In recent years, we have seen investors and stakeholders around the world clamoring for more consistent and comparable climate-related disclosures. But gaps remain in company-level disclosures, and as a result, financial institutions may not have the comprehensive picture they need when allocating capital. Likewise, corporations may lack key information when making decisions about supply chain partners.

S&P Global Sustainable1 researches, standardizes and validates corporate environmental performance data covering more than 17,000 companies representing 99% of global market capitalization across six aggregated categories: Greenhouse gases (GHGs), waste, water, air pollutants, land/water pollutants and natural resource use.

To review the state of current corporate environmental performance disclosure, we assessed all six of these categories across 11 major indices to identify where environmental information is being reported, and where there are gaps.

We found the lowest disclosure rates for all environmental performance indicators in the S&P Global Broad Market Index (BMI) (22%) and the S&P Emerging Plus BMI (19%). This is to be expected as both indices contain a higher proportion of small-cap companies, which are less likely to have the resources to put towards environmental reporting. These are the most environmentally intensive on average of all the market benchmarks reviewed, with total impact ratios of 6.0% and 8.4%, respectively, compared to an average of 4.3% across all benchmarks in the analysis.

Taking a deeper dive into Scopes 1 and 2 GHG disclosure over time, we found a similar pattern.

Our analysis found that emerging markets companies have the highest carbon intensity but lowest level of disclosure. The most carbon-intensive index, the S&P Emerging Plus BMI, also had the lowest GHG disclosure rate at 37%. In this analysis, GHG disclosure was highest for the Dow Jones Sustainability World Index (DJSI) at 96% and for the S&P Eurozone Paris-Aligned Climate Index at 93%, compared to 81% on average for all indices considered. It is likely that companies that disclose GHG data are making progress on improving their carbon efficiency; hence, indices with a high level of disclosure tend to have lower carbon intensities.

In terms of sectors, some of the most carbon-intensive companies are also the best disclosers. However, other sectors have a low disclosure rate and poor carbon efficiency.

For example, utilities companies have the highest carbon intensity and the highest GHG disclosure rate at 73%. The materials sector has the third-highest carbon intensity and less than half of companies in the sector disclose GHG emissions. Despite Scope 1 and Scope 2 operational emissions being the most commonly reported part of a company’s value chain, only 38% of companies in our universe disclosed this data. Disclosure rates are even lower for the remainder of the value chain — Scope 3 upstream and downstream emissions.

These findings have significant implications for financial institutions and corporations alike. Investors with holdings in carbon-intensive regions and business activities could significantly underestimate environmental risks if data gaps in disclosure are not filled, and corporations may have poor visibility on risky supply chain links.

Learn More

Find out how a granular approach to completing data gaps can address the quality imperative to provide a complete picture of environmental performance across the global value chain in the next blog in our series.