In corporate climate action, one decision can shape the entire trajectory of an organization’s carbon reduction efforts: selecting the right baseline year. This single choice influences how companies measure progress, […]

In corporate climate action, one decision can shape the entire trajectory of an organization’s carbon reduction efforts: selecting the right baseline year. This single choice influences how companies measure progress, set realistic emission targets, and report sustainability achievements. Yet, many businesses underestimate its significance—until they encounter data inconsistencies, compliance challenges, or shifting regulatory requirements.

A poorly chosen baseline year can distort carbon accounting, misrepresent emissions trends, and even undermine credibility in sustainability reporting. On the other hand, a well-defined starting point provides clarity, ensuring transparency in greenhouse gas (GHG) disclosures and aligning with frameworks like the 温室气体议定书 和 CSRD. So, how do companies make the right choice? And what pitfalls should they avoid? Let’s explore.

What is a Baseline Year?

A baseline year in carbon accounting is the specific year against which a company measures its greenhouse gas (GHG) emissions over time. It serves as the reference point for tracking emissions reductions, setting climate targets, and assessing progress toward sustainability goals. Typically, organizations choose a baseline year based on data availability, business stability, and alignment with reporting frameworks such as the GHG Protocol, CSRD, and SBTi (Science Based Targets initiative).

For accuracy and consistency, companies must ensure that the baseline year reflects a representative period of their operations, free from anomalies like mergers, major expansions, or economic downturns. In cases where significant structural changes occur, businesses may need to recalculate their baseline to maintain comparability in emissions reporting.

Why a Baseline Year Matters

Selecting the right baseline year is crucial for effective carbon accounting and corporate sustainability. It directly impacts how companies measure progress, set emissions targets, and maintain credibility in reporting. Below are the key reasons why a well-defined baseline year is essential.

1. Establishes a Clear Reference for Emissions Tracking

A baseline year provides a fixed reference point against which companies measure their greenhouse gas (GHG) emissions over time. Without it, tracking progress becomes inconsistent, making it difficult to determine whether emissions are actually decreasing or if fluctuations are due to external factors like market changes or operational shifts.

For example, if a company initially set its baseline year in 2020—a year with reduced industrial activity due to COVID-19—it may falsely appear that emissions have increased in subsequent years. This could lead to misleading conclusions about the company’s environmental impact. Choosing a more representative year, such as 2018 or 2019, ensures more reliable long-term comparisons.

2. Enables Meaningful Carbon Reduction Targets

Organizations set climate goals, such as net-zero targets 或 Science Based Targets (SBTs), using their baseline year as a foundation. The accuracy of this starting point determines whether reduction targets are realistic, ambitious, or misleading. If the baseline year is too recent or chosen arbitrarily, targets may lack credibility and fail to align with international standards.

A properly selected baseline ensures that emission reduction goals are achievable and verifiable, allowing companies to demonstrate real progress. This is particularly important for compliance with frameworks like the GHG Protocol, CSRD, and CDP (Carbon Disclosure Project) [1], which require companies to justify their targets based on historical emissions data.

3. Ensures Transparency and Credibility in Reporting

Sustainability reporting frameworks and regulatory bodies require companies to disclose their emissions trends based on a consistent baseline year. If a company frequently changes its baseline or selects one that does not reflect its typical operations, stakeholders may question the reliability of its carbon accounting. Transparency in baseline year selection enhances investor confidence, regulatory compliance, and brand reputation. Companies that establish a credible baseline can effectively communicate their sustainability efforts to stakeholders, demonstrating commitment to climate action with verifiable data.

4. Aligns with Regulatory and Market Expectations

Governments and regulatory bodies increasingly mandate carbon accounting and sustainability reporting, making the choice of a baseline year even more significant.

For example, under the UK Streamlined Energy and Carbon Reporting (SECR) framework [2], businesses must disclose emissions relative to a chosen baseline year and explain any recalculations. Companies that fail to establish a reliable baseline risk non-compliance, which can lead to penalties or reputational damage.

5. Facilitates Comparability and Benchmarking

A standardized baseline year allows companies to compare their emissions performance against industry peers and global benchmarks. Many climate action initiatives, such as the SBTi, require businesses to set reduction targets based on historical emissions to ensure comparability across sectors.

For instance, 联合利华 uses a 2015 baseline year for its sustainability commitments [3], allowing it to compare emissions reductions against both internal goals and external industry benchmarks. Without a consistent baseline, comparing progress across different reporting periods or against competitors becomes unreliable.

Choosing the Right Baseline Year

Selecting the right baseline year is a critical decision that influences a company’s entire carbon reduction strategy. A poorly chosen baseline can distort progress measurements, while a well-considered one ensures transparency, comparability, and regulatory compliance. To make the right choice, businesses must evaluate key factors carefully.

1. Ensure Data Availability and Reliability

A baseline year should be chosen based on the availability of complete and accurate emissions data. If historical records are incomplete or inconsistent, setting meaningful reduction targets becomes difficult. Companies should ensure that their selected year includes comprehensive data on Scope 1, 2, and 3 emissions where applicable, following recognized carbon accounting frameworks.

Without solid data, recalculations and adjustments may be necessary down the line, which can create confusion in reporting. Organizations should prioritize years where emissions tracking systems were well-established to avoid unreliable estimations.

