The ongoing COVID-pandemic has changed this year’s Climate Week – instead of numerous in-person meetings across New York City, all activity is now, necessarily, online. What has not changed however is the urgency of limiting climate change. The race to zero carbon emissions by 2050 has made some progress with recent pledges from companies such as Walmart, however, the overall challenge remains and much work is yet to be done.
In previous Charts of the Week, we showed that disclosure of carbon emissions is only the first step for companies striving toward a low-carbon economy. This week, we look at the scope 1 and 2 greenhouse gas (GHG) intensity – the amount of GHG emissions per dollar of revenue – of our ranked companies relative to their respective industries. We then compared the performance of the top quintile (those with comparatively low carbon intensity) to the bottom quintile (those with comparatively high carbon intensity), and found that the top quintile outperforms the bottom quintile by 23.7%. This means that reducing carbon emissions does not have to impact the bottom line in a negative way.
While this picture is certainly encouraging, more needs to be done: Scope 1 and 2 GHG emissions tend to be a smaller part of overall GHG emissions for many companies (scope 3 emissions typically comprise a larger part). However, disclosure and reporting for these value chain emissions is still lacking, even though there are a few notable pledges from companies, like BP, that include them. Companies should use the opportunity that climate week represents to consider extending their engagement on limiting their carbon emissions across their whole value chain. As our research shows, there don’t have to be negative impacts on their valuation – in contrast, with the risk of carbon taxation looming, proactive reduction might prove to be beneficial in the long run.