Issuer Gateway Knowledge Hub


Carbon Emissions Research 

FAQ For Companies

February 2024


Morningstar Sustainalytics (“Sustainalytics”) is responding to clients within the institutional investment community – large global asset owners and asset managers – that require trustworthy information on Greenhouse Gas (GHG) emissions to assess the carbon footprint of their portfolio companies and fulfill mandatory and voluntary regulatory requirements.

Sustainalytics collects GHG emissions data using company Reported Data and fills remaining gaps with estimated data. This data is backed by best-in-class models (multi-factor regression) to estimate GHG emissions. Investors can use the data to respond to regulatory requirements and disclosure initiatives such as the European Union Action Plan, the Taskforce on Climate-related Financial Disclosures (TCFD), and the Principles for Responsible Investment (PRI).

Carbon Emissions data is the first building block, and a critical input, of the Sustainalytics Low Carbon Transition Ratings.

Sustainalytics also utilizes certain carbon emissions data for the ESG Risk Ratings product, which includes several Carbon-focused indicators.  

Emissions data is also incorporated into Sustainalytics' Impact Metrics as well as in various Morningstar products.   


Company reporting of emissions has improved but is still limited. To bridge this gap, Morningstar Sustainalytics has created proprietary Scope 1, Scope 2, and Scope 3 GHG Emissions estimation models that assess a company’s overall carbon footprint. These models are expected to evolve over time as the reporting landscape continues to change.

Having a strong estimation model is necessary for carbon emission datasets as 38% of Scope 1 and 2 is estimated and 56% of Scope 3 is estimated.

Given that emissions disclosure rates remain low, several estimation model techniques have been employed to supplement the reported data. One of the more complex techniques developed is the multi-factor estimation model that is based on size-related factors such as Revenues, Number of Employees, Plant, Property & Equipment (PP&E) and Cost of Revenues, in combination with subindustry-, activity- and country-specific factors.

We favor the multi-factor approach framework since the usage of widely available financial and non-financial factors strengthens the stability, flexibility, and scalability of the model. Moreover, being grounded in actual data allows us to better capture a reporting landscape which is expected to improve in the coming years.

The Multi-Metric Multi-Factor Model Framework (MMMF) is a proprietary multi-factor regression model used to estimate Scope 1, 2 and 3 GHG emissions for companies that do not report these data. The model considers multiple size-related factors, as well as business-model-related characteristics, as reflected in industry- and country-specific characteristics. The same general framework is used to estimate all the GHG emissions scopes to facilitate comparability.

The MMMF model includes the following:

  • Common factors that apply across all environmental metrics and are used to replicate industry, country-specific characteristics, and size. 
  • Refining factors that are specific to individual metrics, and address selected issues, such as renewable energy consumption.

The inputs for the model have been chosen according to:

  • Relevance for the prediction of a given metric.
  • Data availability and quality.


This model is applied to companies that report Scope 1 or 2 emissions and subsequently used to estimate companies’ emissions that do not report in the Carbon Universe. 

Regression models are intended to minimize average error. However, this comes at a cost that some predicted observations may deviate from their true value.

According to the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (GHG Protocol Corporate Standard), emissions are categorized into three scopes: 

Scope 1: Direct emissions 
Direct GHG emissions that occur from sources that are controlled or owned by a company. For example: Combustion of fuels in stationary sources (boilers, furnaces, turbines).

Scope 2: Indirect emissions
Indirect GHG emissions associated with the purchased energy, from a utility provider. They are the result of a company’s energy use. For example: Purchased electricity. 

Scope 3: Other indirect emissions
All other indirect value chain emissions, beyond those covered in Scope 2. These are divided into 15 categories, which can be broken down into upstream and downstream emissions. 

  • An example of Scope 3 upstream emissions: Indirect emissions that are generated upstream from the company’s production of goods and services (in the supply chain). 
  • An example of Scope 3 downstream emissions: Indirect emissions that are generated downstream from the company’s production of goods and services (when the company’s products are used).

