Giant multinational corporations have a bad name when it comes to the environment. While they would prefer us to remember their "responsibility" schemes, those of us with more than half an eye on the news are more likely to think of coal-fired power stations, oil-funded "scientists" and government lobbying. Yet when it comes to climate change, it is remarkable how little we know about what the world's largest companies are doing.

Less than half of Europe's 300 largest companies actually disclose complete verified data on their greenhouse-gas emissions, according to areport released this week by the UK-based independent non-profit research body the Environmental Investment Organisation (EIO). Moreover, over one in ten gives no information at all.

While the general trend is to greater corporate transparency, it is clear that there is a great deal of work to be done. The EIO hopes that by publicly ranking companies by their emissions and transparency, it will put pressure on the worst offending corporate giants.

However, public awareness alone is unlikely to make corporations clean up their act. Despite the hard work and success of groups such as Greenpeace and Friends of the Earth, we are still pumping greenhouse gases into the atmosphere at a rate that, if continued, will bring untold harm to society.

Co-ordinate your response

This is where the financial sector could help save the day. Time after time, governments fail to reach binding international agreements on emissions. Moreoever, even if all the relevant countries met the targets set by the (non-binding) Copenhagen Accord, this would still imply a dangerous temperature rise of between 2.5° and 5°C before the end of the century.

If governments cannot take the rapid action we need to avoid dangerous climate change, a co-ordinated private-sector response is needed. What better way to do this than through stock markets, operating across borders and without the need for lethargic governmental mandate?

Much of what the world's listed companies do is controlled ultimately by the stock market and those who invest in it. These companies also produce many of the environmentally damaging goods and services we consume. The EIO is aiming to use its emissions rankings to create new types of financial products that harness the western model of shareholder capitalism to drive emissions reductions.

The idea is simple: subtly modify where large, mainstream investors put their money to alter the supply and demand for different companies' shares according to their carbon emissions. The EIO's forthcoming Environmental Tracking Index series will be based on a conventional index fund, tracking stock-market performance to attract enough investors, but reweighted according to each company's emissions and transparency to give it clear incentives to reduce its footprint and be open to public scrutiny.

If the past 25 years have taught us anything, it is the power of financial markets. To many, particularly on the left, this is reason enough to distrust them. However, given that they exist, we can use them to our advantage, to hold corporations to account and build a greener, more open society.

We need to take hold of whatever resources are available to refashion our present, unsustainable means of production. The tools we need are right before our eyes.

Oliver Willmott is an analyst at the Environmental Investment Organisation and co-author of the ET Europe 300 Carbon Rankings Report 2011.