[Full disclosure: I’ve worked with CDP over the years and have used its data for research purposes.]
Reviewing CDP’s latest information request, I’m struck by the lack of questions about the digital systems companies use to capture, store, analyze, and report the data requested by CDP.
Why is this important?
Reason #1: Data quality
The quality of these systems affects the quality of the information reported. For example, a dedicated cloud-based system with real-time access to the latest emission factors has clear advantages over an in-house developed spreadsheet. Yet CDP provides zero insight into the quality of foundational information systems used by respondents.
Reason #2: Complexity
Investing in and implementing the right information system to fit organizational objectives is non-trivial, evidenced by the high failure rate of IS projects.
Reason #3: Governance
Information systems are typically governed by information systems personnel, or jointly by IS and a particular business function. My own research reveals that for energy and carbon IS, facilities and sustainability experts are leading the charge. Is this optimal? Who should manage these systems? What sorts of governance structures might mitigate risk and ensure robust systems over time?
Reason #4: Regulatory Compliance
In many areas of the world, binding regulations are in place regarding corporate reporting of carbon emissions. It would make sense for investors (and other interested stakeholders) to have some transparency into the information systems (technologies, processes, and people) that produce these numbers. Moreover, one can foresee an audit function analogous to that for accounting information systems used for financial reporting (source):
Bottom line: Either CDP and other third-party data platforms need to request data about information systems used for carbon emissions management, or, we need a robust carbon accounting IS audit function to assure the validity of processes, technologies, and human work practices used to report carbon emissions. Otherwise, doubts about data veracity will likely persist and hamper the positive efforts of reporting firms and data collection agencies.