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Sainsbury’s scoops title of UK’s greenest supermarket

London, 7th August – Full Engaged Tracking article available to download here

 

Sainsbury’s has been ranked as the least polluting of all UK supermarkets, according to a major new study into the carbon footprints of leading food retailers. The 2018 Top 10 Rankings for UK Supermarkets, published today by Engaged Tracking, specialists in impact investing and carbon footprint analysis, details the carbon emissions of UK supermarkets for the first time.

 

Engaged Tracking’s research has revealed that:

 

Sainsbury’s has the lowest emission intensity among UK supermarkets, making it the UK’s greenest supermarket, with an emissions intensity that is twelve times lower than Iceland

 

• The low-cost recent entrants to the UK supermarket scene, Aldi and Lidl, are amongst the dirtiest polluters

 

Iceland is the UK’s worst polluting supermarket, producing an intensity of emissions which is 34% higher than the average intensity of the UK’s top 10 supermarkets

 

 

Sainsbury’s claim greenest supermarket prize in Engaged Tracking study

London, 7th August – Original article from City AM

 

 

Sainsbury’s has today been named the most environmentally friendly supermarket in a major study looking at the carbon footprints of leading food retailers.

 

Engaged Tracking, which carried out the study, revealed that the supermarket has the lowest emissions intensity in comparison to fellow competitors and notably twelve times lower than the worst-performing supermarket Iceland. The unit of measurement used conformed to industry norms by using “emission intensity”, the amount of carbon discharged by a company for every dollar of revenue it earns.

 

The UK’s top 10 most efficient supermarkets

Rank

Supermarket

1

Sainsbury’s

2

Tesco

3

Asda

4

Waitrose

5

Morrisons

6

Ocado

7

Co-op

8

Aldi

9

Lidl

10

Iceland

 

The frozen food specialists came out as the least efficient supermarket, producing an intensity of emissions 34 per cent above the average of the UK’s top 10 supermarkets.

 

Sainsbury’s and Tesco were by far the most efficient, being 9 times less polluting than 3rd placed Asda, with Tesco announcing they will run 100 per cent on renewable electricity in the UK and Ireland by 2030.

 

Sainsbury’s announced that the supermarket has achieved an 8.2 per cent reduction in operational carbon emissions in 2016/17. This is part of a transitional period, with Sainsbury’s looking to reduce their carbon emissions by 30 per cent absolute and 65 per cent relative by 2020.

 

Lidl and Aldi trail behind in terms of their carbon footprint. Engaged Tracking chief executive officer, Sam Gill accused Aldi, Lidl and Iceland of making “big claims about creating value for customers” but in doing so, they are “not doing enough to protect their customer’s environment”.

 

Gill praised the implementation of Sainsbury’s “eco-friendly policies – driven by a desire to attract customers and investors who increasingly appreciate and demand them”.

 

 

Sainsbury’s named greenest in supermarket emissions report

London, 7th August – Original article from The Grocer

 

Sainsbury’s has been named as the UK’s greenest supermarket, according to a study into major food retailers’ carbon footprints.

 

Sainsbury’s was found to have the lowest emission levels compared to its rivals, and had levels that were 12 times lower than Iceland, which faired worst in the ranking, according to the research from Engaged Tracking.

 

To create the data, analysts measured each supermarket’s emissions intensity – the amount of carbon emitted by a company for every pound of revenue it earned for the year ended December 2016, as this was the most recent year there was comparable data for all of the supermarkets available.

 

Iceland was found to produce an intensity of emissions that was 34% higher than the average of its competitors. Discounters Aldi and Lidl, meanwhile, came eighth and ninth in the ranking respectively.

 

“In implementing eco-friendly policies – driven by a desire to attract customers and investors who increasingly appreciate and demand them – companies like Sainsbury’s are changing the game,” said Sam Gill, CEO of Engaged Tracking. “Sainsbury’s has recognised that as a food retailer its supply chain depends on the health of the natural environment. But other supermarkets are not grasping this fast enough. Iceland, Aldi and Lidl make big claims about creating value for customers but they are not doing enough to protect their customers’ environment.”

 

Engaged Tracking further applauded Sainsbury’s statement that the ranking should push “budget supermarkets to replicate the excellent work of a company like Sainsbury’s”.

