Handle with Care: Challenges and Opportunities of using Company-Level Emissions Data for Assessing Financial Risks from Climate Change

Posted: 23 Feb 2021 Last revised: 5 Sep 2023

See all articles by Andrej Bajic

Andrej Bajic

Deloitte & Touche GmbH; Zagreb School of Economics and Management; University Duisburg-Essen; University Duisburg-Essen

Ruediger Kiesel

University of Duisburg-Essen - Faculty of Economic Science

Martin Hellmich

Frankfurt School of Finance & Management

Date Written: February 21, 2021

Abstract

Climate data play an important role for market actors and regulators to assess climate-related vulnerability. The most important quantitative class of such data are carbon emissions as almost all metrics to analyse carbon exposure relate to carbon emissions of companies and countries. This paper provides a detailed analysis of the quality of carbon emission data, points out the most common data flaws, and offers suggestions for a robust empirical analysis. Using a large data set of company-level carbon emissions, we show that year-by-year analysis of the consistency of company emissions is required to identify data flaws. Also, we find that economic and carbon data are not perfectly synchronized. As all carbon-emission metrics suffer from similar data inconsistencies robustness of results is not achieved by using several such metrics. Thus, our findings serve as a warning for the reliability of emission data reporting and their unreflected use in empirical analyses.

Keywords: Company-level Emissions Data, Carbon Disclosure,Data Quality, Carbon Risk

JEL Classification: G18, G21, G22, G28

Suggested Citation

Bajic, Andrej and Kiesel, Ruediger and Hellmich, Martin, Handle with Care: Challenges and Opportunities of using Company-Level Emissions Data for Assessing Financial Risks from Climate Change (February 21, 2021). Available at SSRN: https://ssrn.com/abstract=3789928 or http://dx.doi.org/10.2139/ssrn.3789928

Andrej Bajic

Deloitte & Touche GmbH

Franklinstrasse 50
Frankfurt am Main, 60486
Germany

Zagreb School of Economics and Management ( email )

Jordanovac 110
Zagreb, 10000
Croatia

University Duisburg-Essen ( email )

Germany

University Duisburg-Essen ( email )

Germany

Ruediger Kiesel (Contact Author)

University of Duisburg-Essen - Faculty of Economic Science ( email )

Essen, 45117
Germany

HOME PAGE: http://www.lef.wiwi.uni-due.de/

Martin Hellmich

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

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