The carbon emissions from S&P 500 companies is equivalent to the total combined emissions produced in France, Germany and the UK, according to the S&P Index Carbon Emitter Scorecard.
The scorecard is a report that provides carbon production and efficiency metrics for major indices and across global markets, published by the S&P Dow Jones Indices. It finds that while only around 15 percent of global emissions are directly produced by the world’s blue-chip corporations, the reduction required for global temperature to remain within 2 degrees Celsius from pre-industrial levels may be as much as 75 percent.
The Paris climate deal, which President Obama has said the US will sign on April 22, Earth Day, commits the world’s nations to keep a global temperature rise this century to below 2 degrees Celsius and drives efforts to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels, which scientists say is a safer defense line against the worst impacts of a changing climate. This will require businesses to play a major role in achieving emissions cuts.
The carbon scorecard also finds that on a sector basis, total carbon emissions are far from universal. For example in the financials sector, the US market has a larger footprint than any other region.
As well as geographic and sector differences, investment styles such as growth and value have a strong relationship to carbon footprint, the scorecard says. If an investors wish to invest in companies traditionally associated with innovation and cutting-edge development they are likely to favor growth companies, and lower their emissions footprint at the same time.
Tim Edwards, senior director of index investment strategy, S&P Dow Jones Indices, says the scorecard shows the importance of corporate and investor participation in efforts to reduce carbon emissions.
According to the scorecard, the potential impact of climate change on investors “has become a ‘hot’ topic.” Climate change can affect companies’ bottom lines, from electricity prices to supply chain costs and resource availability, to extreme weather events.
But even among investors concerned about climate change, the question of how they can or should change their behavior remains controversial. “While data alone cannot settle whether, or how, investors should incorporate climate concerns into their investments, we hope that this report will contribute to a better-informed debate,” the report says.
The scorecard follows a US Securities and Exchange Commission ruling that ExxonMobil must allow its shareholders to vote on a climate change resolution. The resolution, which shareholders will vote on in May, would force the oil giant to disclose how climate change would affect its business.
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