AI Study: Old Scope 3 Methods Overestimate Emissions by 2,480%

European and American regulators are revamping emissions reporting rules, affecting businesses that still hinge on traditional models to calculate Scope 3 emissions.
Most old models employ out-of-date data for Scope 3 emissions estimation, yet they still find a place in emissions reporting frameworks, including the GHG Protocol.

Traditional methods used to calculate Scope 3 emissions produce inaccurate results, overestimating emissions by as much as 2,480%, according to a recent study by UK-based firm Carbon Responsible.

Scope 3 emissions are carbon emissions from supply chains, business travel, product use, and other areas. Carbon Responsible reached this conclusion following a comparison between commonly used methods and verified emissions data from FTSE 100 companies in 2023.

It found that conventional models are widespread in calculating emissions across various industries, including EEIO (Environmentally Extended Input Output), but they rely too heavily on spending-based estimates and often use obsolete data. They are also accepted by commonly used emissions reporting frameworks such as the GHG Protocol and the Partnership for Carbon Accounting Financials (PCAF).

The study says it is time to stop using these models, as they are no longer relevant to evolving regulations concerning carbon emission estimation, particularly Scope 3.

To this end, Carbon Responsible introduced an AI-powered platform called Ada, which delivers much more accurate emissions data. According to the firm, Ada is 30 times more accurate than EEIO methods, increasing precision by 97% and reducing estimation errors by up to 80%.

The platform uses a database of over 14,000 verified company records, which is regularly updated, excludes outmoded data, and provides real-time insights using machine learning.

Under new rules such as the Corporate Sustainability Reporting Directive (CSRD), European and American regulators are increasingly demanding traceable and auditable emissions data. This shift will reshape Scope 3 emissions calculation and put pressure on companies that depend on outdated data. Incidentally, Scope 3 emissions account for over 80% of a company's total emissions.

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The COO of Carbon Responsible, Matthew Paver, said: "This represents a step-change in emissions measurement capability. When you’re 97% more accurate than the industry standard, you’re no longer in the realm of estimation – you’re capturing investment-grade data."

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Source: funds europe