2. Avoid Anomalies and One-Time Events

A representative baseline year should reflect normal business operations rather than anomalous conditions. External disruptions such as economic recessions, global crises, or temporary production shutdowns can lead to misleading baseline emissions levels. Using such a year may create an inaccurate picture of actual reductions or exaggerate future improvements.

For example, a year with an unusual drop in emissions due to market slowdowns or external factors may make future reduction goals appear more challenging than they actually are. Conversely, a year with exceptionally high emissions may result in overestimated progress. Choosing a stable, representative year ensures fair and meaningful comparisons over time.

3. Align with Regulatory and Industry Standards

Many sustainability frameworks, including the GHG Protocol, SBTi, and CSRD, provide guidelines for baseline year selection. Adhering to these standards ensures that emissions reduction commitments remain credible and widely accepted by regulators, investors, and stakeholders. Some frameworks may also impose restrictions on how far back a baseline year can be set. Companies should verify whether their industry has specific reporting guidelines to ensure alignment with global sustainability goals and avoid future discrepancies in reporting.

4. Factor in Business Growth and Structural Changes

A well-chosen baseline year should account for a company’s growth trajectory. If a business is expanding rapidly, setting a baseline during a period of lower emissions may lead to unrealistic reduction targets. On the other hand, selecting a baseline from a peak emissions year may make reduction goals appear easier to achieve but less meaningful in the long run.

Additionally, structural changes such as acquisitions, divestitures, or shifts in production processes may require baseline recalculations. Companies should establish clear policies on when and how adjustments will be made to maintain consistency in emissions tracking.

5. Consider Long-Term Comparability and Reporting Needs

Since carbon reduction goals often span decades, the baseline year must remain relevant for long-term tracking. Companies committing to net-zero by 2050 or a 50% reduction by 2030 need a stable and well-documented emissions reference to measure progress consistently. If the baseline year is frequently changed or poorly chosen, it can distort historical comparisons and raise doubts about the company’s actual reductions.

For example, if a company initially sets its baseline in 2015 but later shifts it to 2018, reported reductions may appear more or less significant depending on emission levels in those years. This inconsistency can create skepticism among investors, regulators, and sustainability auditors. Furthermore, frameworks like the SBTi and CSRD require businesses to disclose and justify baseline adjustments, adding complexity to compliance efforts.

To ensure comparability, companies should select a baseline year that aligns with industry standards and remains applicable as new reporting frameworks emerge. A stable baseline strengthens credibility, simplifies year-over-year performance evaluations, and ensures stakeholders can trust the reported progress toward emissions reduction goals.

When and How to Recalculate a Baseline Year

A baseline year is meant to serve as a fixed reference point, but there are circumstances where recalculating it becomes necessary. Companies undergoing structural changes, data refinements, or regulatory shifts must ensure their baseline remains accurate and reflective of actual emissions. However, recalculations should be done carefully to maintain transparency and comparability.

When Is Baseline Recalculation Necessary?

Baseline recalculations are typically required when significant changes alter a company’s emissions profile in a way that makes the original baseline no longer representative. Common triggers include:

• Mergers, acquisitions, or divestitures – If a company acquires or sells a major business unit, its emissions footprint changes significantly. A recalculated baseline prevents artificial spikes or drops in reported emissions.

• Methodology improvements – As carbon accounting standards evolve, companies may need to adjust their baseline to reflect better emissions measurement techniques.

• Discovery of significant data errors – If material errors in past emissions calculations are identified, recalculating the baseline ensures data integrity.

• Changes in emissions boundaries – If a company expands or redefines its organizational boundaries (e.g., including additional Scope 3 categories), the baseline must be adjusted accordingly.

• Regulatory requirements – Some sustainability reporting frameworks mandate recalculations when specific conditions are met, ensuring consistency in disclosures.

Notably, business growth alone is not a valid reason to recalculate a baseline. A company should not adjust its baseline simply because it finds its reduction targets too difficult to achieve.

How to Properly Recalculate a Baseline

When recalculating a baseline, companies must follow established principles to ensure transparency, accuracy, and consistency. These include:

• Applying changes retrospectively – The revised baseline should be updated for all past emissions reports to maintain comparability over time.

• Following recognized standards – Frameworks like the GHG Protocol provide clear guidance on when and how recalculations should be conducted. Adhering to these ensures credibility.

• Documenting and disclosing recalculations – Companies must publicly explain why and how their baseline was adjusted. This includes detailing the magnitude of changes, methodology updates, and expected impacts on reduction targets.

• Governing recalculations through internal policies – Organizations should establish internal guidelines defining when and how baselines can be recalculated to prevent arbitrary adjustments.

Challenges & Risks

While recalculating a baseline can improve accuracy, it also introduces challenges:

• Risk of greenwashing – Frequent or unjustified recalculations can create the perception that a company is shifting targets to manipulate progress. Transparent disclosures mitigate this risk.

• Comparability issues – Adjusting a baseline affects historical emissions data, making it harder to compare with industry peers or previous performance. Ensuring alignment with standard protocols helps maintain consistency.

• Stakeholder skepticism – Investors, regulators, and consumers may question the legitimacy of recalculations. Providing a clear, data-driven rationale builds trust.

参考资料:

[1] https://www.cdp.net/en

[2] https://www.gov.uk/government/publications/environmental-reporting-guidelines-including-mandatory-greenhouse-gas-emissions-reporting-guidance

[3] https://www.unilever.com/sustainability/climate/our-climate-transition-action-plan/