The U.S. waste-management industry has become a darling of environmentally minded investors for its work in recycling trash and harvesting gases from landfills as an alternative fuel.

Leading firms Waste Management Inc. and Republic Services Inc are included in the Dow Jones Sustainability World Index, a benchmark for socially conscious investing. The firms' major investors include funds controlled by billionaire philanthropist Bill Gates and wealth-management icon Larry Fink, founder of BlackRock Inc, who are both leading advocates for corporate climate action.

But the waste industry may be doing far more harm to the planet than investors think, according to a years-long aerial survey commissioned by California air-quality regulators. The survey found "super-emitter" landfills accounted for 43% the measured emissions of the potent greenhouse gas methane — outpacing the fossil-fuel and agricultural sectors.