The ICE 2021 Emissions Dataset covers the largest number of companies we’ve analysed in a single year since we started collecting emissions data approximately 10 years ago! Congratulations to our Climate Data Analysts for the great work.

But this is not the only good news. We are also delighted to highlight some very important and positive trends our analysis of the 2021 Emissions Dataset revealed regarding improving disclosure rates. In fact, our Climate Data Analysts report there has been a significant rise in climate disclosure rates in 2021 among companies in the Emissions Dataset for not only Scope 1 and 2 emissions, but also for Scope 3 emissions.

However, there are sector and regional variations in disclosure rates, as one would expect. We note that some unexpected sectors are leading the way in increased emissions disclosures, while other sectors which we would expect to provide better emissions disclosure are lagging behind.

Increased Public Disclosure

Overall, our analysis of disclosures by companies in the ICE Emissions Dataset found that there was a 15% increase in public disclosure of climate data. Even more encouraging is the fact this improvement has been led by many companies providing comprehensive Scope 1 and Scope 2 emissions public disclosure for the first time.

In 2021, companies achieving ICE’s top disclosure quality rating (i.e., public disclosure of Scope 1 and 2 emissions covering at least 95% of a company’s operations with third party assurance) jumped by over 40% from the last reporting year. This increase includes companies improving their previous public reporting as well as companies who reported publicly for the first time.

We believe the progress on emissions disclosure is an important development, not just for regulatory requirements but for the reputations and investor relations for companies. Indeed, we note increasing emphasis being placed on disclosure quality by investors. At conferences and industry events discussing ESG disclosures, we have heard several institutional investors declaring increased scrutiny of climate disclosures as a condition of investment is an example of how seriously some investors are taking climate data disclosure.

Reverse Gear for Small Minority

Unfortunately, a very small minority of companies seem to have found reverse gear. Our analysis of the disclosures by companies in the 2021 Emissions Dataset showed that 3.6% of companies reported incomplete emissions data for Scope 1 and 2 emissions, despite providing sufficient disclosure in the previous year to receive our top two quality disclosure ratings, which require companies to disclose emissions covering at least 95% of their operations. Whether this was intentional or for reasons beyond their control (e.g., Covid-19 disruption), this is disappointing and also leaves these companies in a potentially awkward position with their shareholders/stakeholders.

Overall, we have been encouraged by the progress we have found from our analysis of disclosures provided by companies in the 2021 Emissions Dataset on corporate climate disclosure globally, but obviously there are variations regionally and among sectors.

Sector Variations

On a sector basis, it is interesting that sectors generally associated with high emissions are again leading the way with public emissions disclosure. Our analysis found the Extractives and Minerals Processing sector leading emissions disclosure with around 78% of the companies analysed by ICE providing at least some public emissions disclosure, followed by the Resource Transformation and Transportation sectors with 77.9% and 77.4% of companies, respectively, providing at least some level of emissions disclosure. Is this perhaps a sign of increasing regulatory and even shareholder pressure in these sectors, perhaps in the run up to COP.

Even when it comes to providing the most comprehensive public disclosure of Scope 1 and 2 emissions, again we found the Extractives and Mineral Processing, Resource Transformation and Transportations sectors are leading the way. Within the ICE 2021 Emissions dataset all three of these sectors have just over 60% of companies which publicly reported sufficient Scope 1 and 2 emissions data to receive our top two quality disclosure ratings.

At the other end of the scale, it is the Health Care sector lagging, with only 53.7% of companies within the 2021 Emissions Dataset making at least some sort of public disclosure regarding emissions in the last reporting year. Following close behind are the Technology and Communications and Services sectors, with only 63.7% and 63.9% of companies, respectively, making at least some public climate disclosures. And when it comes to making sufficient Scope 1 and 2 public disclosures to achieve ICE’s top disclosure quality rating, the Health Care sector once again lags, with only 39.2% of reporting companies within the 2021 Emissions Dataset receiving the top quality disclosure rating. The Services sector also ranks among the laggards when it comes to the amount of data disclosures. Interestingly, the Financials sector also falls below other sectors in the level of emissions disclosures. Among Financial companies that publicly disclosed at least some emissions data, only 51.4% within the 2021 Emissions Dataset reported sufficient Scope 1 and 2 disclosures to receive ICE’s top two quality disclosure ratings.

Regional Variations

Looking at disclosure rates from a country and regional perspective also gives cause for celebration. Across the major regions we are able to report a significant increase in emissions disclosures among companies in the ICE 2021 Emissions Dataset. Again, disclosure of Scope 1 and 2 as well as Scope 3 emissions have gathered pace in all regions and major countries we analyse globally.

Of note is the improvement in reporting by U.S. companies which seem to be gaining momentum, according to our analysis, despite the introduction of climate reporting legislation running behind many other regions. But when it comes to the level of emissions data disclosed, the U.S. still has some ground to make up compared to Europe, which continues to stand out as a leader when it comes to emissions disclosure.

For North America overall, 69.07% of North American companies analysed by ICE reported at least some Scope 1 and 2 emissions data, of which an encouraging 85.91% disclosed sufficient data for Scope 1 and 2 emissions to receive ICE’s top two disclosure quality ratings.

Europe is still setting the pace when it comes to corporate emissions disclosure and reporting. For European companies analysed by ICE, 88.75% publicly reported at least some emissions data. Of those European companies reporting, 89.35% are also providing sufficient Scope 1 and 2 disclosures to receive ICE’s two top disclosure quality ratings.

Scope 3 Disclosure Increase

Scope 3 disclosure, an area close to our hearts at ICE, is also positively surprising us with broad-based progress being recorded over the past year. Our analysis shows that not only are more companies in the 2021 Emissions Dataset disclosing at least one category of Scope 3 emissions, but the average number of categories being disclosed has also increased.

We can report that 44% of all companies we track in our 2021 Emissions Dataset reported at least one category of Scope 3 emissions, with that rising to 63.2% of companies that reported at least some Scope 1 and 2 data. However, when it comes to reporting all 15 categories of Scope 3 emissions, there is a very wide divergence between sectors. The Renewable Resources sector lead the way with 55% of companies that reported at least one category of Scope 3 disclosing emissions across all 15 categories. This is followed by the Food and Beverage and Infrastructure sectors, with 41% and 39%, respectively.

But it is at the other end of the scale where the divergence in disclosure is most apparent, with the Financials sector standing out with less than 4% of companies that disclose at least some Scope 3 emissions publicly reporting all 15 categories, according to our analysis of the ICE Emissions Dataset.

On a regional basis, Europe remains the front runner for Scope 3 disclosure with 67.15% of companies analysed by ICE reporting at least one category of Scope 3 emissions. However, when it comes to providing the full supply and value chain emissions profile, only 31.45% of Europe companies that report at least one category of Scope 3 disclose emissions for all 15 categories.

Conclusion - Cost of Non-Disclosure

Discussions with our customers reveal they are also seeing similar trends in disclosure quality and support our view that investors and lenders are placing increased emphasis on these factors within decision making frameworks. Asset owner/managers’ willingness or even ability to maintain holdings in companies with poor climate disclosure policies is likely to be increasingly challenged, driven not just by regulation but also by shareholder/stakeholder and consumer pressure.