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HomePaperOn the Importance of Assurance in Carbon Accounting

On the Importance of Assurance in Carbon Accounting

21 February 2024
Authors: Florian Berg (MIT), Jaime Oliver (Clarity AI) and Roberto Rigobon (MIT)
Presenter: Florian Berg (MIT)
Abstract:

Firms that obtain assurance for their carbon accounting report on average a 9.5% higher carbon intensity than their peers. When controlling for assurance, we do not find evidence that SBTi target-setters reduce their future emissions. Instead, firms that obtain assurance reduce their future carbon intensity by 3.3%. This has implications for portfolio managers and ESG raters as taking reported carbon emissions at face value would lead to penalizing firms that are more serious about their carbon reductions. It also calls for mandatory assurance when carbon reporting is mandatory and when reported emissions are generally relied upon in regulation.

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