How to estimate the global corporate carbon footprint?
Hello everyone,
The annual human fossil fuel CO₂ footprint is about 36.8 billion tonnes1. This includes direct emissions from all listed companies, unlisted companies, state-owned enterprises and our own individual direct emissions from using fossil fuels. But how much does each segment contribute to the global footprint? And are they decarbonising?
Today I’m excited to share with you our white-paper on estimating the listed universe corporate carbon footprint, showing corporate emissions may have peaked in 2022. You can download the paper here.
The white-paper goes into detail about our unique approach to estimate Scope 1, 2 and 3 emissions for up to 45,000 listed companies globally. It’s quite technical, so we’ve created a new podcast channel that distills it down in 10minutes. You can listen to that on various channels here:
The Goal: Fixing the Carbon Gap
Quantifying a baseline footprint for the corporate universe has been difficult given the lack of quality reported data. The number of companies disclosing however is growing, yet some 83% of publicly listed companies don’t report their Scope 1, 2 & 3 emissions2.
Over the past few years, we’ve collaborated with leading climate financial researchers to develop a unique, robust method to estimate corporate emissions for investors across the listed universe. Today we share this methodology and results in the white-paper.
Key Takeaways
We introduce a new, robust machine learning ‘Meta-Model’ approach to estimate Scope 1, 2 + 3 emissions for up to 45,000 publicly listed companies.
Our results are validated by independent reported data, with a median error rate of 6-10% for the most carbon-intensive sectors. For a typical investor, we demonstrate portfolio-level uncertainty of ~15% for Scope 1, ~17% for Scope 2 and ~19% for Scope 3.
We estimate the cumulative footprint for the listed equity universe to be 11.4 billion tonnes in 2023, a reduction of ~2.5% from 2022. This implies the listed corporate universe accounts for ~31% of the industrial fossil-fuel footprint.
Although we find the listed universe to be decarbonising overall, it’s decline is within the uncertainties of our approach, therefore this decarbonisation trend will need to be confirmed in subsequent years.
If however the decarbonisation trend was validated and continued, then the corporate listed universe will have reduced its overall footprint by nearly 20% by the year 2030.
Given our results, it’s likely that the listed corporate universe footprint may have reached peak emissions, implying that the growth in industrial emissions must be driven from either private companies, state-owned enterprises and/or individual fossil-fuel use.
Reach out if you have any questions. Until next time.
Ben
https://globalcarbonbudget.org/fossil-co2-emissions-at-record-high-in-2023/
Based on the latest Carbon Disclosure Project database, about 8,510 companies disclosed their Scope 1, 2, and 3 emissions in 2023. https://www.cdp.net/en/companies/cdp-2023-disclosure-data-factsheet