report progress towards net-zero targets. Consequently, it is unclear how sincerely companies are fulfilling their self-imposed CO2 reduction pledges or if some are merely engaging in greenwashing. Addressing this concern, a team of researchers from ZEW Mannheim and Stanford University has devised a new standard for consistent corporate reporting of CO2 emissions, known as Time-Consistent Corporate Carbon Reporting (TCCR).
“Companies that adopt the TCCR standard gain enhanced transparency and credibility in disclosing their carbon footprint,” asserts ZEW Research Associate Stefan Reichelstein, one of the study authors and a professor at the University of Mannheim.
Regular review and adjustments of initial projections
The TCCR standard combines various elements to enable regular target-actual comparisons. Companies choose from a selection of indicators to measure CO2 emissions and commit to annual reporting. Initially, they provide a forecast of their emissions trajectory up to 2050. This projection is then regularly compared to actual emissions reductions achieved, leading to adjustments for the remaining years until 2050.
The information provided by companies should be unambiguous, consistent over time, comparable within sectors or industries, and timely. This adherence to principles aligns the TCCR standard with the general guidelines for effective CO2 emission disclosure recommended by the Task Force on Climate-related Financial Disclosures (TCFD). Additionally, it enhances the credibility and transparency of companies’ CO2 reporting for policymakers and the wider public. “The TCCR standard is not intended as a mandatory part of corporate reporting. Nevertheless, companies genuinely prioritising net-zero can distinguish themselves from those merely using it as a buzzword,” Reichelstein explains.
Applicability to different emission indicators
Another advantage of the TCCR standard is its adaptability to various indicators for measuring CO2 emissions. These include direct emissions from production processes, indirect CO2 emissions from upstream supply chains, and emissions associated with downstream product consumption. The study, published as ZEW Discussion Paper No. 23-026, outlining the TCCR standard has been published in the esteemed journal One Earth.
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Prof. Stefan Reichelstein, PhD
