100 Companies are responsible for 71% of Greenhouse Gas Emissions
Well, duh.
That was my initial reaction to hearing this stat for the first time. I mean considering the track record that corporations have with environmental sustainability, plus the added factor that every one of those companies is a fossil fuel extractor, the assertion that these corporations are primary greenhouse gas (GHG) emitters was predictable, to say the least.
The rhetoric people had to share about this tidbit was also unsurprising. You have some people saying this is completely untrue, irrelevant, and politically out-of-the-question. While others claim that it is true, but the only way to ensure climate safety was electoral politics and consumer boycotts.
Regardless, corporations do have a major impact on the climate. So if we want to create a future that doesn’t involve the destruction of the environment, then we need to understand corporations’ role in the climate crisis.
A good place to start is with this stat.
The Stat:
The stat comes from a 2017 report from the Carbon Disclosure Project (CDP). Just in case you were wondering, the statement itself is not a misquote. The report does find 100 companies are linked to 71% of all *industrial GHG emissions since 1988.
But to understand what this means, we need to understand 3 key points.
- Emissions are Largely Scope 3
- These are Investor-Owned Companies
- A Low Carbon Tipping-Point is in Reach
*industrial GHG emissions exclude emissions from land-use like forestry and agriculture*
1: Emissions are Largely Scope 3:
Let’s start with the first point. The report found that 90% of these corporations’ total emissions are scope 3.
But what does that mean?
Scopes are a way to categorize an organization’s GHG emissions into 3 main groups. These groups are divided by what emissions a company has directly produced, what emissions the company purchased, and what emissions the company is indirectly responsible for.
Scope 1 — Emissions from Sources the Organization directly owns or controls. In this case, examples of scope 1 emissions include emissions that come from on-site fossil fuel combustion, or company-owned vehicles. Scope one is also referred to as operational emissions.
Scope 2 — Emissions from Company-Purchased Energy Sources. Scope 2 is all the emissions from electricity, steam, heat/cooling that is purchased by the company. Scope 2 emissions are things like the emissions from powering a factory, or from furnaces used to refine oil.
Scope 3 — All Emissions from Sources the Company does not Own, Control, or Purchase. Scope 3 includes emissions from employees’ commutes, product distribution, or even end-of-cycle processes like the combustion/treatment of a company’s products.
So now that you know what scopes are, it’s like I said: 90% of total corporate emissions are scope 3. This means the majority of these emissions are from sources the company doesn’t own or directly control. It’s true that 71% of GHG emissions are attributable to these 100 companies, but 90% of those emissions come from other companies. And those companies’ scope 3 emissions are from other companies, and so on and so on. To understand scopes is to understand that one company’s scope 1 emissions is another company’s scope 3 emissions.
But why does that matter? Because many assume that because 71% of emissions can be linked to these 100 companies, that 71% of emissions are produced by these 100 companies; which is not true. In saying that 100 companies are “responsible” for 71% of emissions the report is saying that if these companies didn’t exist, the emission-producing activities related to these companies wouldn’t exist.
To be clear, this distinction is not to remove responsibility from these 100 corporations. But knowing about the direct sources of emissions is crucial when talking about potential solutions because it shifts the conversation. Rather than only focusing on the companies extracting fossil fuels, the impetus to reduce emissions is now also on all GHG emitters.
2: These are Investor-Owned Companies
The next important point is that 32% of emissions come from publicly listed investor-owned companies. 59% of the remaining emissions come from state-owned companies, and 9% are from private investor-owned companies.
Why is this important?
Well, in the words of Pedro Faria, Technical Director at CDP:
“The report shows that investors in fossil fuel companies own a great legacy of almost a third of all industrial GHG emissions, and carry influence over one fifth of the world’s industrial GHG emissions today. That puts a significant responsibility on those investors to engage with carbon majors and urge them to disclose climate risk in line with the FSB Task Force for Climate-related Financial Disclosure (TCFD) recommendations, and set ambitious emission reduction targets through the Science Based Targets initiative to ensure they are aligned with the goals of the Paris Agreement.”
TLDR: A small set of investors hold the key to major impact on the fossil fuel industry.
Investors have the opportunity to use their corporate influence, and start making change happen. The changes in question entail measures like reducing operational emissions, only extracting lighter fossil fuels, sequestering carbon, deploying carbon offsets, etc.
