Only 20 companies in the world provide 100 per cent greenhouse gas emissions disclosure – Are investors in the dark on climate risks?

Although it is now standard practice for companies to report on their greenhouse gas (GHG) emissions, few realise that the number reported does not always represent the total amount of emissions generated by the firm. Less than 2 per cent of reporting firms collect and disclose 100 per cent of their scope 1 GHG emissions.

What can you tell about the state of corporate emissions when disclosures are incomplete? The answer is not very much: emissions reduction targets and results become unreliable, and the company’s true contribution to atmospheric greenhouse gas pollution – and thus climate change – is obscured.

Thousands of firms report a number for their Scope 1 GHG emissions. According to Bloomberg, in 2016 only 43 firms worldwide disclosed 100 percent of their Scope 1 GHG emissions. Upon further scrutiny by researchers at Imperial College Business School and University College Dublin, we found that only 20 firms disclose 100 per cent of their emissions.

The 20 firms are:
Abbvie, Adidas, Aviva, Beni Stabili, Cofinimmo, Deutsche Bank, Equinor, Fiat Chrysler, Henkel, IRPC, KGHM, Microsoft, Norske Skog, Northern Trust, Royal Dutch Shell, Safestore Holdings, Saipem, Tokio Marine, Unibail-Rodamco, Verisk Analytics.

Professor Andreas G. F. Hoepner, member of the EU’s Technical Expert Group on Sustainable Finance (in personal capacity) and founding partner of the 100% Club commented:

“Many people may be surprised how few companies we can independently confirm to have reported 100% of their Scope 1 GHG emissions. Yet, to provide asset owners any chance of aligning their portfolios with climate goals scenarios and responding thoroughly to TCFD, it is paramount that the vast majority of corporations listed on equity or bond markets take complete and public accountability of their Scope 1 GHG emissions.”

Why full disclosure matters

Pension funds and investment managers are under increased pressure from stakeholders to disclose their approach to climate risk. But the most sophisticated and robust risk management framework is rendered useless if the underlying data is insufficient. In addition, impactful decision making can only be made off the back of reliable data. Disclosures are a crucial part of climate-risk management and the investment community are vocal in their call for enhanced environmental disclosures from corporates.

But will this call ever be answered? We are seeing a mismatch of incentives. From the firms perspective, there is often little economic incentive to invest resources in accurate GHG data collection, especially if it puts you at risk of appearing worse than a less diligent competitor. It is difficult to know whether you will be rewarded or punished by investors for this level of transparency.

The lack of clarity surrounding emissions disclosures makes it impossible to fully understand the impact a company is having on climate change. Without complete and reliable Scope 1 emissions disclosure any other numbers depending on this information will struggle to be even broadly accurate. This includes parts of TCFD (Task Force for Climate-related Financial Disclosures) reporting, disclosure of indirect emissions (Scopes 2 and 3) and progress against emissions reduction targets.

The principles for effective disclosures outlined in the TCFD 2017 Implementation document highlight that disclosures should be specific and complete. But as the TCFD 2018 Status Report uncovered, despite continued momentum behind the TCFD initiative, there is still a long way to go in achieving effective climate-related financial disclosures.

Collecting 100.0% of GHG emissions is technically and practically very challenging for most corporations. Therefore, missing data can be accounted for by a ‘Quantitative Statement of Completeness’ (e.g. ‘we collected GHG emissions for 98.7% of our revenue lines’).

Inadequacies in GHG emissions disclosures have the potential to mislead investors and hinder progress of country, investor and business initiatives addressing climate change and looking to accelerate the transition to a low carbon economy. The 100% Club seeks to provide new incentives for companies to pursue complete disclosure.

The 100% Club supports the Financial Centres for Sustainability (FC4S) initiative. Complete and reliable GHG emissions disclosures provide greater clarity to investors. This enables better decision making and helps to guide capital towards companies that are consciously addressing their impact on climate change.  Financial centres can provide crucial support to the 100% initiative. Key decision makers and other important financial actors congregate in financial centres, making them an effective place to highlight this issue.

Find out more, please visit https://climatedisclosure100.info/

 
Location
Related Goal
Goal 8: Reduce industry emissions
Articles you may be interested in
In The News
EIT Climate-KIC supported Ombrea raises €1 million to commercialise its smar...

EIT Climate-KIC supported start-up Ombrea, which offers a tool...

EIT Climate-KIC supported Ombrea raises €1 million to commercialise its smart agriculture system
In The News
EIT Climate-KIC announces partnership with Silicon Valley innovation hub

EIT Climate-KIC has announced its partnership with cleantech innovation...

EIT Climate-KIC announces partnership with Silicon Valley innovation hub
In The News
Eight EIT Climate-KIC innovators in prestigious Forbes 30 Under 30 Europe List...

In the last four years, the EIT Community has...

Eight EIT Climate-KIC innovators in prestigious Forbes 30 Under 30 Europe List 2019
In The News
Bill Gates lists EIT Climate-KIC’s Climeworks on 2019 Breakthrough Techn...

Bill Gates was invited to be the first guest...

