How investors profit from companies reporting Scope 3 emissions
New study correlates indirect emissions reporting with lower debt rates.
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(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)
CHAPEL HILL, N.C. (Callaway Climate Insights) — A new study shows how investors can prod companies to get their Scope 3 greenhouse gas emissions under control.
Reducing those emissions is a crucial part of fighting climate change. Scope 3 emissions, which are what is produced by the supply chains a company uses, represent the lion’s share of all corporate greenhouse gas emissions—75%, according to a World Resources Institute estimate. They are to be distinguished from Scope 1 emissions (those a company produces directly from its operations) and Scope 2 emissions (those produced by the electricity a company has purchased).
Despite Scope 3’s crucial importance, most companies only report emissions in Scopes 1 and 2. And those that nevertheless do report their Scope 3 emissions do not always report the data in a standardized and consistent way. As a result, investors are largely in the dark as to which companies are the biggest contributors to global warming.
In fact, as I pointed out in this space earlier this year, investors actually are being misled: That’s because companies with the highest ESG ratings based on their Scope 1 and 2 emissions tend also to be the biggest offenders when it comes to Scope 3 emissions. So, without taking Scope 3 emissions into account, climate-friendly investors may actually be investing in climate-unfriendly ways…
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Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.
Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community.
Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.
Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, moderating workshop sessions at regional conventions.
