Corporate GHG emissions reporting: variability of CAC-40 disclosure tests investors
Large reporting gaps exist on indirect GHG emissions, the so-called scope-3 category. The CAC-40 companies are a good disclosure sample as they include some of the world’s biggest by sales in various sectors: aircraft making, car making, luxury goods, oil & gas, pharmaceuticals, steel making and tyre making among others. The gaps in disclosure are not dissimilar to those of companies that make up the benchmark DAX-40 index in Germany.
“Our first conclusion is that corporate climate-related disclosure is far from being uniform and standardised even under the regulatory impulse of the European Union – through the Sustainable Finance Disclosure Regulation (SFDR) coming into force next year and Corporate Sustainability Reporting Directive due in the financial year 2024,” says Bernhard Bartels, managing director at Scope ESG.
“Secondly, until that is the case, asset managers need to remain wary of designing climate-linked investment portfolios that claim to be green, not least because GHG disclosure can vary significantly among companies even within the same sector,” says Bartels.
CAC-40 companies can be grouped broadly by disclosure into five groups: good, mostly good, indifferent, poor and negligible.
Hit and miss: precision of GHG reporting (2021) widely dispersed among CAC-40 non-financial companies
Number of reported categories (y-axis) and materiality-alignment (x-axis)
Note: We have excluded financial institutions due to non-reported data.
Source: Annual, Integrated and/or Sustainability Reports 2021, own calculations
The first group offers detailed disclosure and large coverage of sector-relevant emissions: Compagnie de Saint-Gobain SA, Legrand SA, L’Oréal SA, Michelin SA, Sanofi SA, Schneider Electric SE. The second group provides limited detail across GHG-protocol categories but good coverage of those relevant to their industry: Thales SA, Vinci SA, Airbus Group, Orange SA and Carrefour SA.
The third group of service-related companies offers detailed disclosure across some GHG-protocol categories but limited coverage of downstream-related emissions or contribution to emission avoidance in the use of their sold products: Worldline SA, Eurofins Scientific SA, Publicis Groupe SA, Vivendi SE, and Capgemini SE.
The fourth group provides limited coverage of the relevant GHG disclosure categories and limited detail overall: STMicroelectronics NV and EssilorLuxottica SA.
Finally, a fifth group – which we have excluded from our study – is made up of financial institutions as only one among the four CAC-40 listed companies (Crédit Agricole SA) reports on scope-3 emissions from their investments which is overwhelmingly the most important category for them.
“As for GHG emissions-reduction goals, the targets set by CAC-40 companies differ widely which makes it hard to compare one firm’s targets with another’s,” says Tetiana Markiv, associate analyst at Scope ESG.
“Corporate ambitions for emissions-reduction also vary considerably depending on how easily a company’s business model allows it to adjust to carbon-neutral output,” says Markiv.