When it comes to climate policy, the companies in the second edition of Asia-Pacific Climate Leaders — compiled by the Financial Times and data provider Statista — confront a different world from their predecessors in the inaugural list a year ago.
In the US, Joe Biden’s Inflation Reduction Act, with its $369bn in support for green energy projects, has galvanised investment in renewables — not only at home but also in the EU, where policymakers worry about businesses being lured to the US. This surge in demand offers potential wins not only for clean tech suppliers, such as China and Japan, but also for countries rich in the minerals needed for electric vehicle batteries, such as Australia and Indonesia.
The past 12 months have brought good news for poorer countries, too, in the form of the long-awaited “loss and damage” fund agreed at November’s COP27 climate summit. Funnelling money from wealthy nations to developing countries hit by the effects of global warming, the facility was described by Pakistan’s climate change minister Sherry Rehman as “an investment in climate justice”.
But some situations remain stubbornly unchanged. Following pressure from oil and gas producing countries, COP27 failed to move beyond the commitment to “phase down” — rather than “phase out” — coal power that had been agreed at the preceding summit, COP26. For all their clean tech knowhow, both China and Japan are still heavy users of coal-fired power — a reliance that put the latter at odds with other G7 members during last weekend’s Hiroshima summit.
Greenhouse gas emissions keep climbing: according to the International Energy Agency, energy-related CO₂ emissions reached a record 36.8bn tonnes in 2022, with Asia-Pacific countries other than China contributing an increase of 229mn tonnes over 2021. Although China registered a slight decrease, it remains the world’s biggest emitter, at 12bn tonnes.
And scientists continue to warn of rising global temperatures: this month the World Meteorological Organization said that global temperatures were likely to pass the threshold of 1.5C above pre-industrial levels within the next five years.
So, while the 275 companies on the Climate Leaders list can take pride in their efforts to cut greenhouse gas emissions, there is no room for complacency. Pressure on governments and businesses to do more looks set to grow, especially as the adverse consequences of global warming — such as last year’s floods in Pakistan — become more apparent.
In order to reflect this more challenging environment, the FT and Statista have tightened the Climate Leaders methodology.
In the previous edition, the companies listed were simply those that achieved the greatest reduction in their Scope 1 and 2 greenhouse gas (GHG) emissions intensity over a five-year period. Scope 1 and 2 emissions — “core emissions” in the table — come respectively from a company’s own operations and from the energy it uses, while intensity is defined as tonnes of emissions of CO₂-equivalent per $1mn of revenue. Scope 3 emissions, which arise elsewhere in companies’ value chains, are harder to factor in. There is no standard metric and reliable data from suppliers and customers may be elusive, so companies do not always disclose them. Yet they typically far outweigh Scope 1 and 2 emissions and mandatory reporting — detailed in new guidance from global standard-setter the International Sustainability Standards Board — looks inevitable in many jurisdictions.
So, this year, we have not only calculated companies’ performance in cutting their Scope 1 and 2 emissions intensity, for the period 2016-21, but have also assigned a score to reflect their transparency on Scope 3, plus other indicators of commitment to reducing emissions. These indicators include collaboration with environmental performance monitor CDP, and with the Science Based Targets initiative (SBTi), which assesses emissions reduction plans.
These two factors — reduction of emissions intensity, and the commitment criteria, weighted at 80 per cent and 20 per cent respectively — are combined to produce an overall score for each company.
The editors reserved the right to exclude companies if their broader environmental record — on non-GHG pollution, for example, or deforestation — was sufficiently disputed to undermine any claim to be a “climate leader”. Energy companies prospecting for new fossil fuel reserves fell into this category.
The business with the highest score was Hong Kong-listed computer maker Lenovo Group, with 79.7 points, followed by two professional services companies: India’s Wipro (75.6 points) and Japan’s Nomura Research Institute (75.1 points).
Like last year, the technology and electronics industry accounted for the greatest number of companies in the list, with 57, followed by financial services, with 34. The top two countries also remained the same, with Japan home to 130 companies and Australia to 46.
Although the revised methodology — further details of which can be found in the panel below and on Statista’s website — means it is now harder to become a climate leader, the list still has shortcomings. In particular, because the intensity calculation is based on emissions relative to revenue, some rapidly growing companies on the list actually increased their absolute emissions over the five-year period but achieved a relative cut.
What is more, some of the key data this research relies on — companies’ own carbon accounting, plus information submitted to CDP — may also be flawed, whether because of inconsistent emissions figures or insufficient detail on carbon offsets.
To help compensate for this, the figures reported for 2016 and 2021 by some of the biggest emissions cutters, in terms both of intensity and absolute emissions, have been scrutinised by GreenWatch, a sustainability research team based at University College Dublin. Its findings have been added to the table as footnotes.
Whether climate policy continues to evolve as quickly over the next 12 months as it has over the past 12 remains to be seen. But, as global temperatures rise, consumers and policymakers are ever less likely to give corporate emitters an easy ride.
A print and online report on the Asia-Pacific Climate Leaders 2023 will be published on June 15, containing articles analysing the issues that this research raises