If a company claims that it plans to reduce its carbon footprint 15% by 2020, is that good? Better yet, is it enough? The purpose of this study was to analyze greenhouse gas (GHG) emissions of 100 companies against science-based targets that seek to limit climate change to 2o Celsius (3.6o Fahrenheit). As climate modeling has provided a “best guess” as to what it will take to reverse climate change and stabilize greenhouse gas emissions to safe levels, this study assesses how well companies are performing in the context of environmental thresholds. Surprisingly, nearly half the 100 companies analyzed (49%) rated sustainably in our study, with Autodesk, Unilever and Eli Lilly earning three top spots in the ranking. On the flip side, 51% of companies are emitting unsustainable levels of CO2. Even more surprising is that of the 49 companies that scored sustainably, 25 of those exhibited revenue growth even as their emissions declined, proving that decoupling of growth and emissions is possible, at least in the short term.
While one might automatically assume that all oil and gas companies would score unsustainably due to the nature of their products, one of the primary caveats is that only direct emissions (known as Scope 1) and indirect emissions from the purchase of electricity, heat, or steam (known as Scope 2) were analyzed for this study, not indirect emissions from the supply chain and product use (known as Scope 3).
In our study, we look at factors such as emissions output and financial performance (contribution to gross domestic product) to assign a company-level carbon budget and to determine whether a company’s emissions are on track with the reductions called for by the scientific community. For this effort, any company scoring less than or equal to one (≤ 1) is considered “sustainable,” while any company scoring greater than one (>1) would be considered “unsustainable.”
It is also important to point out, that while over half the companies rated scored unsustainably, the sample set of companies chosen for this study are part of a limited universe of companies that have voluntarily disclosed their emissions publicly since 2005 through CDP (formerly the Carbon Disclosure Project). While this fact in no way earns companies less of a responsibility for their emissions, it does point to the vital need for universal transparency in emissions reporting.
One of the premises of this report is that while sovereign nations must come to an agreement on how to reduce global CO2 emissions, there is an increasing role to be played by the business community to address climate change. This point is crystalized by the fact that in 2012, of the world’s 100 largest economic entities, 40% of them were corporations.