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Key takeaways
- To avoid inconsistencies and misleading conclusions in climate stress tests and transition risk assessments, misalignment between two different emissions data systems needs to be addressed.
- Structured interoperability, seen in the EU approach of linking verified emissions trading system data to corporate disclosure standards, is essential for enhancing the reliability and consistency of emissions data used for both regulatory and capital market transparency.
- In Asia, where sustainable finance systems are rapidly evolving, integrating data alignment into policy frameworks early on should be a strategic priority to ensure data is used more effectively.
Central banks and financial regulators are placing increasing emphasis on climate-related financial risks. Across the G20, authorities are conducting climate stress tests, assessing banks’ exposures to carbon-intensive sectors, and examining how climate policies may affect financial stability.
Yet one foundational issue remains underappreciated: the structure and governance of the emissions data underpinning these analyses.
In practice, there is no one single greenhouse gas dataset. Rather, at least two distinct institutional systems generate emissions data for different policy purposes. While these systems are often discussed separately, their interaction is becoming increasingly important. Differences in data design, system boundaries and governance can lead to inconsistencies, misinterpretation and potentially misleading conclusions.
As central banks rely more heavily on emissions data, they can also take on a data governance role to ensure alignment and interoperability of these different systems.
Two systems, one data challenge
The first system is built around carbon pricing and regulatory compliance. Emissions trading systems (ETS) and carbon taxes require firms to measure emissions at the facility level, report them to regulators, and undergo verification through monitoring, reporting and verification (MRV) frameworks. Because emissions determine regulatory obligations – such as allowance surrender or carbon tax payments – accuracy and credibility are critical. The primary objective of this system is compliance, and its broader goal is to ensure environmental integrity.
The second system has emerged through corporate climate disclosure frameworks. Standards developed by the International Sustainability Standards Board (ISSB), including IFRS S2, require companies to disclose emissions at the enterprise level, covering emissions across scopes 1, 2 and 3. These disclosures are designed to provide investors with decision-useful information about firms’ exposure to climate risks and their transition strategies. The objective is not regulatory enforcement but transparency and comparability in capital markets.
These structural differences in scope, focus, and institutional design underpin the challenges of aligning the two systems.
Linking the systems: the European approach
The EU provides one of the more developed examples showing how carbon pricing systems and corporate disclosure frameworks can be connected in practice.
The European ETS generates facility-level emissions data through a well-established MRV framework directly linked to carbon pricing. Covered entities are required to monitor and report emissions annually, and verified emissions must be matched with surrendered allowances. These data therefore carry direct regulatory and financial consequences, making accuracy and verification central to the system.
In parallel, under the EU’s corporate sustainability reporting directive, companies are required to disclose emissions in line with the European Sustainability Reporting Standards. ESRS E1 requires firms not only to disclose scope 1 emissions, but also to provide information on the extent to which these emissions are covered by regulated schemes such as the ETS.
In practice, this includes disclosing the proportion of scope 1 emissions that fall under emissions trading systems. This requirement creates a concrete and operational linkage between facility-level MRV data and corporate-level disclosures. By identifying which portion of emissions is already subject to regulatory monitoring and third-party verification, firms can directly connect compliance-based emissions data with enterprise-level reporting.
Because ETS data are generated under strict monitoring rules and independent verification, their use as an input to corporate disclosure enhances the reliability and credibility of reported emissions. At the same time, corporate disclosure frameworks extend beyond regulated emissions. They cover emissions across the entire firm, including those outside ETS boundaries and along the value chain.
The EU approach therefore does not seek to fully harmonise the two systems. Rather, it enables a form of structured interoperability, in which data are partially aligned and reused across systems while maintaining transparency about differences in scope, purpose and coverage. This allows each system to retain its institutional integrity while improving the overall coherence of emissions data for both regulatory and financial purposes.
Evidence from Asia: early-stage development and policy priorities
These issues are particularly relevant in Asia, where climate policy frameworks and sustainable finance systems are still at an early stage of development.
A survey which I conducted on behalf of the Asian Development Bank Institute provides new evidence on how emissions data systems are currently governed across the region. The findings suggest that coordination between MRV systems and corporate disclosure frameworks remains limited, reflecting the fact that both systems are still being established and expanded.
Only a small number of jurisdictions report formal institutional coordination between MRV systems and corporate disclosure frameworks. In most cases, coordination is either informal or still under development, with limited clarity on how facility-level MRV data and enterprise-level disclosure data are linked in practice.
This pattern indicates that emissions data systems used by Asian institutions are still evolving, often in parallel, with limited institutional integration at this stage. Importantly, this should not be interpreted as a structural weakness, but rather as a reflection of sequencing in policy development. Many jurisdictions are building core MRV systems and disclosure frameworks simultaneously, under different authorities and mandates. This also implies that there is an opportunity to design interoperability from the outset, rather than addressing fragmentation at a later stage.
The survey also highlights that the main challenges are institutional rather than technical. Responsibilities for MRV systems are typically assigned to environmental ministries or agencies, while corporate disclosure frameworks fall under financial regulators or securities authorities. Differences in legal mandates, reporting objectives and supervisory structures can make coordination more complex.
Further insight is provided by the survey’s assessment of policy priorities. As shown in the chart below, regulators place the greatest emphasis on capacity building, technical training and the development of basic reporting infrastructure. Interoperability between MRV systems and disclosure frameworks is not yet perceived as a priority, reflecting the fact that many jurisdictions are still focused on establishing reliable systems for emissions measurement, reporting and verification.
At the same time, this sequencing has important implications. If interoperability is not considered early in system design, parallel data systems may become more difficult to align over time. Incorporating interoperability into policy frameworks at an early stage could therefore help improve data consistency, reduce duplication and support more effective use of emissions data in financial and policy contexts.
Why alignment matters for central banks
The coexistence of multiple emissions data systems creates important analytical challenges. Emissions data may be used outside the context for which they were originally designed, leading to inconsistencies and potentially misleading interpretations.
Facility-level MRV data are intended to support regulatory compliance and environmental integrity, while corporate disclosures are designed to inform investors about firm-level exposure, strategy and transition risks. Using one dataset as a substitute for the other without appropriate adjustments may distort assessments of emissions exposure and transition risk. In particular, applying corporate disclosure data directly to regulatory or risk analysis frameworks – without adjusting for differences in system boundaries – may lead to underestimation or overestimation of emissions exposure.
For central banks, this issue is becoming increasingly important. Climate stress tests, transition risk assessments and financial supervision rely on emissions data that were not originally developed for financial analysis. Differences in system boundaries, verification approaches and reporting purposes can complicate the interpretation of such data.
Interoperability between MRV systems and corporate disclosure frameworks is therefore not merely a technical objective but a policy necessity. Greater alignment can improve data consistency, enhance comparability across firms and jurisdictions, and reduce uncertainty in climate-related financial analysis.
Without such alignment, financial authorities may face fragmented datasets that are difficult to reconcile. This could weaken the effectiveness of climate stress testing, complicate cross-country comparisons and reduce the reliability of transition risk assessments.
Central banks therefore have an important role not only as users of climate data, but also as facilitators of data governance. By encouraging coordination between environmental regulatory systems and financial disclosure frameworks, they can help ensure that climate-related financial policies are based on coherent, consistent and reliable information. Ensuring such alignment will be critical as climate-related financial policies continue to expand globally.
This page was last updated March 31, 2026
Written by
Sayuri Shirai is a professor at Keio University and a former policy board member of the Bank of Japan. She is also a visiting fellow at the Asian Development Bank Institute.
