Widespread Misstatements of Emissions by Major U.S. Corporations

In the United States, corporations were directly responsible for more than 30 percent of the country’s 2022 total emissions, or approximately 2 billion metric tons of CO2 equivalents (1). Worried in part about the potential regulatory threats that companies face, investors and asset managers have called for greater transparency of publicly traded firms’ climate impacts. These calls have sparked a debate about whether government agencies should require such disclosures, or whether market pressures are sufficient to drive disclosure necessary for investors to make informed decisions (2). We show that these disclosures are, in fact, unreliable. Examining 900 emissions disclosures from 276 of the largest U.S. firms with available data, we find that 60% of these disclosures are eventually restated by the firm, a rate of restatement that has been consistent during the sample period. Furthermore, firms are more likely to understate than overstate, and the value of the understated emissions, on average, is more than twice the value of overstated emissions, suggesting that at least some of the misstatements are not errors. During the decade that we examine, the total gross understated public-firm emissions is 265 million tons, equivalent to the total emissions of Taiwan in 2020. Our results demonstrate the failure of market forces to produce reliable corporate environmental data.