40% of climate warming from listed companies

Listed companies are responsible for 40% of all climate-warming emissions, according to new research from Generation Investment Management.

The research shows that all previous estimates underplay the true impact that listed companies have on climate-warming emissions. It takes into account Scope 1, 2 and some types of Scope 3 emissions like supply chain impact. The research also seeks to eliminate the problem of double counting emissions.

Most previous estimates focus on direct emissions only (known as Scope 1 emissions) and estimate listed companies’ emissions at around 20% of the total. Generation’s analysis, which incorporates listed companies’ value chain GHG emissions, estimates almost double the Scope 1 results, based on CDP data. Similarly, it is more than double the Scope 1-only calculation published recently by MSCI.

For example, the Generation analysis includes oil produced by listed global oil majors that is consumed by households and smaller non-listed enterprises, as well as the oil consumed in vehicles manufactured by listed companies. The problem of double counting is accounted for in the research.

The analysis also considers emissions from food production and changes in land use which are largely absent from Scope 1 estimates, because most food is produced by smallholder farmers, larger independent farmers and cooperatives or by privately owned companies.

Even with these additional factors included, Generation say their estimates are likely to be conservative. For example, the analysis excluded emissions where double counting was too difficult to address and where sufficient, reliable data was not available from public sources. Future research will expand the methodology to cover other ways listed companies contribute to global GHG emissions.