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Discrepancies in corporate GHG emissions data and their impact on firm performance assessment

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Abstract

Corporate greenhouse gas (GHG) emissions data underpin almost every economic analysis related to climate change, spanning from firms' transition risk to their ESG ratings and, ultimately, their reduction is fundamental in addressing global warming. However, various quality issues plague relevant data. This study documents the scale of discrepancies in GHG emissions data among three commercial data providers along various dimensions, investigates the reasons behind these and examines the possible ramifications for assessing firms' environmental performance. It finds widespread inconsistencies between data providers in every emissions category, through time and across sectors. The lowest -yet important- inconsistencies are observed in direct emissions data (Scope 1) and they progressively increase in indirect emissions (Scope 2 and Scope 3). A sectoral analysis reveals specific sectors with higher levels of inconsistencies. A detailed investigation shows that inconsistencies originate from a few, common sources, mostly related to the nature of emissions disclosure requirements. Finally, a simple ranking exercise exhibits that these inconsistencies can translate into diverging carbon performance assessments.

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  • : Papadopoulos, Georgios, 2022. "Discrepancies in corporate GHG emissions data and their impact on firm performance assessment," JRC Working Papers in Economics and Finance 2022-12, Joint Research Centre, European Commission.
    • Handle: RePEc:jrs:wpaper:202212
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    File URL: https://joint-research-centre.ec.europa.eu/publications/discrepancies-corporate-ghg-emissions-data-and-their-impact-firm-performance-assessment_en
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    Cited by:

    1. Buchetti, Bruno & Miquel-Flores, Ixart & Perdichizzi, Salvatore & Reghezza, Alessio & Lin, Luca X., 2024. "Loan guarantee and portfolio greening: evidence from European credit registers," Working Paper Series 2916, European Central Bank.
    2. Enrico Bernardini & Marco Fanari & Enrico Foscolo & Francesco Ruggiero, 2024. "Environmental data and scores: Lost in translation," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4796-4818, September.
    3. Alessi, Lucia & Battiston, Stefano, 2022. "Two sides of the same coin: Green Taxonomy alignment versus transition risk in financial portfolios," International Review of Financial Analysis, Elsevier, vol. 84(C).
    4. Chabot, Miia & Bertrand, Jean-Louis, 2023. "Climate risks and financial stability: Evidence from the European financial system," Journal of Financial Stability, Elsevier, vol. 69(C).

    More about this item

    Keywords

    corporate GHG emissions; disclosure; data inconsistency; corporate carbon performance;
    All these keywords.

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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