DitchCarbon vs Moody's ESG: A Comparison for Financial Firms

Comparing Carbon Data Providers for the Financial Sector

Financial institutions face a unique and dual carbon measurement challenge. First, like any large enterprise, they must measure and reduce their own operational emissions, particularly from their supply chain in Scope 3 Category 1 (Purchased Goods & Services). Second, and often far larger, is the challenge of quantifying the financed emissions within their investment and lending portfolios, covered by Scope 3 Category 15.

Addressing these two distinct challenges requires different tools and data methodologies. On one side, platforms like DitchCarbon are built to collect actual, primary data from suppliers to drive operational decarbonisation. On the other, established data providers like Moody’s ESG Solutions offer broad, modelled data designed for portfolio-level risk analysis. This article compares these two approaches to help you identify the right solution for your specific needs.

At a Glance: DitchCarbon vs. Moody's ESG

While both platforms provide emissions data, their focus, methodology, and ideal user are fundamentally different. Here’s a high-level summary of their core distinctions.

Data Methodology and Accuracy

The credibility of any emissions report hinges on the quality of its underlying data. DitchCarbon and Moody's employ fundamentally different philosophies here, tailored to their respective use cases.

DitchCarbon: A Bottom-Up Approach for Actionable Accuracy

DitchCarbon is built on the principle that real decarbonisation requires real data. The platform prioritises collecting primary, verified information directly from suppliers. The process is designed to move organisations away from unreliable averages and towards an audit-ready source of truth.

• Primary Data First: The core workflow involves engaging suppliers through a dedicated portal to collect their actual emissions data, reduction targets, and supporting evidence.
• Verification and Provenance: All data, whether from suppliers or public disclosures, is captured with full provenance. This means you can see the source, the date, and the evidence for every data point, creating an audit trail that withstands scrutiny.
• Intelligent Estimation: Where primary data isn't available, DitchCarbon uses a hierarchy of high-quality, specific estimates, clearly flagging them as such. This avoids the black-box nature of purely modelled data and shows you exactly where your data coverage gaps are.

This bottom-up method provides the granular, asset-level accuracy needed to identify emissions hotspots, collaborate with suppliers on reduction initiatives, and track progress over time.

Moody's ESG: A Top-Down Approach for Broad Coverage

Moody’s ESG Solutions, including its acquisitions of V.E and Four Twenty Seven, focuses on providing broad coverage across a vast universe of public and private companies. Its methodology is designed to give investors a consistent way to assess climate risk across entire portfolios where collecting primary data from every single holding is impractical.

• Sophisticated Modelling: Moody’s uses economic input-output models, industry-specific data, and company-level information (like revenue and employee count) to estimate emissions. This top-down approach allows them to generate a carbon footprint for thousands of entities quickly.
• Focus on Materiality: The data is geared towards financial materiality and risk assessment. It helps investors understand which sectors and companies are most exposed to transition and physical climate risks.
• Scale Over Granularity: The trade-off for this immense scale is granularity. The data is excellent for portfolio-level analysis, benchmarking, and high-level reporting, but it is not designed for engaging a specific supplier to discuss their factory's emissions sources.

Scope 3 Coverage and Core Use Cases

The different data methodologies naturally lead to different strengths in covering Scope 3 categories.

DitchCarbon: Built for Operational Scope 3 (Category 1 & 2)

DitchCarbon’s primary focus is helping organisations tackle their own value chain emissions. It excels at:

• Purchased Goods & Services (Category 1): This is the platform's core strength. By integrating with procurement systems, DitchCarbon maps spend data to specific suppliers and replaces spend-based estimates with actual supplier data. This empowers procurement teams to make carbon-aware buying decisions and collaborate with suppliers on reduction.
• Capital Goods (Category 2): The same supplier engagement engine can be used to gather emissions data for capital equipment purchases, providing a far more accurate picture than industry averages.

The goal is to move beyond reporting and into active decarbonisation by embedding reliable emissions data into the operational workflows of procurement and sustainability teams.

Moody's ESG: The Standard for Financed Emissions (Category 15)

Moody's is a leader in providing the data financial institutions need to measure and report on their financed emissions. Their solution is tailored for:

• Financed Emissions (Category 15): Asset managers, banks, and insurers use Moody’s data to calculate the carbon footprint of their portfolios. The platform's vast company coverage is essential for this task, allowing firms to assess their exposure across equities, bonds, and loans.
• Climate Risk Analysis: Beyond simple footprinting, the data is used in sophisticated climate risk models to understand how factors like carbon pricing or physical climate events could impact investment returns.

The use case is analytical and strategic, informing investment decisions and satisfying regulatory reporting requirements like TCFD and SFDR.

Workflow, Integration, and User Experience

How teams interact with each platform reflects their intended purpose.

DitchCarbon is an interactive, operational platform designed for collaboration between a company and its suppliers. The workflow involves:

1. Data Ingestion: Integrating with ERP or procurement systems to pull spend data.
2. Supplier Engagement: Using an automated, scalable engine to invite suppliers, track responses, and manage data collection.
3. Analysis & Action: Using dashboards to identify hotspots, create supplier scorecards, and provide procurement teams with the insights to act.

It is a system of engagement, designed to be used by sustainability and procurement professionals to manage a live decarbonisation programme.

Moody's ESG is primarily a data product delivered via feeds or APIs. The workflow is about data consumption:

1. Data Delivery: Integrating Moody’s data feeds into internal portfolio management systems, risk models, or third-party platforms like Bloomberg and FactSet.
2. Quantitative Analysis: Running portfolio-level calculations, stress tests, and screens based on the data.
3. Reporting: Generating reports for clients, regulators, and internal stakeholders.

It is a system of record and analysis, used by quantitative analysts, portfolio managers, and risk officers.

The Verdict: Choosing the Right Tool for the Financial Services Job

The choice between DitchCarbon and Moody's ESG is not about which is “better,” but which is fit for purpose. Your decision should be guided by the specific problem you are trying to solve.

Choose Moody's ESG Solutions if:

• Your primary objective is to measure, manage, and report on your financed emissions (Scope 3 Category 15).
• You need broad, consistent data coverage across thousands of public and private companies for portfolio-level analysis.
• Your main users are investment analysts, portfolio managers, and risk teams who need to integrate climate data into financial models.
• Your goal is regulatory compliance and strategic asset allocation based on climate risk.

Choose DitchCarbon if:

• Your primary objective is to measure and reduce your firm’s own operational supply chain emissions (Scope 3 Category 1).
• You need granular, verifiable, and audit-ready data from your specific suppliers to drive real-world reductions.
• Your main users are sustainability, ESG, and procurement teams responsible for hitting corporate net-zero targets.
• Your goal is to move from estimation to action, engaging suppliers and changing purchasing behaviour.

Ultimately, many large financial institutions may find they need both. Moody’s provides the macro-level view of the portfolio, while DitchCarbon provides the micro-level tools to manage the firm's own significant operational footprint. By understanding their distinct strengths, you can build a carbon data strategy that is both compliant and impactful.