Do Corporate Carbon Emissions Data Enable Investors to Mitigate Climate Change?

The Journal of Portfolio Management Novel Risks 2022, jpm.2022.1.410; DOI: https://doi.org/10.3905/jpm.2022.1.410

Posted: 7 Jan 2021 Last revised: 20 Sep 2022

See all articles by Vitali Kalesnik

Vitali Kalesnik

Research Affiliates Global Advisors

Marco Wilkens

University of Augsburg

Jonas Zink

University of Augsburg

Multiple version iconThere are 2 versions of this paper

Date Written: November 24, 2020

Abstract

Investors play an important role in combating climate change. The authors examine several types of currently available carbon emissions data in their capacity to enable investors to incentivize companies to reduce emissions. The authors evaluate the information content of estimated current and forward-looking carbon emissions data from four popular data providers. Absent mandatory reporting and although many companies report their carbon emissions, much emissions data are estimated by data providers. Despite the providers’ claims of accuracy, the authors find the data on estimated current emissions (often comprising >50% of observations) mostly capture only basic company information (e.g., company size and industry). The authors find that forward-looking carbon scores from different data providers do not have any power in predicting future changes in emissions. The authors’ analyses suggest that estimated emissions are at least 2.4 times less effective than self-reported emissions. Their results debunk the belief that third-party estimated emissions are a satisfactory substitute for company-reported emissions and call for mandatory and audited carbon emissions disclosure.

Keywords: Carbon data, carbon databases, climate-related information, climate-related risks and opportunities, environmental impact of investments, carbon emissions, carbon intensities

JEL Classification: G11, G14, Q51, Q54

Suggested Citation

Kalesnik, Vitali and Wilkens, Marco and Zink, Jonas, Do Corporate Carbon Emissions Data Enable Investors to Mitigate Climate Change? (November 24, 2020). The Journal of Portfolio Management Novel Risks 2022, jpm.2022.1.410; DOI: https://doi.org/10.3905/jpm.2022.1.410, Available at SSRN: https://ssrn.com/abstract=3722973 or http://dx.doi.org/10.2139/ssrn.3722973

Vitali Kalesnik (Contact Author)

Research Affiliates Global Advisors ( email )

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London, W1J 8DZ
United Kingdom
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HOME PAGE: http://https://www.researchaffiliates.com/en_us/home.html

Marco Wilkens

University of Augsburg ( email )

Universitaetsstr. 16
Augsburg, 86159
Germany
+49 821 598 4124 (Phone)
+49 821 598 4223 (Fax)

HOME PAGE: http://www.wiwi.uni-augsburg.de/bwl/wilkens/team/wilkens_marco/

Jonas Zink

University of Augsburg ( email )

Universitätsstr. 16
Augsburg, 86159
Germany
0049 821 598 4045 (Phone)

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