5 biggest tech greenhouse gas emitters
Mark Hulbert explains why we should focus on a company’s gross, rather than net, greenhouse gas emissions.
(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)
CHAPEL HILL, N.C. (Callaway Climate Insights) — Ready for today’s climate investing pop quiz?
Which of the five largest companies in America emits the most greenhouse gases? And which one the least?
These five companies to which I refer are, in descending order of size, Microsoft (MSFT), Apple (AAPL, Alphabet/Google (GOOGL), Amazon (AMZN), and Facebook (FB). They’re huge: Though they represent just 1% of the companies in the S&P 500, they collectively account for 19% of the total market capitalization of all 500 companies in that benchmark.
Note that my pop quiz question is not which of these companies has the largest or smallest carbon footprints on a net basis — after debiting from its total greenhouse gas (GHG) emissions any carbon offsets that they may have purchased.
As I’ve written recently, many of those offset programs have turned out to sequester a lot less carbon than the amounts for which companies have taken credit.
Another reason to focus on a company’s gross, rather than net, GHG emissions: In order to completely neutralize those emissions, these offset programs will need to remain in place for the decades (centuries?) in which the gases remain in the atmosphere. If at any point in the future the forests that were planted get cut, or the regenerative agriculture fields get plowed under, then the carbon that was initially sequestered, and for which these companies got credit, will be released back into the atmosphere.
In the meantime, the companies continue to emit greenhouse gases. That’s why I’m focusing on that.
Accounting for GHG emissions
While you’re thinking about your answer, let me review how GHG emissions are counted. Because different gases have different warming potentials, their emissions are converted into whatever amount of CO2 would have the same impact. For example, one ton of methane emissions is equivalent to 25 tons of CO2 emissions. Companies typically report their GHG emissions in CO2-equivalents.
They also report their GHG emissions in three categories, following the lead of the Greenhouse Gas Protocol (which was produced by the World Resources Institute in an effort to create a universal GHG accounting standard):
Scope 1: This category reflects the emissions that result from operations over which a company has direct control.
Scope 2: Indirect emissions from the production of the energy the company uses
Scope 3: All other indirect emissions that result from the activities of the company, encompassing everything from business travel, the environmental impact of its products lifecycles, and so forth
And the winner is…
With this review out of the way, we can now answer my quiz. Of the five largest U.S. publicly-traded companies, the one with the most GHG emissions is Amazon. It’s not even close in fact, as you can see from the accompanying chart. Adding up its totals in Scopes 1, 2, and 3, the company’s GHG emissions in the most recent reporting year come to 44.4 million tons of CO2 equivalent.
Greenhouse gas emissions of the 5 largest publicly-traded U.S. companies
Million tons of equivalent CO2 emissions* in most recent reporting year
*Total of emissions in Scopes 1, 2, and 3. Source: company reports; HulbertRatings.com
You probably could have guessed that Amazon would be the biggest GHG emitter of any of these five companies. The company’s business model is heavily reliant on shipping its products to customers all over the world, which, needless to say, is energy intensive.
What may surprise you is which of these five companies has the smallest carbon footprint. It’s Facebook, with total GHG emissions in Scopes 1, 2 and 3 of just more than one million metric tons of equivalent CO2.(1.164 million in its 2019 Sustainability Disclosure).
Note, however, that Facebook’s reporting of its Scope 3 emissions is not complete. In reporting just 912,000 tons of equivalent CO2 emissions in this category, the company acknowledges in a footnote that this total “include[s] only select activities and are not intended to represent Facebook’s full value chain emissions.”
That is a crucial detail, needless to say. Google, in contrast, is reporting 14.3 million tons of CO2 equivalent emissions in the Scope 3 category, more than 15 times as much. Given that the two companies are involved in relatively similar pursuits, one suspects that the actual total GHG emissions of the two companies is closer than is suggested by the accompanying chart.
Until the carbon capture and sequestration technology is more developed and foolproof, I will continue to focus on companies’ gross rather than net GHG emissions. Stay tuned.