Material, But Missing: Gaps in Scope 3 Reporting Persist
Scope 3 emissions offer key insights into a company’s climate impact and exposure to transition risks. In many cases, they capture the majority of a company’s total carbon footprint, whether from upstream (e.g., extraction, processing, manufacturing, transport and distribution for a consumer-electronics company) or downstream emissions (e.g., the lifetime emissions of vehicles sold by an automotive company).
Investors may be buoyed by increased reporting on Scope 3 emissions — whether encouraged or mandated by major jurisdictions including the EU, U.K., Australia and Japan — but should be wary of its utility.1
Very few report what matters the mostSpecifically, there is considerable variation in the extent to which companies report on their “material” Scope 3 categories — those expected to contribute the bulk of their carbon footprint. Previous research has shown that, for most companies, just two of the 15 Scope 3 categories typically account for the majority of these emissions.2 Building on this, we identified the two most material categories for each company based on its business sector. According to our analysis of company disclosures, only 13% of MSCI ACWI Investable Market Index (IMI) constituents actually reported on their most material categories.
So, what’s the upshot of this? First, investors may want to be cautious about taking reported Scope 3 emissions at face value. And second, until disclosures become more consistent and comprehensive, high-quality estimation models may offer a prudent approach to fill stubborn gaps and enable broader data coverage.
Data as of May 2025. The metrics shown are percentage of reporting companies of all 8,197 constituents of the MSCI ACWI IMI Index from 2015 to 2023. Source: MSCI ESG Research
Data as of May 2025, based on all 8,197 constituents of the MSCI ACWI IMI Index. Source: MSCI ESG Research
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1 “Decoding Mandatory Scope 3 Reporting: A Global Overview of Regulations for Companies,” Aligned Incentives, accessed June 23, 2025.
2 “IIGCC Supplementary Guidance: Scope 3 emissions of investments,” IIGCC, September 2024.
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