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Good News/Bad News: Companies Climb Climate Counts Rating, But World Still Burns
December 5th, 2012
First, the good news: Companies are climbing up the 6th annual Climate Counts scorecard, which rates and ranks corporate policies and performance on reducing globe-warming greenhouse gas (GHG) emissions. Even better, five of the six top-rated companies — Unilever, Nike, UPS, Levis Strauss and L’Oreal — grew revenues while reducing absolute emissions across some or all business units, bolstering the case for decoupling carbon from economic expansion. This progress prompted Climate Counts to introduce a new tier in the report it released today: Soaring, for the 15 companies scoring above 85 points (out of 100), to augment the existing tiers of Striding (83 companies scoring 50-84 points), Starting (24 companies scoring 13-49 points), and Stuck (24 companies scoring 0-12 points). That’s the 3,000-foot view, and it truly is pretty good news.
Now, viewed from 30,000 feet, the bad news: a spate of reports from the likes of the World Bank, PriceWaterhouse Coopers and the International Energy Agency, released in the run-up to the Doha COP18 talks, note we are fatally off-target for staying within the vital climate threshold of 2 degrees warming. Indeed, scientific data show that global temperatures are continuing to rise.
So, where’s the disconnect? One hint is in this quote from Climate Counts Director Mike Bellamente:
“As the economy shows limited signs of improvement, top performers on our scorecard are demonstrating that economic prosperity and environmental sustainability can be achieved simultaneously. We would call that a win-win if it weren’t for the great distance we still have to go in squaring up human consumption with the true carrying capacity of our planet.”
Bellamente’s second sentence accurately identifies the bigger-picture problem, but his first sentence contains a key misconception: Climate Counts’ 22-criteria scorecard doesn’t actually measure environmental sustainability.
Why not? Climate Counts currently makes the same omission the Carbon Disclosure Project does in its questionnaire: Both ask companies for GHG emissions (absolute and relative) as well as reduction targets, but neither asks for the underlying science (or “climate stabilization models,” in the parlance), allowing for targets un-tethered from reality-based thresholds.
So, currently, companies can potentially improve their Climate Counts scores (which measure environmental impacts) while still exhibiting environmentally unsustainable performance. Indeed, of all the quotes Climate Counts culled from corporate sustainability reports acknowledging the climate challenge, only Nike cites science-based emissions reduction targets:
“We recognize the recommendations of the majority of leading climate scientists that the global economy needs to see greenhouse gas emissions reduced 80 percent below 1990 levels by 2050. We recognize that there are a number of ways to reach this level of mitigation. And that includes us.”
Even here, though, I remember reading this section of the Nike report when it came out earlier this year, and I had a hell of a time discerning whether the company is indeed holding itself to this emissions trajectory or not (Please let me know if you can figure it out).
On the other end of the spectrum, six of the eight companies that scored 0 (that’s right: zip, zero, nada) on the scorecard come from the Toys & Children’s Products sector. The irony of this performance resounds loudly when juxtaposed to the introductory words of Climate Counts Board Member Cameron Wake, a prominent climate scientist:
“Climate change is also a moral issue. It is those who are most vulnerable who will suffer the most. Globally, the decisions we make today and over the next decade about how we produce energy and how efficiently we use it will determine the climate our grandchildren inherit.”
So the toys these kids play with now are actually trashing their future climate, the Climate Counts analysis suggests.
Another irony emerges from Bellamente’s introductory words:
“[T]he Climate Counts scorecard offers consumers a tool for making informed purchasing and investing decisions based on how well major name brands are addressing climate change. Two assumptions we make, therefore, are 1) climate change is indeed occurring and 2) human activity, largely from the burning of fossil fuels, is playing a role in the process.”
However, Climate Counts doesn’t currently cover fossil fuel companies, largely because of their focus on consumer-facing brands, Bellamente told me. But consumers do intersect with fossil fuel-based companies at the gas pump, home heater and electric meter, so these sectors could be considered to fall under Climate Counts' mission.
A recent blog post by sustainability consultant Maya Forstater supports the case for including fossil fuel companies in the Climate Counts analysis, where she uses a graphic of 2011 GHG emissions by company and sector to show that the lion’s share of carbon comes from the oil sector. And she links to the Carbon Tracker research on our burnable carbon budget of 565 gigatons, if we’re to stay within the 2-degree threshold; if Climate Counts wants to help keep us within this budget, it makes sense to include fossil fuel companies in its analysis.
Luckily, Bellamente is open to doing just this. He recently announced a pilot program to integrate sustainability context which measures corporate performance against specific thresholds — into Climate Counts’ rating on a sample set of companies representing a broad range of sectors (potentially including oil and gas).
This brings us back full circle to the question of the alignment of economic prosperity and environmental sustainability. While some top-rated Climate Counts companies are demonstrating the ability to de-couple revenues from carbon emissions, it will be interesting to see how fossil fuel companies rate. They have shown their ability to reap record profits while driving us off what Nick Robins of HSBC calls the climate cliff.
Indeed, as I said to Bellamente in a meeting earlier this year, practicing capitalism in a world of expanding resources was a cakewalk; but the new world of contracting resources and planetary boundaries now challenges capitalism to up its game if we are to preserve a planet similar to the one civilization developed on.