NSF International, a public health and safety organization, and Trucost Plc, a provider of environmental data and analysis, have announced the availability of a new report entitled, Carbon Emissions — Measuring the Risks. This free report examines the greenhouse gas (GHG) emissions of S&P 500 companies in several different sectors, including industrial goods and services.
Many U.S. companies will soon have to pay for GHG emissions under the planned cap-and-trade program, an approach used to control pollution by providing economic incentives to companies achieving reductions in pollutant emissions. This report looks at the GHGs emitted by S&P 500 companies in several sectors that NSF works with: chemicals, food and beverage, healthcare, industrial goods and services, personal and household goods, automobiles and parts, and retail.
The report also highlights other significant environmental challenges facing these industries, by addressing the following: Are companies measuring and reporting GHG emissions? Which sectors emit the most direct operational GHGs? Which sectors are most exposed to carbon costs under regulations to control GHG emissions? Beyond carbon, what are the other significant environmental impacts of each sector?
The report is based on findings from Trucost’s study Carbon Risks and Opportunities in the S&P 500, which assessed GHG emissions, carbon intensity and exposure to carbon costs of S&P companies internationally using publicly disclosed information. Using Trucost’s unique methodology to provide an overview of each industry’s impact on the environment, the key components of the report, Carbon Emissions — Measuring the Risks include:
- Carbon benchmarking — Carbon intensity can be used to assess a company’s carbon emissions relative to its sector peers. Companies that are more carbon-efficient than their competitors can gain a competitive advantage under carbon constraints, such as carbon pricing.
- Financial risk — The report reveals calculated carbon costs relative to earnings to identify potential profit risk.
- Other environmental impacts — To compare the importance of other environmental impacts for each sector, such as impacts on natural resources, Trucost calculated environmental costs based on the financial value of damages caused by each impact.
- Strategic implications — Companies with more energy efficient operations and supply chains will be well-positioned during the shift to a low-carbon economy to attract investors and increase market share.
Trucost’s key findings among the industrial goods and services sector include:
- The average major U.S. industrial good/services company emits 1.2 million metric tons of GHGs annually.
- Over 70% of emissions originate from supply chains, representing a serious financial exposure as costs are passed on to manufacturers.
- The cost of carbon may reach as high as 18% of earnings for some firms, as measured by earnings before interest, taxes, depreciation and amortization (EBITDA).
- Companies that compete with more carbon-efficient peers could lose market share.