2016 ET CARBON RANKINGS REPORT

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24 CARBON REDUCTION POTENTIAL: BENCHMARKING MEDIAN CARBON EFFICIENCY The ET Carbon Rankings are designed to encourage investors to shift investment to more carbon-efficient companies, reducing their own exposure to carbon risk and rewarding companies that take action and disclose it. This is intended to drive decarbonisation across the economy, by incentivising each company to become more carbon-efficient. The ET Low Carbon Index Series, which is based on the ET Carbon Rankings, weights investment towards the 50% of companies that are less carbon-intensive and away from the 50% that are more carbon-intensive. Thus, the Index Series rewards companies that achieve greater than median carbon efficiency. In this section, the median carbon-efficiency is used as a benchmark to get a sense of the carbon reduction potential associated with this approach (see Figure 11). Analysis of just the 363 companies that have disclosed complete Scope 1 and 2 emissions in the ET Global 800 reveals that in each sector, if the 50% which are more carbonintensive were to achieve the median level of carbon efficiency, it would save 1.4 billion tonnes of carbon dioxide a year, equivalent to the emissions of Japan, the world’s third largest economy. 26 Further analysis reveals that 86% of these savings – 1.2 billion tonnes of carbon dioxide, equivalent to twice the emissions of South Korea – could be made by companies in just five industries: Electric Utilities; Oil and Gas Exploration and Production; Construction Materials; Chemicals; and Real Estate Owners, Developers and Investment Trusts. 27 This analysis only looks at those companies that have disclosed complete Scope 1 and 2 emissions, and does not consider the impact of Scope 3 emissions which typically account for 75% of companies’ total emissions. It is safe to assume that far greater savings could be made if the world’s largest companies took action to increase their carbon efficiency to the median level in their sector across the full range of their direct and value chain emissions. FIGURE 11: CARBON REDUCTION POTENTIAL. Highest Reduction to median Intensity Median Reduction to lowest Lowest ET INDEX RESEARCH 2016 CARBON RANKINGS REPORT
CARBON REDUCTION POTENTIAL 25 CARBON REDUCTION POTENTIAL BY SECTOR Table 4 shows the potential to reduce emissions across the 11 SICS sectors of the economy if every company with an emissions intensity greater than the median value for their sector were to reduce their emissions to achieve that level of carbon efficiency. Three sectors account for 86% of the entire emissions reduction potential, 1.26 billion tonnes of carbon dioxide a year. This is one and a half times the total emissions from global aviation. 28 The Infrastructure sector is the most carbon-intensive of all. If the least carbonefficient companies achieved the median level it would cut the sector’s emissions by 53%, saving 579 million tonnes of carbon dioxide per year, slightly more than the total annual emissions of Canada. 29 AvalonBay Communities, Swire Pacific and Vinci are among 33 companies disclosing complete data in this sector. TABLE 4: EMISSIONS REDUCTION POTENTIAL ACROSS THE 11 SECTORS (COMPANIES DISCLOSING COMPLETE SCOPE 1 & 2 DATA) – WORLD’S 800 LARGEST LISTED COMPANIES. SICS sector Number of Companies Weighted Average Carbon Intensity (Scope 1 & 2 tCO2e/$m Revenue) Total Scope 1+2 Emissions of Disclosing Companies (tCO2e) Total Revenue ($m) Median Intensity for sector (Scope 1 & 2 tCO2e/$m Revenue) Average Intensity for sector (Scope 1 & 2 tCO2e/$m Revenue) % Reduction if every Company lowers Emissions to level of Median Intensity (Scope 1 & 2 tCO2e/$m Revenue) GHG Emissions Reduction Potential if every Company lowers Emissions to level of Median (tCO2e) Infrastructure 33 694 1,095,182,247 1,578 327 467 53 579,182,625 Non-Renewable Resources 31 595 1,753,953,949 2,950 431 488 28 483,076,854 Resource Transformation 46 198 356,475,870 1,803 91 122 54 192,817,032 Technology and Communications 52 44 134,408,182 3,032 25 29 43 57,974,508 Consumption I 37 90 97,653,019 1,091 63 70 29 28,392,328 Transportation 28 152 400,877,838 2,637 144 141 5 20,590,672 Health Care 32 21 37,430,119 1,809 11 13 44 16,639,459 Financials 59 5 28,257,454 5,457 3 4 37 10,514,678 Consumption II 23 38 87,684,138 2,326 36 36 6 4,973,246 Services 20 62 42,279,592 685 55 56 11 4,614,909 Renewable Resources and Alternative Energy 2 166 2,733,861 16 166 166 – – Average 33 188 366,994,206 2,126 123 145 28 127,161,483 Total 363 2,065 4,036,936,269 23,384 1,352 1,592 310 1,398,776,311 2016 CARBON RANKINGS REPORT ET INDEX RESEARCH
Page 1 and 2: FOREWORD 1 2016 ET CARBON RANKINGS
Page 3 and 4: 3 ABOUT ET INDEX RESEARCH ET Index
Page 5 and 6: FOREWORD 5 The international Financ
Page 7 and 8: 7 EXECUTIVE SUMMARY The 2016 ET Car
Page 9 and 10: EXECUTIVE SUMMARY 9 Carbon Context
Page 11 and 12: ENGAGED INDEXES, CARBON RISK AND PE
Page 13 and 14: ENGAGED INDEXES, CARBON RISK AND PE
Page 15 and 16: UNDERSTANDING THE ET CARBON RANKING
Page 23: UNDERSTANDING THE ET CARBON RANKING
Page 27 and 28: CARBON REDUCTION POTENTIAL 27 Infra
Page 29 and 30: CARBON REDUCTION POTENTIAL 29 TABLE
Page 31 and 32: CARBON REDUCTION POTENTIAL 31 Table
Page 33 and 34: CARBON REDUCTION POTENTIAL 33 Oil a
Page 35 and 36: ET GLOBAL CARBON RANKINGS 2016 35 C
Page 37 and 38: ET GLOBAL CARBON RANKINGS 2016 37 C
Page 39 and 40: ET GLOBAL CARBON RANKINGS 2016 39 T
Page 41 and 42: ET GLOBAL CARBON RANKINGS 2016 41 T
Page 43 and 44: 43 ET CARBON RANKING METHODOLOGY: E
Page 45 and 46: ET CARBON RANKING METHODOLOGY 45 KN
Page 47 and 48: ET CARBON RANKING METHODOLOGY 47 SP
Page 49 and 50: ET CARBON RANKING METHODOLOGY 49 DI
Page 51 and 52: APPENDIX 51 ET Europe 300 Carbon Ra
Page 53 and 54: APPENDIX 53 INFORMATION FOR REPORTI
Page 55 and 56: APPENDIX 55 Level 1 Thematic Sector
Page 57 and 58: APPENDIX 57 Michael is non-executiv
Page 59 and 60: APPENDIX 59 References 1 Carbon Tra
Page 61: FOREWORD 61 2016 CARBON RANKINGS RE

2016 ET CARBON RANKINGS REPORT

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