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

Absent mandatory reporting, and although many companies report their carbon emissions, much of the emissions data are estimated by data providers. As we evaluate the forward-looking carbon scores from several popular data providers, we find no evidence that these scores predict future changes in emissions. Further, we find that data on estimated emissions are at least 2.4 times less effective than reported data in identifying the worst emitters and provide little information to identify green companies in brown sectors. Our 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.