External assurance of carbon disclosures indicates possible underestimates in reported European corporate emissions data

Georgios Papadopoulos

No 2023-09, JRC Working Papers in Economics and Finance from Joint Research Centre, European Commission

Abstract: Company carbon disclosures are crucial in assessing a firm's impact on the environment, and many policy actions are associated with this information. As a response to the increasing demand for transparency, many firms disclose carbon emissions through sustainability reports and voluntarily engage with external assurance of the reported information. However, the possible existence of systematic differences in reported emissions with respect to their assurance status is still under-explored. This study investigates the causal effect of third-party assurance on carbon disclosures in a sample of European companies. Findings suggest that non-assuring firms may be under-reporting their direct GHG emissions by up to a magnitude comparable to the largest annual reduction of EU emissions in history. On the contrary, the effect of assurance is much weaker to almost absent in indirect, Scope 2, emissions possibly due to their clear and easily verifiable estimation nature. The findings demonstrate that third-party assurance can provide more reliable and certainly more prudent estimates of corporate GHG emissions which are relevant to corporate sustainability strategy, policymaking and, ultimately, climate change mitigation.

Keywords: external assurance; corporate carbon disclosure; company GHG emissions; climate change (search for similar items in EconPapers)
JEL-codes: M42 Q54 Q56 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2023-08
New Economics Papers: this item is included in nep-ene and nep-env
References: Add references at CitEc
Citations:

Downloads: (external link)
https://publications.jrc.ec.europa.eu/repository/handle/JRC134799

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jrs:wpaper:202309

Access Statistics for this paper

More papers in JRC Working Papers in Economics and Finance from Joint Research Centre, European Commission Contact information at EDIRC.
Bibliographic data for series maintained by Peter Benczur ().