Many Companies Quietly Revise Their Emissions Data: One Chart

The next time you check a corporate sustainability report, keep in mind there’s a big chance the company has revised its carbon emissions figures, most often upward.

Research by Harvard Business School Professors Lauren Cohen and Ethan Rouen reveals a “troubling pattern” in the mostly unregulated and unaudited corporate social responsibility (CSR) reports that public companies release each year: understated emissions. Companies frequently restate their reports to revise their emissions data, indicating that they’re often further from their previously disclosed climate targets.

“The amount of emissions that went underreported was 135 million tonnes (metric tons), more than the total 2020 emissions of major fossil fuel exporters Venezuela, Nigeria, Qatar, and Kuwait, and more than the emissions of all but 35 countries,” they write in an article published in Nature Climate Change in January.

Cohen, the L.E. Simmons Professor of Business Administration, and Rouen, the Terrie F. and Bradley M. Associate Professor of Business Administration, coauthored “Widespread Revisions of Self-Reported Emissions by Major US Corporations,” with Kunal Sachdeva, an assistant professor of finance at the University of Michigan’s Ross School of Business.

The research team collected CSR reports for companies that were at any point listed in the S&P 500 Index from 2010-2020. They zoomed in on 266 firms that reported historical emissions data at least twice, allowing their emissions to be tracked and compared over time through 2024.

They found that companies across industries and sizes understated greenhouse gases twice as often as overstated. Adding to the confusion, few companies disclosed why they were restating their reports.

A more detailed explanation of their findings is available at http://www.correctingcarbon.com/.