Reliability and Comparability of GHG Disclosures to the CDP by US Electric Utilities

ABSTRACT

This exploratory study analyses voluntary disclosures of greenhouse gas (GHG) emissions to the Carbon Disclosure Project (CDP) by the largest emitters in the US utilities sector. We compare the amounts that firms voluntarily disclose to the CDP to mandatory amounts that should be less than them and find that the opposite is true for some firms. Examining the comparability of the CDP amounts, we find that firms calculate them using different reporting boundaries and accounting methodologies. We analyse how the choice of boundary affects emissions and find that it results in differences in emissions amounts. We also find that most firms do not have their reported amounts verified by third parties. Our analysis indicates that the amounts that some of the largest emitters disclose to the CDP are unreliable and incomparable. Our results suggest caution in relying on voluntary GHG emissions disclosures.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 The CDP defines Scope 1 GHG emissions as direct emissions from GHG sources owned or controlled by the reporting organization. Scope 2 GHG emissions are emissions that do not physically occur from within the organization’s reporting boundary and are therefore ‘indirect’ emissions (CDP 2014).

2 The CDP 2014 and the CDP 2015 includes data for the calendar year ending 2013 and 2014, respectively.

3 Prior to 2015, the CDP did not charge signatory investors nor did it charge responding firms. In 2015, it began charging investors and firms $950 each.

4 CDP details the benefits of becoming a signatory investor here: https://www.cdp.net/en/investor/signatories-and-members.

5 CDP website https://www.cdp.net/en/info/about-us (accessed March 25, 2017).

6 The price schedule for responses over 20 ranges from access to 50 responses for 300 USD to 1000 responses for $2500 (source: email correspondence on 21 December 2017 with Hannah Doughty, CDP, Corporate Partnerships Executive).

7 Guidance for companies reporting on climate change on behalf of investors & supply chain members 2016, 85–7. Available here: https://www.cdp.net/Documents/Guidance/2014/CDP-2016-Climate-Change-Reporting-Guidance.pdf (accessed July 6, 2016)

8 Source: http://www2.epa.gov/ghgreporting/ghgrp-2014-reported-data (accessed September 9, 2016).

9 All emissions amounts are in millions of CO₂e metric tonnes.

10 The two years are combined, but the individual results by year are similar.