 

 

Sainsbury’s named UK’s greenest supermarket

London, 7th August – Original article from Talking Retail

 

The study’s result is supported by the supermarket giant’s announcement that it achieved an 8.2% reduction in absolute operational carbon emissions in 2016/17.

 

Meanwhile, Tesco has announced that it will run 100% on renewable electricity in the UK and Ireland this year and worldwide by 2030. Sainsbury’s, Tesco and Asda have also all formed CO2-reduction partnerships with their suppliers, encouraging them to install LED lighting, heat recovery solutions and smart refrigeration systems.

 

However, the research found that Iceland, Lidl and Aldi are trailing behind when it comes to reducing their carbon footprint.

 

Sam Gill, chief executive of Engaged Tracking, said: “In implementing eco-friendly policies – driven by a desire to attract customers and investors who increasingly appreciate and demand them – companies like Sainsbury’s are changing the game.

 

“Sainsbury’s has recognised that as a food retailer its supply chain depends on the health of the natural environment. But other supermarkets are not grasping this fast enough. Iceland, Aldi and Lidl make big claims about creating value for customers but they are not doing enough to protect their customers’ environment.”

 

 

Sainsbury’s crowned UK’s greenest supermarket

London, 7th August – Original article from Retail Gazette

 

Sainsbury’s has been crowned the UK’s greenest supermarket, producing the lowest emissions some 12 times better than the worst offenders.

 

According to new research from Engaged Tracking, Sainsbury’s emits the lowest number of greenhouse gases (GHG) out of the UK’s largest grocers, followed closely by its larger rival Tesco.

 

Iceland came last producing an intensity of emissions 34 per cent higher than the average supermarket, while discounters Aldi and Lidl made up the next two bottom spots.

 

Despite being an online only retailer Ocado came sixth, while Waitrose was the only grocer in the top four not to be part of the Big 4.

 

The study ranked grocers in terms of emissions across three “scopes” in which GHGs are categorised. Scopes one and two are direct emissions from sources like company vehicles and electricity purchases, while scope three cover non-direct pollutants like waste disposal and employee.

 

“In implementing eco-friendly policies – driven by a desire to attract customers and investors who increasingly appreciate and demand them – companies like Sainsbury’s are changing the game,” Engaged Tracking chief executive Sam Gill said.

 

“Sainsbury’s has recognised that as a food retailer its supply chain depends on the health of the natural environment.

 

“But other supermarkets are not grasping this fast enough. Iceland, Aldi and Lidl make big claims about creating value for customers but they are not doing enough to protect their customers’ environment.”

 

England triumph in Carbon World Cup

London, 5th July 2018  

Footballing victory in the World Cup may be a distant memory for England, but when it comes to carbon emissions, the Three Lions are leading the field. The rankings are based on how effectively countries have been able to get their listed companies to disclose their carbon emissions.

The 2018 Carbon World Cup rankings show that:

– England holds the highest rate of carbon emissions disclosure from companies listed in the country, ranking ahead of 28 other countries¹ including well-known environmentally conscious nations such as Sweden and Switzerland.

    • – England’s performance also far outstrips traditional World Cup rivals, including former champions Germany and 2018 hosts Russia.

    • – European Union rules concerning climate change have failed to create a standard rate of carbon emission disclosure among member states, with a great degree of disparity between Croatia, Poland and other EU states

      ¹Three countries (Peru, Uruguay, Costa Rica) are not included in the rankings as their data was too limited to accurately analyse.

      Please click here to download the full article.

England vinner matchen om rapportering av koldioxidutsläpp Footballing 

[England wins the match on reporting of carbon dioxide emissions]

Sweden, 28th June 2018 – Original article from Aktuell Hallbarhet  

    • Sverige må ha goda chanser inför morgondagens slutspelsmatch mot England. Men när spelarna kliver in på planen har England redan vunnit ett annat slag: matchen om vilket VM-land som är bäst på att få sina företag att redovisa koldioxidutsläpp.

      Medan England tar hem den prestigefyllda segern i Carbon World Cup hamnar Sverige på en fjärdeplats efter tvåan Island och trean Portugal. Detta enligt analysföretaget Engaged Tracking som har gjort en rankning över alla länder som deltar i fotbolls-VM efter hur stor andel av landets noterade bolag som redovisar sina koldioxidutsläpp.

