GreenCo Urges Higher Standards in ESG Disclosure and Scope 3 Reporting

Takeaways

• GreenCo urges companies and analysts to go beyond automated ESG reporting and apply professional judgment in evaluating Scope 3 disclosures.
• The firm warns that AI-based carbon calculators can enhance efficiency but not necessarily accuracy.
• GreenCo recommends transparency, contextual understanding, and continuous improvement as the cornerstones of credible ESG disclosure.

GreenCo, a sustainability advisory firm established in 2016, is calling for higher standards in greenhouse gas (GHG) and ESG disclosures, particularly in how companies report their Scope 3 emissions. The firm emphasizes that while automated tools and AI-based calculators are becoming increasingly common, they should never replace professional oversight and contextual analysis.

“Today, we see more companies relying on AI-based tools to generate carbon figures and presenting them as highly accurate,” said Max Tsang, Director of GreenCo. “But carbon accounting is not a one-click process. Behind every credible number is a professional who understands context, boundaries, and data integrity.”

GreenCo has observed a trend toward what it calls “formulaic” GHG reporting, i.e., disclosures that prioritize compliance over credibility. The firm argues that ESG disclosure should reflect responsibility, not convenience, and that Scope 3 reporting should be treated as a strategic exercise rather than a data-filling task.

Read More: Incorporating Scope 3 Emissions Reporting into Contract

Understanding Technology’s Limits

According to GreenCo, AI-driven calculators can increase efficiency but cannot replace human judgment. These tools often include disclaimers warning that results “may contain errors,” highlighting the need for expert validation and contextual review.

Prepared in Accordance with the GHG Protocol: A Closer Look

GreenCo cautions that simply stating a report is “prepared in accordance with the GHG Protocol” does not guarantee its quality. The credibility of any ESG disclosure depends on how thoroughly methodologies are applied, how transparent assumptions are, and how robust the supporting data is.

Evaluating Scope 3 Completeness

Scope 3 emissions, which account for indirect impacts across a company’s value chain, are divided into 15 categories, eight upstream and seven downstream. A credible disclosure should specify which categories are included or excluded, along with clear justifications. Missing significant categories without explanation should raise questions about a company’s transparency and commitment.

Scrutinizing Exclusions and Limitations

When companies omit certain categories, GreenCo urges reviewers to assess whether the exclusions are based on valid constraints or mere convenience. Firms citing “limited resources” despite strong financial capacity may be signaling weak sustainability priorities.

Also Read: Philippines SEC Proposes New ESG Disclosure Standards for Firms

Continuous Improvement Matters Most

“Scope 3 disclosure should be viewed as a journey of refinement,” said Stephanie Chan, Co-owner and Principal Consultant at GreenCo. “The goal isn’t perfection overnight, but year-over-year improvement in data coverage and accuracy.”

GreenCo continues to champion professionalism in ESG disclosure, offering consulting, training, and tools that promote transparency and responsible reporting. “Responsible ESG disclosure starts with asking the right questions, not accepting the easiest answers,” Tsang added. “Our mission is to help companies move from convenience to credibility.”

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Source: MACAUBUSINESS.COM