Carbonwashing: A New Type of Carbon Data-Related ESG Greenwashing

In, Soh Young; Schumacher, Kim

doi:10.2139/ssrn.3901278

Cited by 16 publications

(15 citation statements)

References 32 publications

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Section: Implications and Recommendations For The Esg Ratings Industrymentioning

confidence: 99%

“…Compared to other ESG issues, carbon emissions are more readily measured and the goal of emissions reduction is the subject of a relatively broad consensus (Christensen et al, 2022; In & Schumacher, 2021; Kaplan & Ramanna, 2021; Trahan & Jantz, 2023). The inability of ratings to capture emissions data for airlines raises questions over whether they do so in other emissions‐intensive industries, and over how other issue‐scores within ESG ratings relate to real‐world outcomes.…”

Section: Implications and Recommendationsmentioning

confidence: 99%

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Are environmental, social and governance (ESG) ratings reliable indicators of emissions outcomes? A case study of the airline industry

Cregan,

Kelly,

Clinch

2023

Corp Soc Responsibility Env

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We analyse environmental ratings and emissions scores for commercial airlines from several major environmental, social and governance ratings providers. Specifically, we investigate whether emissions scores capture and predict absolute carbon emissions and emissions intensity levels, and whether scores are consistent across providers. This builds on existing literature by evaluating the predictive ability of ratings over significantly longer periods than past studies, examining within‐industry ratings disagreement for carbon emissions scores, and using an industry‐specific emissions intensity metric. Data covers 57 airlines from 2012 to 2021. Cross‐sectional and panel regressions are estimated to investigate whether ratings capture and predict carbon emissions data. We find no evidence that emissions scores capture or predict reported carbon emissions, and find that scores from different providers diverge substantially. Persistent shortcomings may undermine trust in the ratings industry, create trade‐offs between emissions abatement and ratings improvement, and hinder the incorporation of climate‐related information in capital allocation decisions.

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Section: Implications and Recommendations For The Esg Ratings Industrymentioning

confidence: 99%

Section: Implications and Recommendationsmentioning

confidence: 99%

Are environmental, social and governance (ESG) ratings reliable indicators of emissions outcomes? A case study of the airline industry

Cregan,

Kelly,

Clinch

2023

Corp Soc Responsibility Env

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“…Universities that reduces the level of COE in the application of the ESG model tend to have more students [22]. The disconnection between the reduction of COE and the application of ESG model has offered the opportunity to introduce the new concept of carbonwashing [23].…”

Section: Coe and Esgmentioning

confidence: 99%

The Determinants of CO2 Emissions in the Context of ESG Models at World Level

Costantiello¹,

Leogrande²

2023

SSRN Journal

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“…To achieve the goals set in the Paris Climate Change Agreement by 2050, a serious global climate change movement will need to raise approximately US $3.5 trillion from the energy sectors every year from 2020 to 2050, totaling approximately US $110 trillion [ 4 ]. Therefore, the investment flow and fund allocation toward decarbonization [ 12 ] and carbon-washing [ 13 ] need to be accelerated to make progress toward net-zero emissions targets and develop greater economic, social and environmental prospects.…”

Section: Introductionmentioning

confidence: 99%

Asymmetric and time-frequency co-movements among innovation-themed investments and carbon emission efficiency: Thematic investing and hedging opportunities

Huo,

Ferreira,

Ul Haq

2024

PLoS ONE

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This study is aimed at investigating the asymmetric and time-frequency co-movements and the hedge or safe-haven properties of carbon efficient indices, the MSCI ACWI Sustainable Impact, and MSCI World EGS indices, in relation to technology and innovation-themed investments. In doing so, the ADCC-GJR-GARCH and wavelet coherence techniques are applied to a daily return series ranging from January 2019 to January 2023. Findings of the ADCC-GJR-GARCH model show negative and insignificant asymmetric linkage among underlying indices during the sample period. The S&P 500 carbon efficient index (CEI) acts as a strong hedge or safe-haven for technology and innovation-themed indices during tranquil and tumultuous periods. The MSCI ACWI Sustainable Impact, MSCI World EGS, and carbon efficient indices except for S&P 500 CEI exhibit weak hedge or safe-haven attributes. Wavelet coherence reveals negative (positive) co-movements between the thematic and carbon efficient indices in short-term (medium-term and long-term) horizons with consistent leading behavior of thematic indices to carbon efficient indices outcomes. It justifies the presence of short-lived hedging or safe-haven characteristics in the thematic domain for investors. These strong and weak hedge or safe-haven characteristics of low carbon and sustainability indices reveal that adding low carbon efficient and sustainable investments to a portfolio result in considerable diversification benefits for investors who tend to take minimal risk in both tranquil and tumultuous periods. The current findings imply that financial institutions, thematic investing companies, and governments need to encourage carbon efficient technology transfer and innovation-themed investments by increasing the fund allocations in underlying asset classes. Policy-making and regulatory bodies can encourage investors to make carbon-efficient and thematic investments and companies to issue carbon-efficient stocks or investments to safeguard social and economic risks during fragile periods. These investments can offer greater opportunities to combat the intensity of economic shocks on portfolios for responsible or sustainable investors.

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Carbonwashing: A New Type of Carbon Data-Related ESG Greenwashing

Cited by 16 publications

References 32 publications

Are environmental, social and governance (ESG) ratings reliable indicators of emissions outcomes? A case study of the airline industry

Are environmental, social and governance (ESG) ratings reliable indicators of emissions outcomes? A case study of the airline industry

The Determinants of CO2 Emissions in the Context of ESG Models at World Level

Asymmetric and time-frequency co-movements among innovation-themed investments and carbon emission efficiency: Thematic investing and hedging opportunities

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