    • Undersökningen tittar på bolag med ett marknadsvärde över 60 miljoner GBP, knappt 700 miljoner SEK. Siffrorna har justerats efter legal och makroekonomisk status så att samtliga länder ska ha haft en ärlig chans att vinna, oavsett hur stora de är eller vilka industrier som är vanligast. 

  • [Sweden must have good chances for tomorrow’s final game match against England. But when the players step into the plan, England has already won another game: the match of which World Cup countries are best at getting their companies to report carbon dioxide emissions.

    While England takes home the prestigious victory in the Carbon World Cup, Sweden is in fourth place after two-second Iceland and three Portugal. This, according to the Engaged Tracking analyst, has made a ranking of all countries participating in the World Cup after the proportion of the country’s listed companies reporting their carbon dioxide emissions.

  • The survey looks at companies with a market value of more than 60 million GBP, almost 700 million SEK. The figures have been adjusted to legal and macroeconomic status, so that all countries have had an honest chance of winning, no matter how big they are or most industries.]

    • Please click here to read the full article.

Green on the outside, red in the middle: the untold story of Tesla’s carbon emissions 

London, 25th June 2018 

 

As the pathfinding developer of electric cars, Tesla isn’t shy about brandishing its green credentials. The Company’s chief executive, Elon Musk, has accused politicians of bowing to the “unrelenting and enormous” lobbying power of the fossil fuel industry – warning that a global “revolt” may be needed to accelerate the transition to more sustainable energy and transport systems.

However – unlike its older, “dirtier” counterparts in the automobile industry, many of whose stock market valuations it has long since overtaken – Tesla doesn’t report its greenhouse gas emissions. Indeed, Tesla does not even acknowledge climate change as a current business issue in its company reporting.

Already a company beset by corporate governance doubts, Tesla trails behind the more traditional carmakers when it comes to monitoring and managing ESG-related risks. Investors need robust, comparable data and Tesla remains opaque.

Engaged Tracking has estimated Tesla’s emissions based on industry benchmarks and the published energy consumption levels of Tesla’s cars. Its findings follow industry norms by using “emissions intensity” – in other words, the amount of carbon emitted by a company for every dollar of revenue it earns – as their fundamental unit of measure. Engaged Tracking’s analysis across each category of emissions shows that:

– Tesla has an estimated 13% higher emissions intensity than BMW, its closest “fuel-burning” rival. BMW produced almost 2 million vehicles in 2017, 20 times that of Tesla’s 100,000 vehicles in the same year. But its net carbon footprint is only 13 times greater. BMW also has revenues that are 15 times higher than Tesla’s.

– Tesla has emissions intensity more than 70% higher than Mercedes, in an even greater disparity with a supposedly “traditional” competitor in the market for luxury cars (see figure 1).

Please click here to download the full article.

 

“Uppseendevackande att Tesla inte redovisar sina utslapp” 

[“Striking that Tesla does not report its emissions”]

Sweden, 28th June 2018 – Original article from Aktuell Hallbarhet  

 

Som en vattenmelon, grön på utsidan och röd på insidan. Så beskrivs Tesla av den brittiska analysföretaget Engaged Tracking som i en ny analys hävdar att det amerikanska bilföretagets klimatprestanda står i stark kontrast mot dess nollutsläpps-profil.

Engaged Trackings analys visar att Teslas bilar inte alltid är så gröna som de antas vara, som en följd av de utsläpp som uppstår i samband med produktion av elbilar och framställning av elektricitet. Samtidigt visar analysen att Tesla, till skillnad från de flesta av sina konkurrenter, inte rapporterar bolagets växthusgasutsläpp. Engaged Tracking, som arbetar med att ta fram hållbarhetsinformation till investerare, är kritiska till Teslas bristfälliga klimatrapportering. 

– Det är uppseendeväckande att Tesla inte redovisar sina växthusgasutsläpp. Jag vet att en del stora amerikanska investerare har privata samtal med Tesla om detta, så det är möjligt att de redovisar nästa år men i nuläget görs det inte, säger Jonathan Harris, chefsanalytiker på Engaged Tracking till Aktuell Hållbarhet.