Bill Gates lists EIT Climate-KIC’s Climeworks on 2019 Breakthrough Technologies list
Innovation Spotlight
AI and robotics could revolutionise municipal waste sorting

Ferrovial, a leading infrastructure operators and municipal services company, and EIT Climate-KIC partner, is collaborating with start-up...

AI and robotics could revolutionise municipal waste sorting
In Detail
Accelerating the transition to a circular economy

A new report, “Accelerating the transition to a circular economy: Improving access to finance for circular economy projects,” provides key recommendations to drive increased...

Accelerating the transition to a circular economy
In The News
EIT Climate-KIC launches ‘Call to Action’

This week, EIT Climate-KIC launched its call for proposals....

EIT Climate-KIC launches ‘Call to Action’
In The News
EIT Climate-KIC supported Ÿnsect raises €110 million, becoming global leade...

Ÿnsect announced yesterday that it has raised €110 million...

EIT Climate-KIC supported Ÿnsect raises €110 million, becoming global leader in alternative protein
Opinion
Policy: The circular designer’s secret weapon
Joe Iles & Simon Widmer Circulate News & The Circular Design Guide
Policy: The circular designer’s secret weapon
In The News
EIT Climate-KIC supported Climetrics announces top ten European equity funds f...

Climetrics, the world’s first and only independent climate rating...

EIT Climate-KIC supported Climetrics announces top ten European equity funds for climate performance
In The News
EIT Climate-KIC supported WINnERS secures over €1.5 million in funding

WINnERS, an agricultural supply chain de-risking service supported by...

EIT Climate-KIC supported WINnERS secures over €1.5 million in funding
In our community
Interview with Marian-Constantin Vasile, Trainer, EIT Climate-KIC
Interview with Marian-Constantin Vasile, Trainer, EIT Climate-KIC
In our community
Interview with Piotr Magnuszewski, Programme Leader, Centre for Systems Solu...
Travis Hendrix tbd
Interview with Piotr Magnuszewski, Programme Leader, Centre for Systems Solutions
Opinion
How the climate community breeds its own inaction
Dominic Hofstetter EIT Climate-KIC
How the climate community breeds its own inaction
Innovation Spotlight
Not your ordinary reusable bag: Plant trees & earn discounts while you s...

Remember a time when you’d carry your purchases home in a plastic bag? Neither can we. That’s...

Not your ordinary reusable bag: Plant trees & earn discounts while you shop with goodbag
In our community
Interview with Mike Asquith, Project Manager – Integrated Environmental As...
Interview with Mike Asquith, Project Manager – Integrated Environmental Assessment, European Environmental Agency
In The News
EIT Climate-KIC launches strategy for 2019-2022

EIT Climate-KIC, innovation community established and funded by the...

EIT Climate-KIC launches strategy for 2019-2022
Opinion
A systemic approach to innovation in land use and nature-based solutions
Daniel Zimmer Director Sustainable Land Use at EIT Climate-KIC
A systemic approach to innovation in land use and nature-based solutions
Opinion
How moderation could accelerate climate action
Dominic Hofstetter EIT Climate-KIC
How moderation could accelerate climate action
In The News
Close the circularity gap to avert catastrophic climate change, Davos told tod...

A new report by Circle Economy, supported by EIT...

Close the circularity gap to avert catastrophic climate change, Davos told today
In our community
Interview with Mia Dragovic Matosovic, Scientific Researcher, Institute for ...
Interview with Mia Dragovic Matosovic, Scientific Researcher, Institute for European Energy and Climate Policy
In our community
Interview with Charlotte Breen, from C40’s Business & Innovation Team
Interview with Charlotte Breen, from C40’s Business & Innovation Team
In The News
EU group invites feedback on sustainable finance definition

The Technical Expert Group on Sustainable Finance (TEG) set...

EU group invites feedback on sustainable finance definition
In Detail
Municipality-led circular economy case studies from EIT Climate-KIC and part...

How can cities create prosperity for expanding populations whilst transitioning through systematic change to low-carbon economies? How can cities achieve continued prosperity whilst preserving...

Municipality-led circular economy case studies from EIT Climate-KIC and partners
In Detail
Transformative change through innovation: An analysis of the role of innovat...

One of the areas with significant potential to reduce carbon emissions is the energy sector, including the transition away from coal. It is, and...

Transformative change through innovation: An analysis of the role of innovation in five transition regions
In The News
COP24 report: The vital role of land use in climate mitigation

With the carbon costs of travel in mind, key...

COP24 report: The vital role of land use in climate mitigation
In The News
COP24: Distributed ledger technology could help enact Paris Agreement

With the carbon costs of travel in mind, key...

COP24: Distributed ledger technology could help enact Paris Agreement
Opinion
System innovation is needed to help regions shift to a low-carbon economy
System innovation is needed to help regions shift to a low-carbon economy
In The News
COP24: Social innovation to drive just transition of coal regions

With the carbon costs of travel in mind, key...

COP24: Social innovation to drive just transition of coal regions
In Detail
DLT for climate action assessment

DOWNLOAD THE REPORT Over the past decade, we’ve witnessed a myriad of milestones that have put the vision of a prosperous, climate-resilient society on...

DLT for climate action assessment