Data quality in the spotlight: a Hybrid-LCA approach to evaluating reported corporate carbon footprints

Global warming is a substantial issue, and addressing it requires robust data on corporate environmental performance. However, there is still an information gap in indirect emissions — particularly Scope 3 emissions — due to the small number of reporting companies, greenwashing practices, and methodological differences across reports. In this study, we propose a new Hybrid-LCA approach for estimating corporate Scope 3 emissions for a large universe of companies following the Greenhouse Gas Protocol framework. Our approach recovers expected trends in emissions while maintaining the comparability and transparency needed for decision-making. Moreover, we observe an asymmetric bias with respect to self-reported data from the Carbon Disclosure Project. Our analysis indicates that this bias is partially related to poor environmental management practices in firm disclosures, which we proxy by factoring in the verification status of firms’ reports. This work calls for greater scrutiny in Scope 3 reporting to ensure the accuracy of emission data and promote better environmental management practices.