Under måndagen rapporterade The Times och flera andra brittiska tidningar att Teslas bilar inte är renare än den genomsnittliga bilen i Storbritannien, med uppgifter baserade på Engaged Trackings analys. I en svensk kontext är det emellertid inte helt korrekt att dra samma slutsats eftersom Sveriges elektricitet till övervägande del genereras av vatten- och kärnkraft – till skillnad från Storbritannien som i stor utsträckning ännu är beroende av fossila bränslen för sin elproduktion.

[Like a watermelon, green on the outside and red on the inside. Thus, Tesla is described by the UK analyst Engaged Tracking, which in a new analysis claims that the US car company’s climate performance is in stark contrast to its zero-emission profile.

Engaged Tracking analysis shows that Tesla’s cars are not always as green as they are supposed to be as a result of the emissions that arise in the production of electric cars and the production of electricity. At the same time, the analysis shows that, unlike most of its competitors, Tesla does not report the company’s greenhouse gas emissions. Engaged Tracking, which works to provide sustainability information to investors, is critical of Tesla’s inadequate climate reporting.

“It is remarkable that Tesla does not report its greenhouse gas emissions. I know that some major US investors have private talks with Tesla about this, so it’s possible they’ll report next year, but at the moment, it’s not done, “says Jonathan Harris, Chief Analyst of Engaged Tracking for Current Sustainability.

During the Monday, The Times and several other UK newspapers reported that Tesla’s cars are not cleaner than the average UK car, with data based on Engaged Tracking analysis. However, in a Swedish context, it is not entirely correct to draw the same conclusion because Sweden’s electricity is largely generated by water and nuclear power – unlike the UK, which is still dependent on fossil fuels for its electricity production.]

Continue to full article

Rapport sågar Teslas klimatredovisning 

[Report, Tesla’s climate report]

Sweden, 27th June 2018 – Original article from Di Hallbart Naringsliv
 

Som en vattenmelon, grön på utsidan och röd på insidan. Så beskrivs Tesla av det brittiska analysföretaget Engaged Tracking som i en ny analys hävdar att det amerikanska bilföretagets klimatprestanda står i stark kontrast mot dess nollutsläpps-profil.

Engaged Trackings analys visar att Teslas bilar inte alltid är så gröna som de antas vara, som en följd av de utsläpp som uppstår i samband med produktion av elbilar och framställning av elektricitet.

Analysen visar också att Tesla, till skillnad från de flesta av sina konkurrenter, inte rapporterar bolagets växthusgasutsläpp. Engaged Tracking, som arbetar med att ta fram hållbarhetsinformation till investerare, är kritiskt till Teslas bristfälliga klimatrapportering.

[Like a watermelon, green on the outside and red on the inside. Thus, Tesla is described by the British analyst Engaged Tracking, which in a new analysis claims that the US car company’s climate performance is in stark contrast to its zero-emission profile.
 
Engaged Tracking analysis shows that Tesla’s cars are not always as green as they are supposed to be as a result of the emissions that arise in the production of electric cars and the production of electricity.
 

The analysis also shows that, unlike most of its competitors, Tesla does not report the company’s greenhouse gas emissions. Engaged Tracking, which works to provide sustainability information to investors, is critical of Tesla’s inadequate climate reporting.]

Continue to full article

Electric Teslas are not as green when it comes to their full life

London, 26th June 2018  – Original article from Earth

A new study from Engaged Tracking suggests that electric Tesla vehicles are not as environmentally friendly as previously reported. Despite being promoted as some of the greenest cars in the world, the analysts have found that the energy used across the entire life cycle of a Tesla has been underestimated.

The researchers determined that the amount of greenhouse gas emissions which result from Teslas are are not much different from those generated by vehicles running on gasoline or diesel.

The shift to electric cars is greatly beneficial to the climate in regions where there has also been a large shift to clean energy sources. For charging stations that are used in many regions such as Britain, however, much of the electricity is still being generated by coal-fired power plants.

The total amount of emissions from any vehicle depends on the specific model. The investigation conducted by Jonathan Harris and his team at Engaged Tracking, a company that specializes in carbon-related data, was focused on the Tesla Model S.

