U.S. Business Emissions Growing, Not Slowing

Published April 23, 2010

When President Barack Obama announced last November his commitment to cut greenhouse gas emissions by 17 percent by 2020, it was a crucial step in bringing the U.S. into the global climate change negotiations and signaling to the business community and the consumer that the U.S. was ready to take on the challenge of stopping climate change.

The business community generates the majority of global emissions and has a key role to play in reducing emissions and in driving the transition to the low carbon economy. The Carbon Disclosure Project (CDP), which holds primary climate change and emission data from 2,500 of the world’s largest companies, just completed analysis to assess how current U.S. corporate emissions trends measure up against the U.S. target.

What is striking is that the current trends are moving in the opposite direction from the required cuts, creating a Carbon Chasm between current corporate emissions trends and U.S. commitments.

We are seeing an annual increase in S&P 100 reporting emissions of 0.36 percent, whereas, we actually need to see a reduction of 1.05 percent per year, so we need to see a reversal in the current corporate emissions trends in order to deliver against targets.

It is worth noting that the commercial opportunities around corporate emissions reductions are significant. Companies that spot these opportunities and deliver products to enable the reduction of emissions are well positioned to benefit from the transition to a low carbon economy.

We are seeing huge opportunities for the construction industry in green buildings and AT&T is providing Telepresence facilities for virtual meetings, which enable reduction in emissions generated through travel. Companies such as GE Energy, Siemens and Vestas are major suppliers of wind energy, a low carbon solution and a significant growth area, and National Grid is building solar plants for power generation in Massachusetts.

When you look at where we will benefit most from cutting emissions, it is striking that 90 percent of reported S&P 100 emissions are generated by just four sectors -- utilities, energy, materials and industrials.

The CDP research also shows that utilities and industrials are not currently reducing emissions, but are actually seeing a higher than average growth in emissions. The utilities sector, which generated 37 percent of S&P 100 reported emissions in 2009, saw emissions growth of 1.64 percent per annum from 2007 to 2009. Industrials saw their emissions grow 2.03 percent per year. If we continue on this trajectory, we will be a long way off delivering in line with the U.S. commitments made in November and subsequently through the Copenhagen Accord.

If we go a step further and assess these current emissions trends against the recommendations of the global scientific community, through the Intergovernmental Panel on Climate Change (IPCC), we see they fall far short of scientific recommendations. The IPCC recommends cuts of 25-40 percent by 2020 and 80-95 percent by 2050 in developed economies. This equates to a 3.9 percent reduction annually, requiring a step change for the corporate sector in cutting emissions.

Joanna Lee is chief partnerships officer at CDP.