New global research exposes the true scale of corporate climate costs, urges mandatory carbon disclosure

Authored by Assistant Professor Patricia Breuer of Erasmus School of Economics, together with Michael Greenstone (University of Chicago) and Christian Leuz (University of Chicago Booth School of Business), the research introduces the concept of corporate carbon damages, a measure that quantifies the total social cost of companies’ emissions.

Measuring the cost of carbon pollution

By combining emissions data with the social cost of carbon (SCC), the monetary value of climate damages per ton of greenhouse gas emitted, the authors provide one of the most comprehensive estimates to date of the economic harm associated with corporate emissions.

The study draws on data from nearly 15,000 public firms across the globe, representing more than 80 percent of total market capitalisation. The results are striking: on average, corporate carbon damages amount to 44 percent of companies’ operating profits and 3.1 percent of their revenues worldwide. In the United States, the figures stand at 18.5 percent of profits and 2 percent of revenues.

The damages are not distributed evenly. A handful of carbon intensive industries (energy, materials, utilities, transportation, and food and beverages) account for nearly 90 percent of global corporate carbon damages.

Patchy reporting undermines climate accountability

Despite the magnitude of the problem, most corporations still do not disclose their emissions in a standardised or verifiable way. Only about one-third of the firms in the dataset directly reported their emissions, and many of those reports lack independent verification. For the remaining two-thirds, emissions had to be estimated using modeling based on limited public data. 

Patricia Breuer and her fellow authors argue that mandatory disclosure would not only improve the integrity of markets but could also drive companies to reduce their emissions voluntarily. Transparent data would allow investors, customers, and employees to compare firms and hold them accountable for their climate impact. 

Global variation highlights uneven climate regulation

The study also reveals stark differences among countries. Firms in Russia, Indonesia, and India show the highest average corporate carbon damages, while companies in France, the United States, and the United Kingdom record much lower averages. These variations reflect both the composition of national industries and the differing stringency of climate policies worldwide.

According to Patricia Breuer, the findings preview what more comprehensive emissions reporting could reveal. ‘Our analysis shows the potential impact of the SEC’s proposed climate disclosure rules and similar initiatives globally,’ she says. ‘Mandatory reporting is a vital step toward holding corporations accountable and aligning business practices with global climate goals.’

The authors conclude that mandatory, standardised, and verified emissions reporting is essential to effective climate governance and sustainable financial markets. Without credible disclosure, they argue, investors and policymakers will continue to underestimate the true costs of corporate activity and the scale of the climate challenge.