PLANETARY BOUNDARY #1 CLIMATE CHANGE: The impact of corporate carbon emissions

For the past seven years Article 13 have reviewed the world’s 240 largest companies [1] to assess their performance and impact against our planetary boundaries and social thresholds [2]. This year, we extended this research to calculate the combined impact of these companies on certain boundaries and thresholds – carbon, water and voice. Here’s our first summary on carbon.

Of the 240 companies reviewed, 96% disclosed their greenhouse gas (GHG) or ‘carbon’ emissions in their latest sustainability report [3]. The combined carbon footprint (scope 1 and 2) of these companies was 2.15 billion tonnes CO2e [4]. This amount is equivalent to approximately half of the carbon footprint of the entire European Union, or 5% of global emissions [5].

84% of the 240 companies also report having set targets to reduce their carbon emissions [6]. If these targets are achieved it can be estimated that these companies would emit a combined value of approximately 983 million tonnes by 2025 – a 54% reduction from the 2018 values [7].

Scientific predictions, published by the Intergovernmental Panel for Climate Change (IPCC), for staying well below a 2oC temperature rise is for the world to reduce carbon emission by 45% by 2030 from a 2010 baseline. From this perspective, targets by the world’s leading companies are broadly on track with the IPCC guidelines.

However, this only considers the companies’ scope 1 and 2 emissions.

79% of the companies report emissions associated with their wider value-chain (scope 3) emissions [7], which combined represented 10.7bn tonnes CO2e, over five times the amount of their Scope 1 and 2 emissions.

Crucially, only 21% of companies have set targets to reduce their scope 3 emissions – ranging from a 7.5% to an 87% reduction over a variety of target and baseline years [8].

In conclusion

Companies are generally setting achievable targets for their emissions for 2025, this does not fully represent all the emissions related to operations of these companies. Scope 3 emissions account for an enormous carbon footprint in comparison to scope 1 and 2 emissions, with many companies not reporting their full scope 3 – this actual figure will be much larger.

For all the corporate sector to play its part in the achievement of global climate change targets it must address its real impact on the planet’s resources and base reduction targets on what the world needs them to do.

Footnotes

1. How were companies selected

Companies were selected according to four factors to ensure a representative sample size. Ability to impact planetary limits (e.g. largest companies globally by revenue); Public commitment to sustainability (e.g. constituents of sustainability leadership rankings such as Corporate Knights); Representatives of largest companies by regional stock exchange and by super-sector listing. Representatives by geography (largest companies for different regions: Europe, Middle East and Africa, North America, South America, Asia and Australia).

2. Planetary boundaries and social thresholds

Planetary boundaries: In 2009, Johan Rockström and 28 scientists identified the nine processes that regulate the stability and resilience of the Earth system. They proposed quantitative planetary boundaries. Crossing these boundaries increases the risk of generating large-scale abrupt or irreversible environmental changes.

Social thresholds: In 2016, Kate Raworth (Oxfam) combined the nine planetary boundaries with twelve social thresholds, which set out quantifiable basic needs for all people. The planetary boundaries and social thresholds were key scientific inputs to the UN Sustainable Development Goals. https://www.article13.com/d-is-for-doughnut

3. Sources of data used

Latest company CSR/Sustainability Report or disclosures to the CDP. The most recent published values were used, for the majority of firms this was the 2018 values, however occasionally the companies’ 2018 data was unavailable and 2016/2017 values were used.

4. Note re: carbon measures

This was calculated as the combined emission amount (in tonnes) for each of the companies scope 1 and scope 2 (either on a location or market basis). Some companies reported their emissions in a metric other than absolute emissions (equivalent tonnes CO2), for example CO2e tons per employee or mass by revenue. In these instances the target emissions were excluded- thus the target figure is less than reported by firms. Scope 2: Where given, the market-based method was chosen for scope 2 emissions as it is a more specific indication of the CO2 emitted by electricity which companies have specifically chosen. Whereas location gives a value of average emissions of grids on which energy consumption occurs (more information can be found here: https://ghgprotocol.org/sites/default/files/Scope2_ExecSum_Final.pdf)

5. EU data

Janssens-Maenhout, G., Crippa, M., Guizzardi, D., Muntean, M., Schaaf, E., Olivier, J.G.J., Peters, J.A.H.W. and Schure, K.M., 2017. Fossil CO2 & GHG emissions of all world countries (Vol. 107877). Luxembourg: Publications Office of the European Union.

6. Baseline for targets

Note the baselines for the company targets varied widely. The most recent baseline figure was always selected with the aim of a range from 2010-2018, however 37 companies in the sample used a baseline year between 2002-2010 for their target, and one company used a baseline year of 1990.

7. Calculating what targets would achieve

The prediction for 2025 emissions were obtained by calculating the expected total emission for the company based on the target set and the baseline (where available). Note baseline data for certain company targets were not available – so 2018 baseline was used.

2025 target

As different companies set different target years (2018 to 2050) - the target year 2025 was taken as an illustration. There was not an extrapolation upwards or downwards (e.g. if a target was set for 2024 it was assumed this would be the number in 2025, similarly with 2020 targets and 2030 targets). For the companies with two different targets for different years, the target closest to the year 2030 was selected, for consistency.

8. Scope 3

Reporting categories

The GHG Protocol sets out 15 distinct reporting categories for scope 3 emissions – the majority of the companies did not report against all 15 of these categories (stating a combination of not relevant and/or relevant but not yet calculated).

Targets

It is almost impossible to calculate / estimate the total reductions for these scope 3 targets – due to insufficient data on current baselines.

Other sources

Stocker, T., Qin, D., Plattner, G.K., Tignor, M., Allen, S., Boschung, J., Nauels, A., Xia, Y., Bex, V. and Midgley, P., 2014. Summary for policymakers

CDP. (2017). Carbon Majors Database. Retrieved from https://6fefcbb86e61af1b2fc4-c70d8ead6ced550b4d987d7c03fcdd1d.ssl.cf3.rackcdn.com/cms/reports/documents/000/002/327/original/Carbon-Majors-Report-2017.pdf?1501833772