Continue to full article

 

Electric Teslas may be no greener than petrol and diesel cars despite being marketed as the world’s most environmentally friendly vehicles

London, 24th June 2018  – Original article from the Daily Mail

They are marketed as being among the world’s most environmentally friendly vehicles.

But Teslas may be as bad for the planet as their petrol and diesel equivalents, it was claimed yesterday.

Analysts found the amount of greenhouse gas used in building a Tesla and generating the electricity to charge it was no different to petrol cars.

Battery-powered cars such as the Tesla are charged with electricity from power stations, and half of Britain’s power comes from coal and gas.

Continue to full article 

 

Green car giant Tesla ‘no cleaner than petrol rivals’

London, 24th June 2018  – Original article from The Sunday Times

Musk: co-founder of Tesla sent roadster into space

Tesla electric cars, marketed as being among the planet’s greenest vehicles, may be behind the production of just as much greenhouse gas as their petrol and diesel equivalents, according to energy analysts.

They have calculated the amount of greenhouse gas generated in building Tesla’s luxury cars and added this to the CO2 from the power stations that produce electricity to charge them. This was compared with the emissions from making and running normal cars.

“Teslas are not cleaner to run than the average car in the UK,” said Jonathan Harris, of Engaged Tracking, a London-based company that analyses the sustainability and “greenness” of firms for potential investors.

“The annual emissions of a UK car is 1.5 tons of CO2, based on an average of 7,800 miles a year. Both the Tesla Model S vehicles we analysed have the same emissions [as an ordinary petrol car] of 1.5 tons of CO2 per year.”

Continue to full article

 

19th December 2017 – Engaged Tracking to assess companies against SDGs as it launches latest 2017 carbon rankings

London, 19th December 2017 – Original article from the Responsible Investor

London-based data house and index provider ET Index has rebranded as part of a larger strategic overhaul, which will include a move into assessing companies’ alignment with the United Nations’ Sustainable Development Goals. The decision comes as the ESG-specialist – now named Engaged Tracking – released its annual Carbon Rankings, scoring 2,750 companies globally on their overall carbon emissions intensity (Scope I, II and III). The rankings are based on publicly disclosed information, and the methodology penalises firms that don’t disclose – giving them a ‘worst case’ score. Engaged Tracking plans to widen its coverage as part of its next step. Firstly, it will expand its carbon analysis next year, to reach 3,000 companies. It will also broaden the subject from carbon to the SDGs. Initially, this will focus on assessing the same universe of firms for their alignment with issues including the circular economy, green revenues, water and gender – on which there is already some disclosure. The plan, Gill told RI, was to develop this to cover more sustainability topics over coming years. The information would continue to be publicly disclosed and could form the basis of future index products, he said.

The rankings show the likely suspects at the bottom of the list: non-renewable resource businesses such as coal, steel and cement companies. At the top are nine tech companies. Notably, disclosure of Scope III emissions – those generated by supply chains – has seen a big leap, according to the findings. This is a crucial step forward for those investors interested in carbon risk, because supply chains account for a significant portion of many companies’ footprint. According to Engaged Tracking, 86% of firms’ total emissions come from Scope III emissions. Disclosure on these emissions in Europe has increased to 51% in 2016, from 39% the previous year; and in the US, this figure has risen to 39% from 24% over the same period, it claims. The rankings are publically available and are the basis for Engaged Tracking’s index products.
 

CEO Sam Gill said Engaged Tracking had “a number” of undisclosed investor clients in Europe and the US, and was discussing its services with stock exchanges. Engaged Tracking is co-chaired by James Cameron, co- founder of Climate Change Capital and Chairman of the Overseas Development Institute and GE’s Ecomagination. It is currently also chaired by Chris Huhne, former UK Secretary of State for Energy and Climate Change, who will be stepping down from his position at the end of the year.

Recently, the firm made a couple of big hires from HSBC: it took on Joaquim de Lima, former Global Head of Quantitative Research at HSBC Global Banking and Markets, and head of the Green Revenues division within HSBC’s climate change index offering, which no longer exists; and Vijay Sumon, former Global Head of Indexation Research in the same division. S&P Dow Jones Indices recently published a report on SDGs, stating that market players with $4trn of assets under management had made commitments to the goals so far, including APG and PGGM in the Netherlands and CalPERS and State Street in the US. However, it calls for “robust metrics” and the development of reporting frameworks in order to move the market forward, adding that many companies say they support SDGs, but on closer inspection this focuses often on single goals – particularly ones linked to providing employment and promoting well-being. “Furthermore, many of these initiatives are aimed at mapping existing programmes to the SDGs, with few companies publically setting targets,” the authors say.