A Brief Statment on Economics:
As much as I wish the future of the climate was enough to get investors to change the status quo, it’s not. So let’s talk money real quick: There is approximately 2 Trillion dollars of investment in fossil fuel companies. All that investment is at risk of becoming stranded assets when fossil fuels can no longer be extracted. Even looking more broadly, the environment has an estimated value of anywhere from 33 -125 trillion dollars that would be thrown away by climate change. Frankly: There’s not just a moral impetus for investors to lead corporate change, there’s also an economic one.
Although again, we shouldn’t need to prioritize profit over the health of the planet and billions of people, but I digress:
Investors pushing companies to implement these tactics is extremely important. Not just to save money or to curb the effects of climate change we’re already seeing, but also to reach the ultimate goal of no fossil fuel extraction.
3: A Low Carbon Tipping-Point is in Reach:
The last point to be made here is that there is still time to change.
In the Intergovernmental Panel on Climate Change’s (IPCC) most recent 2021 report, it was found that if we halved current emissions by 2030 and reached net-zero emissions by 2050, then we can halt or even reverse the global rise in temperatures.
But both the IPCC’s and the CDP’s reports confirm that won’t be an option if human activity remains the same. According to the CDP’s report, if fossil fuel extraction continues at the same rate it’s been going at for the last 28 years, then global average temperatures will rise by 4 degrees C by the end of the century. The IPCC’s report also found that at this point, global average temperatures will rise by 1.5 degrees celsius by 2040 even assuming we immediately take the most sustainable course of action.
So if we want to mitigate these realities we need to wean off fossil fuels. Fast.
Although it being necessary won’t make it any less difficult.
Fossil fuels currently supply 80% of global energy. According to the United Nations Environmental Program(UNEP), fossil fuel production will need to decline by 6% every year from now to 2030. The decline of fossil fuel production will need to be met with the rapid rise of renewable energy to meet consumption needs, carbon offsets to “undo” existing emissions, all while meeting the energy demands of a growing population.
So easy it is not. But it is possible, And it is the only option if we want to avoid a climate crisis.
Takeaways:
Congrats! You now understand more about the corporate role in the climate crisis. So to summarize what you learned:
- Responsibility doesn’t = Production: All of these emissions can be linked to fossil fuel extractors, but most of these emissions were not produced by fossil fuel extractors. Reducing emissions means addressing all GHG producers across companies, states, and industries.
- Investors are Key: Investors hold a lot of unused power over their companies’ policies. This means they also bear a lot of responsibility to lead corporate institutions away from fossil fuels, and towards renewable energy.
- We can change, and we need to: At the risk of sounding naive, there is still hope. As bad as the current situation is, we still have time to mitigate the worst effects of climate change - and we have to. The world can’t afford climate change environmentally, or economically. So as long as there’s still an opportunity to fix it, industries, corporations, and governments have an obligation to solve the problem they created.
But what can you do with this newfound wealth of knowledge?
Well admittedly, there’s not that much you as an individual person can do unless you’re personally dumping barrels of oil into the Gulf of Mexico; But there are a few ways to support action. Here are some organizations doing important climate work:
- Amazon Watch: Amazon watch is a nonprofit working with Indigenous organizations to restore ecological systems and hold corporations accountable.
- Oil Change US: Oil Change US is an organization working to decouple fossil fuel money and politics.
- Greenpeace: Greenpeace is a non-profit working to promote climate solutions and mobilize communities to hold corporations and governments accountable.
- The Climate Crew: The climate crew (TCC) is a community of climate-focused youth under 25 years old developing policy demands to bring to the United Nations Climate Conference, COP26.
Final Thoughts:
Like I said, learning corporations are a huge contributing factor to climate change was not a surprise. Learning that these companies have the power to change our current climate reality and just won’t, feels more like a confirmation of what most people already intrinsically know.
What was surprising to me was learning it’s not too late to do anything. That if immediate action is taken we can minimize the worst effects of climate change. I think in general climate change can make people feel very powerless, which makes sense. Powerlessness is a very normal emotional response to an existential threat, especially one as thought-consuming as climate change.
But the first step to solving any problem is understanding it. So I hope reading this article gave you a little bit more insight into the problem, and to feel a little less powerless about the future.