According to the GHG Protocol Corporate Standard, there are two methods to calculate and report Scope 2 emissions. 

  • The first is the location-based approach, which refers to the average emissions intensity of the local power grid where energy consumption occurs. 
  • The second is the market-based approach, which refers to the emissions emitted by the generators from which the reporter contractually purchases electricity—which may differ from the electricity that is generated locally.

Sustainalytics’ Scope 2 data collection is based on the location-based approach since it is more commonly used. However, in cases where the company does not report using the location-based approach, the market-based data are collected instead. 

Research Process

Sustainalytics includes companies within our Compliance Universe, which comprises 16,000 companies.  Of these, only 7,500 companies report carbon emissions (as of April 2023).

The GHG estimation models are built on reported disclosures from over 7,500 companies, across 130+ industries.

Sustainalytics begins researching a given fiscal year (FY) in the following calendar year (i.e., we started researching FY22 in calendar year 2023). We began publishing some of this new research in our quarterly releases for investor clients throughout 2023.

In January 2024, Sustainalytics released the full FY22 dataset for investor clients. This dataset includes additional research to what was released quarterly. It also includes our set of estimated data.

In the coming months, Sustainalytics will start our FY23 research, to be released in our 2024 quarterly releases for investor clients.

Sustainalytics collects emissions data from company reporting using web-scraping tools and a dedicated research team. 

Company reporting varies significantly (variety of metrics, weights, and scales).

For most cases, where company reporting is available, Sustainalytics captures company reported data. However, for exceptional cases, Sustainalytics may disqualify the reported data and an estimated value will be used instead. Reasons for disqualification include uncertain units of measurement; exceptionally high intensity values (e.g., contradictory unit references on different sections of the company reports); uncertain or unsatisfactory levels of completeness (e.g., not including all categories of Scope 3 emissions in Scope 3 reporting); and inconsistent and erroneous reporting from year-to-year (e.g., frequent corrections and restatements).

No, Sustainalytics' GHG emissions data are based on reporting of Gross Emissions and do not include any reductions in emissions that a company may report due to the use of carbon offsets.

The Sustainalytics Research team has been trained to review reporting and assess whether it meets industry standards.

Common reasons for reported data to be rejected include the fact that the data does not cover a company’s full operations, or the scopes are not clearly defined. All reported emissions data is reviewed by a second analyst as part of our quality assurance process.

Yes, Sustainalytics encourages companies to submit any data provided separately to the Carbon Disclosure Project (CDP) or other organizations such as the Taskforce on Climate-related Financial Disclosures (TCFD), and Global Reporting Initiative (GRI).  

Please note, Sustainalytics does not consult external websites, such as the CDP website, to access your submissions to other organizations. 

Yes, it is best to provide any updated information with supporting documents as soon as it is available. Use the document upload function in the Issuer Gateway portal. See details here.

  • See a summary of document types here.
  • Documents provided will be used for research purposes.  
  • Information provided that is not publicly available will not be disclosed and will be referenced as internal (non-public). Sustainalytics does NOT accept any confidential material information from companies. 
  • Use the Document Upload function on the Issuer Gateway. 
  • Do NOT use any of the following special characters in the document title: [`!@#$%^*_+=[]{};':"\|,<>/?~]  

Sustainalytics provides the following guidance:

  • Public Documents:  
  • Sustainalytics may reference information from a company’s documents within research products for investor clients, following the standard citation rules.  
  • We may include excerpts within external-facing documents, provided that appropriate citation is in place. 


  • Non-Public (non-material, non-confidential):  
  • Sustainalytics may reference information from these documents in research products for investor clients, following the standard citation rules.  
  • We will NOT include any excerpts within external-facing documents.  
  • Such information is not shared outside Sustainalytics in our reports to investor clients.  
  • Sustainalytics will NOT sign any Confidentiality/ Non-Disclosure Agreement regarding any documents that are shared with us by a company.