As a result, Trucost – owned by S&P – proposes ‘best practice’ criteria for action on SDGs, including comparable metrics and frameworks focused on those goals that are material to the business, and proposing measurable outcomes so that investors can track performance. S&P acquired Trucost recently, in the first of a series of acquisitions in the ESG data provider space. South Pole was also bought by ISS, and Morningstar upped its stake in Sustainalytics. When asked if Engaged Tracking was in the market for a buyer, given the appetite from some of the larger players, Gill told RI: “At this stage of the company’s journey, a strategic investment from the right partner who can help us scale is more aligned with our ambitions than an acquisition.”

13th December 2017 – Annual global corporate carbon ranking goes live to the public

(London) 13th December 2017 – today marks the release of the 2017 Engaged Tracking (ET) Carbon Rankings.

The ET Carbon Rankings are the only public, fully transparent ranking to score the largest listed 1,000+ corporates globally according to the carbon emissions intensity of their activities.

The rankings represent $39 trillion in market value, $20 trillion in sales, and 5 billion tonnes of CO2 in direct and indirect electricity emissions. This exceeds the combined emissions of the European Union.

The ET Carbon Rankings score companies according to their direct (Scope 1), indirect electricity (Scope 2) and indirect supply chain emissions (Scope 3). The emissions data in the 2017 rankings covers the latest available reported emissions data from 2016.

The full dataset covering over 2,750 companies across the globe is available from Engaged Tracking (ET) Research on request. Further carbon rankings will be released in 2018.

Key findings 2015 to 2016

  • Carbon regulation across major global markets either increased or remained static, reflecting the implementation of the 2015 Paris Climate Change Agreement.
  • The average carbon emissions intensity of companies decreased in Brazil (-20%), United States (-7%), France (-5%) and the UK (-2%).
  • The average carbon emissions intensity of companies increased in Switzerland, Germany, South Africa, Sweden, India, Japan, Canada and Australia. In Australia emissions increased by +5%, the most of any country.
  • The average carbon emissions intensity of the Non-Renewable Resources sector decreased by -8.5%, the greatest decrease of any sector.
  • The average carbon emissions intensity of the Health Care sector increased by +7.5%, the greatest increase of any sector.
  • ET Research found the percentage of companies reporting complete direct and indirect electricity (Scope 1 and 2) emissions data in South Africa and Japan increased, by +9% and +2%, respectively. In Europe it remained static at 69%. In the United States it decreased by -9%.
  • ET Research found that supply chain (Scope 3) emissions now typically account for 86% or more of a company’s total carbon footprint.
  • ET Research found the percentage of companies reporting all 15 supply chain (Scope 3) emissions categories increased in South Africa (from 8% to 33%), Japan (from 45% to 66%), United States (from 24% to 39%) and Europe (from 39% to 51%).

Carbon context

The publication of the ET Carbon Rankings follows the COP23 Climate Change Conference in Bonn, where world governments further renewed their efforts to lower global greenhouse gas emissions.

Clearly corporates also have a key role to play in decarbonising the global economy. As today’s ranking release highlights, the largest 1,000+ global corporates represent more than the combined emissions of the European Union.

170 countries have now ratified the 2015 Paris Climate Change Agreement and 165 countries have submitted their Nationally Defined Contributions (NDCs) to cutting emissions.

Over 40 countries and more than 20 cities, states and provinces now have carbon pricing mechanisms in place. Significantly, China is poised to introduce the world’s largest emissions trading scheme. Once operational, 25% of global emissions will be subject to some form of carbon pricing.

Implication for investors

As regulation continues to increase to meet the goals of the Paris Agreement, corporates with higher-carbon emissions are expected to be at a competitive disadvantage relative to their more carbon-efficient peers.

The resulting devaluation of carbon-intensive assets represents a considerable carbon risk for investors. Leading investors are already switching to investment strategies that reduce their exposure to high carbon assets.

