December 06, 2019

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In New Science-Based Approach, Climate Counts Ranks the Top 100 Companies on Sustainability

A new report from Climate Counts shows that 51 of the top 100 companies are releasing unsustainable levels of CO2.

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By Francesca Rheannon

Every year, Climate Counts releases a scorecard of the top 100 companies ranked on sustainability performance. This year, the organization decided to do something different.

Billing it as “the world’s first science-based ranking of corporate carbon emissions,” Climate Counts has just released a study, done in collaboration with The Center for Sustainable Organizations, that used context metrics to assess company sustainability performance through the lens of climate science.

The “context” is that of the carrying capacity of the planet — context-based metrics seek to measure whether a company is using no more than its fair share of resources to insure the Earth remains within 2 degrees of temperature rise. (Some scientists say even that is too high.)

The report gathered data on companies’ carbon emissions and contributions to GDP to come up with a company level “carbon budget” to judge if emissions were within threshold limits. (See here and here for my previous posts explaining the approach in more detail.) It found that a slim Climate-Countsmajority of companies were over-budget.

Climate Counts Executive Director Mike Bellamente spoke with CSRwire about the just-released report, Assessing Corporate Emissions Performance through the Lens of Climate Science.

Context-Based Sustainability Metrics

This is the first year that Climate Counts has used context-based metrics to rank companies on sustainability. Why did you decide to go with this method?

It's a departure from our typical scorecard. We'd been using the same scorecard for six years, looking at how companies measure, manage and report their GHG emissions. It’s safe to say that practically every company has sustainability targets in place and is managing their carbon emissions.

But we wanted to see, strictly from a performance standpoint, how well companies are performing against science-based targets and environmental thresholds, like 350 ppm of atmospheric carbon [Editor’s note: current levels are at 400 ppm], as opposed to just their policies and procedures for managing and measuring their emissions.

With New Approach, Some Companies Drop In Ranking

You're measuring many of the same companies as you have in the past. Did applying this standard make a big difference in the results?

To some degree it has. You have some companies, like Unilever, that are perennial high scorers in our annual scorecard and it’s the same in this metric: they’re number two in the ranking. But on the other side, you have UPS, Bank of America and Nestlé, all of which are on the Dow Jones sustainability index and are really leaders in this arena.

But they weren't scoring as well on this metric – and that goes to show you that if you're not measuring the right things, you don't really know what you're getting. It's great to have relative targets – emissions reductions per dollar of revenue per unit sold – but the real thing we have to look at here is: are we reducing our admissions enough to avert long-term runaway climate change?

Scope of Metrics Leaves Out Downstream Emissions

You mentioned Bank of America. I've seenClimate-Counts-CO2 reports that Bank of America invests heavily in fossil fuels. You are measuring emissions reductions but do you also measure the downstream impact of a company's operations?

That's a great question: are we looking at companies that might reduce their own emissions but, as banks perhaps are, invest heavily in fossil fuels? That's termed “Scope 3” or “indirect emissions.”

For this specific report, we only looked at Scope 1 and Scope 2 operational emissions. We're very clear about that because a lot of people may say, “Well, an oil company may manage its emissions quite effectively, but if they're not looking at their downstream – the utilities that are burning the oil and the cars that are driven using their product – then you're really missing a big piece of the pie.”

That said, Scope 3 data isn't yet adequate for a study of this nature. Right now, we had to backcast for this report to 2005 to capture emissions data—2005 to 2012—and there's only Scope 1 and Scope 2 emissions data for the hundred companies or so in this report. There's very little Scope 3 data available. This highlights the need for greater transparency and accountability in reporting at some point in the future.

Top Scorers Autodesk, Unilever Use Science-based Sustainability

Now tell us about some of the high scorers and why they scored so high.

There's some evidence to suggest that Autodesk, a software company that scored the highest in this ranking, is using a science-based target. They've done due diligence to look at their own emissions through the lens of climate science, which is what we're urging corporate sustainability professionals to do.

Unilever, by way of their brand Ben and Jerry's, was one of the first to pick up this idea of context-based sustainability, in 2006. [Unilever scored second in the rankings.] That is evidence that companies that are already looking down this road actually have a better handle on what needs to be done with regards to their operational carbon footprint.

Decoupling Emissions and Revenue Growth

You came up with a surprising finding that reducing Autodeskemissions does not have to lead to a reduction in revenues.

One of the golden eggs in this report is the fact that it’s possible to decouple emissions and growth. 25 of the companies that scored as sustainable showed evidence of decoupling; meaning, if you look from 2005 onward, not only have they grown their revenues, they have also reduced their emissions over the same time period. That's a sign that, at least in the short term, it's possible to decouple growth from emissions.

Counting on the Future

When one realizes just how fast we are hurtling toward the precipice – the point of no return for runaway climate change – the need for companies to adopt science as the basis for sustainability performance becomes urgently evident. We may have 10 years—or not even that.

With governments paralyzed, it may be up to the world’s biggest corporations to turn us around. (As the report points out, 40% of the 100 largest economic entities in the world are corporations.)

Climate Counts is considering how to incorporate climate science into its traditional annual scorecard for succeeding years. With a more realistic, science-based score, companies will have a beacon to strive for.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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