Despite an uptick in business activity -- which might be expected to result in higher emissions -- some of the world's top-earning companies are managing to reduce their carbon footprints, according to a new report.
Five of the six highest-ranked companies -- Unilever, UPS, Nike, Levi Strauss and L'Oreal -- showed year-over-year revenue growth from 2010 to 2011 while reducing their total emissions across some or all of their business units, according to the Climate Counts 2012-2013 Annual Company Scorecard report, released Wednesday. It ranks major consumer brands on their efforts to address climate change. (GreenBiz Executive Editor Joel Makower sits on Climate Counts' board of directors).
The Durham, N.H.-based organization analyzed public data from 145 companies for its sixth annual report. AB Electrolux, IBM, Bank of America, Stonyfield Farm, Hewlett-Packard, Coca-Cola Company, Groupe Danone, Sony, Siemens and Reckitt-Benckiser rounded out the top-ranked companies. Alongside the toys, children's products and fast food industries, Amazon, Viacom and Wendy’s were among the worst performers.
"The fact that a lot of major corporations are showing the signs of sustainable growth and cutting overall emissions is of huge significance," Mike Bellamente, Climate Counts director, told GreenBiz. "Companies are getting back on their feet but they’re able to do so with more of what we need to do for climate change."
Companies were evaluated on 22 criteria, including the extent to which they conducted a greenhouse gas emissions review, whether they developed a plan to reduce their emissions, and whether those reductions were achieved. They were also scored on their stances on climate and energy policy, as well as on public disclosures of their sustainability performance.
Sixty-six percent of the companies had developed public climate and energy strategies, compared to 25 percent in 2007. Bellamente attributed this growth to an increased ability for companies to make the business case for sustainability, especially in light of extreme weather events over the past few years such as Hurricane Sandy, the Midwestern drought and floods in the U.K.
"They say that there’s real risk and that it's disrupting business from a continuity standpoint," Bellamente said, "and want to invest in renewable energy for the sake of mitigating risks. ... They’re having a conversation with their suppliers and are being more forthright as to why it’s important for them [suppliers] to measure their emissions."
Only a handful of brands have developed energy and climate change strategies for moral reasons, Bellamente said, citing Unilever and its Ben & Jerry’s brand, Levi Strauss and Timberland in this category.
Next page: Toys, children's products, fast food industries lag behind
Top-ranked Unilever achieved a score of 91 out of 100 possible points, the highest score ever awarded since the first Climate Counts report was released in 2007, while an unprecedented number of companies (15) achieved scores of 85 or higher this year.
"Never before has it been so important for business to step up its leadership to address both the causes and the impacts of climate change," said Paul Polman, CEO of U.K.-based Unilever. "Ordinary people are increasingly suffering the effects of extreme weather events and the associated food and water shortages. They are expecting us to be responsible in helping them to manage these challenges."
A short list of the most improved and the least improved companies from 2007 to 2012 provided context to the rankings. eBay, Clorox and Levi Strauss were identified as the top three companies demonstrating what the report described as "noticeable progress." Siemens, Avon and Molson Coors Brewing Company were also included in the "most improved" group.
Amazon, Wendy's and Viacom have shown the least progress since 2007, the report found. "To the extent that these companies are embracing sustainability, there continues to be little publicly available evidence to suggest that they are measuring, reducing and reporting their GHG emissions," it read. Scores for the other companies on the "least improved" list -- Burger King, apparel company Liz Claiborne and McDonald's -- took a downwards turn by the end of the 2007-2012 period.
The clear loser in the report was the toys and children’s products industry. Out of the eight companies that scored zero points, six of the eight were from this category, making it the lowest-scoring sector. Industry leader Hasbro, however, was given a score of 73.
The fast food industry also performed poorly, with Wendy’s and Burger King scoring in single digits (5 and 2 respectively) and McDonald’s at 14.
And despite Apple's score of 62, it ranked at the bottom of its 14 peers in the technology sector. IBM led with a score of 86. But in the Internet/software category, Apple landed just two points behind Google, which was the top-ranked company in that sector with a score of 64. At the other end of the spectrum, prominent online professional network LinkedIn received a score of zero in the Internet/social media category.
Next page: Lack of industry, consumer pressure affects scores
Bellamente said that lack of industry and consumer pressure in the worst-performing sectors was responsible for their poor scores.
"[The climate] is just not on their strategic radar," Bellamente said of the fast food industry. He said consumers are asking these companies to perform with better nutrition levels in their products instead of taking action on climate issues: "It hasn't affected their industry negatively enough [for them] to report on their emission levels."
"The same goes for the toys and children's products industry," he added. "Their first order of business is to make sure the children are safe. You've got a lot of companies that manufacture abroad that don't have regulations that make sustainability as much of a science as here," he said.
But Hasbro and Lego have both increased their Climate Count scores by double digits, he said.
Next year, Bellamente expects more companies to look at the consumer end and the downstream effect of how their footprint can be managed through R&D, similar to the way Unilever approaches sustainability.
"At Unilever, everyone in the company has a sustainability target -- from the guy who makes the shampoo to the guy who makes the shampoo packaging," he said. "You’ll start to see more of that embedded into organizations."
Next page: Top-tier and sector leader report scores
Top-tier ranked companies (scores in parentheses):
Levi Strauss (87)
AB Electrolux (87)
Bank of America (86)
Stonyfield Farm (86)
Coca-Cola Company (85)
Groupe Danone (85)
Sector leaders (scores in parentheses):
Airlines: Lufthansa (77)
Apparel/Accessories: Nike (89)
Banks: Bank of America (86)
Beer: Heineken (79)
Consumer Shipping: UPS (89)
Food Products: Unilever (91)
Food Services: Starbucks (69)
Home and Office: Herman Miller (66)
Hotels: Marriott (70)
Household Products: L'Oreal (87)
Internet/Software: Google (64)
Large Appliances: AB Electrolux (87)
Media: News Corporation (67)
Pharmaceuticals: Johnson & Johnson (82)
Technology (formerly Electronics): IBM (86)
Toys & Children's Equipment: Hasbro (73)
For a full copy of the 2012-2013 report, visit the Climate Counts website.