Some pitfalls of carbon footprinting :
Operated vs equity share data issue:
Many projects are often held in joint ventures or other joint ownership structures. Typically the operator reports 100% of the emissions and the other owners report 0%, however there is often inadequate date to show emissions data in terms of equity ownership. Making this more problematic is the fact that financial data, such as revenues or sales, used to calculate emissions intensity clearly relates to equity share of projects or operations. Thus the numerator and denominator entries are inconsistent and particularly for companies most material in a carbon footprinting exercise energy or materials.
Problems with “revenue” used as the denominator in intensity calculations:
Some companies reported revenue as the net income it receives from associates or subsidiaries, whereas other use underlying revenue. Using reported revenue (likely lower than underlying) will lead to high intensity figures.
Emissions intensities may rise with improved and more complete reporting:
The more broadly companies start to report on emissions, the more likely it will raise their emissions.
Emission from a company will be heavily influenced by which activities they conduct inhouse rather than outsourcing. E.g. do hey manufacture or purchase their raw materials?
Estimates for companies who do not report may be erroneous if based on peer group:
They need to be based on the physical activities of that company, not peers. Eg a peer group may contain raw steelmakers, cement makers and other companies that primarily process raw materials purchased from others.
A portfolio carbon footprint might change from year to year for other reasons outside of holdings or company activities:
Upward movements in commodity prices will increase revenues, exchange rates will affect revenues. Revisions by company to do more comprehensive reporting and the equity share data issue.
Scope 3 emissions are generally excluded from reporting:
Generally these are excluded due to inconsistencies from definitions and reporting.
We may be double or treble counting. Eg a coal miners scope 3, could be the power generators scope 1 and the industrial electricity users scope 2 emissions, and the aluminium can makers scope 3 emissions. These emissions might be 1005 attributed to equity investors, or inadvertently counted in debt portfolio footprint,