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The Actuary The magazine of the Institute & Faculty of Actuaries

Largest companies can save as much CO2 as Japan emits in a year

The world’s largest companies could save the equivalent of Japan’s annual CO2 emissions by achieving standard levels of carbon-efficiency for their sector according to ET Index Research.

Carbon transition is underway ©Shutterstock
Carbon transition is underway ©Shutterstock

Their 2016 ET Carbon Rankings report, released today, shows that nearly half of the largest listed companies have disclosed their emissions, and that the dirtiest 50% have the potential to save 1.4 billion tonnes of CO2.

In addition, the 1,000 least carbon-intensive companies have been shown to outperform the 1,000 most intensive ones over the last five years.

Former UK secretary of state for energy and climate change, Chris Huhne, said: “Sector by sector there are champions and dunces. Some companies can be over 100 times less carbon intensive than others in the very same industry.

“Backing the champions makes sense because carbon-efficient companies have outperformed the market average over the last five years.”

Out of the world’s 800 largest listed companies, 363 have fully disclosed their direct emissions from operations, seen as the first step to setting targets and putting carbon management initiatives in place.

These disclosers have increased their carbon efficiency by an average 15% from 2015 to 2016, saving 360 million tonnes of CO2, equivalent to the annual emissions of Turkey.

However there is a huge range of efficiency within the same sector, with Petronas Chemicals Group, in Malaysia, emitting 13,961 tonnes of CO2 for every million dollars of revenue, 481 times less carbon-efficient than the UK’s Johnson Matthey for example.

It was found that computer software company Oracle is the world’s most carbon-efficient company, producing just 34 tonnes of carbon for every $1m of revenue, followed by two more US companies, biotechnology company Biogen at 40 tonnes, and software company Adobe Systems at 41 tonnes.

Top 10 carbon-efficient companies:

Source: ET Index Research
Source: ET Index Research

Carbon risk has become a mainstream investor concern following the Paris Climate Agreement, which commits countries to keeping global temperature rises well below 2°C.

A task force set up by the international Financial Stability Board is due to make recommendations this month on how companies should report on the potential impact of climate change on their bottom line.

PricewaterhouseCoopers’ finance sector leader for sustainability and climate change, Jon Williams, said: “It is quite clear that the low carbon transition is underway, with carbon intensity falling 2.8% globally in 2015.

“As a result, investors will be increasingly asking companies to disclose the risks and opportunities arising from climate change.

“This will include the wider financial impacts of climate change, such as the impact on asset valuations, investments, disposals and earnings.”