Investors representing $600bn in assets have commited to decarbonising their portfolios as part of the Portfolio Decarbonization Coalition. 150 investors representing over $10 trillion have made the Montreal Pledge, committing to measure and then reduce the carbon footprint of their portfolios. Over 800 institutions representing $5.5 trillion have committed to divesting from fossil fuels as part of the Fossil Free movement.

Against a backdrop of increasing global regulation and investor awareness of carbon risk, pressure is mounting on companies to disclose their carbon emissions. Yet, clearly there is still a long way to go. ET Research finds that 39% of the companies in the 2017 ET Carbon Rankings do not publicly disclose their direct and indirect electricity (Scope 1 and 2) carbon emissions data.

The urgent need for improved corporate carbon disclosure has been the focus of the G20 Financial Stability Board and its specially created Task Force on Climate-related Financial Disclosures (TCFD). The TCFD recommendations, published this summer, call on companies to publicly disclose their carbon emissions, risk management strategy and decarbonisation plans.

Notably, the TCFD calls on companies to disclose Scope 1 and 2 emissions data, as well as material Scope 3 data. ET Research finds Scope 3 emissions typically account for 86% or more of a company’s total carbon footprint, suggesting that Scope 3 is material for all companies.

The TCFD also provides clear guidance to institutional investors on how to measure and report on their carbon risk exposure. Notably, the TCFD advocates investors stress-test their portfolios to ensure they are correctly managing their carbon risk exposure. However, many asset owners and asset managers clearly still have a long way to go. The Asset Owners Disclosure Project highlighted in its 2017 Global Climate 500 Index that 201 investors are still ‘X-rated Laggards’, meaning they are completely ignoring climate risk.

Engaged Tracking – a toolkit for investors to track and manage carbon risk

The ET Carbon Rankings provide a public, transparent engagement tool for investors to track corporate carbon emissions over time. They also provide the basis of the Engaged Tracking Low Carbon Index Series, the only low carbon index series based on a public, transparent ranking of all constituent companies.

The ET Carbon Rankings reward carbon efficiency and penalise non-disclosure. They are designed to incentivise each company to continuously improve their disclosure standards and lower emissions relative to their peers. The Engaged Tracking approach to index investing is designed to create a clear and transparent link between a company’s carbon emissions and its weighting in the index.

Each company’s rank position in the ET Carbon Ranking Series informs its weighting in the investable ET Low Carbon Index Series. Every ET Low Carbon Index has outperformed its market capitalisation-weighted benchmark over the last 6 years – highlighting it is possible for investors to cut carbon and beat the market.

The ET Low Carbon Index Series includes Scope 3 emissions, which typically account for 86% or more of a company’s carbon risk exposure. Including Scope 3 emissions means the full extent of a company’s carbon risk exposure is not overlooked.

James Cameron, Chair, ET Research

“Following the Paris Climate Change Agreement, the world is now set on a pathway towards economy-wide decarbonisation. The arrival of carbon pricing and mandatory climate risk disclosure in key capital markets poses new business risks and opportunities. The US coal sector is in decline. European power utilities face an existential crisis. It is clear that industries and companies that choose to ignore technological shifts and underestimate the rapidity of the shift to a low-carbon economy will suffer financially.”

“Regulators, such as the Governor of the Bank of England & Chair of the Financial Stability Board, have called for greater disclosure from companies. Their primary concern is that without access to the necessary information, investors are unable to effectively manage their exposure to carbon risk. The Engaged Tracking Carbon Rankings provide a data-driven engagement tool for investors to encourage greater corporate carbon disclosure.”

Sam Gill, CEO, ET Research

“The largest 1,000+ global listed global companies account for more emissions than the European Union. With regulation increasingly penalising carbon intensive companies, investors are significantly exposed to the ‘carbon risk’ of high carbon assets losing value.”

“The purpose of the ET Carbon Ranking Series and corresponding ET Low Carbon & Fossil Free Index Series is to help investors reduce exposure to carbon-intensive assets without sacrificing returns. At the same time, the Engaged Tracking approach offers a clear means through which investors can accelerate the transition to a low carbon economy. This is achieved by reallocating capital from carbon-intensive companies to carbon-efficient companies, via a transparent rankings-linked indexing approach that is unique to the market.