December 27, 2013
Using Science to Set Emissions Targets
by Robert Kropp
Climate Counts and the Center for Sustainable Organizations rank 100 companies within the context
of climate science and find that nearly half are rated as sustainable.
In October, the US
Energy Information Administration (EIA) reported that energy consumption in the US decreased by
2.4% in 2012 and that greenhouse gas (GHG) emissions are 12% less than they were in the
pre-financial crisis year 2007. Also in 2012, EIA found, the Gross Domestic Product for the US
increased by 2.8%.
According to a new report<
/a> from Climate Counts and the
Center for Sustainable
Organizations (CSO), EIA's statistics indicate that “the US economy decoupled economic growth
from carbon emissions, a necessary dynamic if we are to achieve the elusive goal of truly
The report, entitled Assessing Corporate Emissions Performance
through the Lens of Climate Science, is noteworthy in that it employs a context-based analysis
developed in 2006 by CSO. The report determines the corporate environmental performance of 100
companies against the science-based goal of limiting atmospheric concentrations of CO2 to no more
than 350 parts per million (ppm). In May of this year, the National Oceanic and Atmospheric
Administration (NOAA) reported that for the first time, the daily mean concentration of carbon
dioxide in the atmosphere surpassed 400 ppm at its measurement station in Mauna Loa, Hawaii.
The levels of CO2 measured at Mauna Loa have not been experienced on Earth in at least three
The report from Carbon Counts and CSO relays some good news, as it found
that “49 of 100 companies studied are on track to reduce carbon emissions in line with scientific
targets to avert dangerous climate change.” Furthermore, 25 of those 49 companies “exhibited
revenue growth even as their emissions declined, proving that decoupling of growth and emissions is
possible.” Autodesk and Unilever, the top two companies in the ranking, both have been using forms
of context-based carbon metrics for several years.
Of course, that leaves 51 of the 100
companies with unsustainable emissions levels. Not surprisingly, the oil & gas and utilities
sectors scored poorly, although the sample of companies was small.
Perhaps less intuitive
was the finding that of the seven financial firms included in the study, six are emitting
unsustainable levels of emissions, despite the fact that the study did not include Scope 3
emissions arising from such sources as companies in the lending and investment portfolios of banks.
During the period of time covered in the report—from 2005 through 2012—the financial industry
“experienced the 'worst of both worlds' -- weakening financial performance and growing carbon
footprint -- resulting in a reverse version of 'decoupling' as compared to the desirable dynamic of
economic growth linked to carbon contraction.”
“The findings herein are meant to represent
the start of a journey, not the end,” the report states. The number of companies eligible for
analysis was small; “there is a limited universe of companies that have been disclosing their
emissions publicly back to 2005, the baseline year of our study,” the report states. And linking
emissions to “to an organization’s individual and proportionate contributions to GDP” seems like a
necessary evil in a global economy that persists in regarding economic growth as a positive
concept. “We are very much aware of the shortcomings of GDP in this regard and are taking steps to
replace it with an arguably better mechanism or proxy of some kind as soon as a viable substitute
becomes available,” the report states.
Finally, as noted earlier, the report does not take
into account indirect emissions from such sources as supply chains and product use, which in many
industries account for the vast majority of emissions.
Yet, it is undeniable that
grounding corporate emissions reporting in a context based on climate science is an important
development. “Most of what passes for best practice in sustainability measurement and reporting
today falls short of the mark, precisely because it fails to take real social and environmental
thresholds into account,” said Mark McElroy, Founder and Executive Director of CSO. “What
businesses need, instead, are science- and context-based tools that bring meaning to measurement.
The context-based carbon metric used in this study can help show the way.”
What does such
a development mean for sustainable investors? “"To my knowledge, there aren't any sustainable
investment organizations that are using context-based metrics at all,” McElroy told SocialFunds.com
in 2012. “The opportunity for that in the capital markets is enormous. I'd like to see the
sustainable investment world become more involved in cutting-edge thinking on this topic.”
McElroy serves as an expert adviser to the Global Initiative for Sustainability Ratings (GISR), an
initiative launched in 2011 by Ceres and the Tellus Institute. The goal of the initiative is to
create a single standard for rating the sustainability performance of companies.