Frequently Asked Questions
I. Reporting carbon emissions
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Companies measure their business-related carbon emissions using a standardized method. When referring to "carbon emissions" what companies are actually referring to, is tCO2eq (tons of carbon dioxide equivalent greenhouse gases) covered by the Kyoto Protocol, namely:
Carbon dioxide (CO2)
Methane (CH4)
Nitrous oxide (N2O)
Hydrofluorocarbons (HFCs)
Perfluorocarbons (PCFs)
Sulphur hexafluoride (SF6)
Nitrogen trifluoride (NF3)
The GHG Protocol Corporate Accounting and Reporting Standard provides requirements and guidance for companies and other organisations preparing a corporate-level Greenhouse Gas emissions inventory to credibly measure and report emissions. Carbon emissions are reported in a standard format, separating direct emissions (Scope 1), indirect emissions (Scope 2) and value chain emissions (Scope 3).
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The Greenhouse Gas (“GHG”) Protocol Accounting and Reporting Standard classifies emissions into three distinct categories or “Scopes” depending on their source, as follows:
Scope 1: Direct emissions from owned or controlled sources. E.g. Emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.
Scope 2: Indirect emissions from the generation of purchased energy. E.g. Emissions from purchased electricity, heat, steam or cooling.
Scope 3: All indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. E.g. Emissions from business travel, purchased goods and services, etc.
Above: the GHG Protocol classifies direct and indirect emissions into one of three Scopes.
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These are two different methods of calculating Scope 2 emissions and companies are required to report both. In a nutshell, Location-based represents gross carbon emissions while Market-based represents net emissions after taking into account any renewable energy purchases.
Location-based
Reflects the average emissions intensity of the power grid the company is using (i.e where the energy consumption occurs), which depends on the mix of electricity produced. In this calculation, the contribution of renewable energy is 0 as it is considered to have no carbon emissions.
Market-based
Reflects emissions from electricity that companies have purchased. The company can contract with a renewable energy developer, to purchase additional renewable energy (“REPs”) or renewable energy credits (“RECs”). These can be used to mitigate the company’s existing scope 2 emissions.
So, in most cases, market-based emissions are equivalent to location-based emissions minus renewable energy purchased on the market.
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Category 1. Purchased Goods and Services
All upstream (i.e., cradle-to-gate) emissions from the production of products purchased or acquired by the reporting company in the reporting year.
Products include both goods (tangible products) and services (intangible products). Data can be collected from suppliers directly and/or by using secondary data (i.e. industry average data).
Category 2. Capital Goods
All upstream (i.e., cradle-to-gate) emissions from the production of capital goods purchased or acquired by the reporting company in the reporting year.
E.g. Equipment, Machinery Buildings Facilities Vehicles.
Category 3. Fuel- and Energy-Related Activities Not Included in Scope 1 or Scope 2
Emissions related to the production of fuels and energy purchased and consumed by the reporting company in the reporting year that are not included in scope 1 or scope 2 Upstream emissions of purchased fuels/electricity.
E.g. mining of coal, refining of fuels or gasoline, etc.) T&D losses Generation of purchased electricity that is sold to end users.
Category 4. Upstream Transportation and Distribution
Transportation and distribution of products purchased in the reporting year, including:
Between a company’s tier 1 suppliers and its own operations in vehicles not owned or operated by the reporting company.
This includes multimodal shipping where multiple carriers are involved in the delivery of a product, but excludes fuel and energy products.
Third-party transportation and distribution services purchased by the reporting company in the reporting year (either directly or through an intermediary)
This includes inbound logistics, outbound logistics (e.g., of sold products), and third-party transportation and distribution between a company’s own facilities.
Category 5. Waste Generated in Operations
Emissions from third-party disposal and treatment of waste generated in the reporting company’s owned or controlled operations in the reporting year.
This includes emissions from disposal of both solid waste and wastewater. E.g.
Disposal in a landfill
Disposal in a landfill with landfill-gas-to-energy (LFGTE) – that is, combustion of landfill gas to generate electricity
Recovery for recycling,
Incineration
Composting
Category 6. Business travel
Emissions from the transportation of employees for business-related activities in vehicles owned or operated by third parties.
This may include the following:
Aircraft
Trains
Buses
Passenger cars (e.g. business travel in rental cars or employee-owned vehicles other than employee commuting).
Emissions from business travellers staying in hotels (optional)
Category 7. Employee Commuting
Emissions from the transportation of employees between their homes and their worksites.
This includes, but is not limited to, the following:
Automobile
Bus
Rail
Air
Subway
Bicycling
Walking
Category 8. Upstream leased assets
Emissions from the operation of assets that are leased by the reporting company in the reporting year and not already included in Scope 1 or 2.
Companies may use one of the following methods to collect this data:
Collect asset-specific (e.g., site-specific) fuel and energy use data and process and fugitive emissions data or scope 1 and scope 2 emissions data from individual leased assets
Collect the scope 1 and scope 2 emissions from lessor(s) and allocate emissions to the relevant leased asset(s).
Category 9. Downstream transportation & distribution
Emissions that occur in the reporting year from transportation and distribution of sold products in vehicles and facilities not owned or controlled by the reporting company.
This includes emissions from: -
Warehouses and distribution centers
Retail
Air transport
Rail transport
Road transport
Marine transport
Category 10. Processing of sold products
Emissions from processing of sold intermediate products by third parties subsequent to sale by the reporting company.
Intermediate products are products that require further processing, transformation, or inclusion in another product before use and therefore result in emissions from processing subsequent to sale by the reporting company and before use by the end consumer.
This includes the scope 1 and scope 2 emissions of downstream value chain partners (e.g., manufacturers).
Category 11. Use of sold products
Emissions from the use of goods and services sold by the reporting company in the reporting year.
This includes the scope 1 and scope 2 emissions of end users (i.e. consumers and business customers that use final products).
Category 12. End-of-Life Treatment of Sold Products
Emissions from the waste disposal and treatment of products sold by the reporting company (in the reporting year) at the end of their life.
This includes the following:
Total expected end-of-life emissions from all products sold in the reporting year.
Emissions from end-of-life treatment methods (landfilling, incineration, and recycling), require assumptions about the end-of-life treatment methods used by consumers.
Category 13. Downstream leased assets
Emissions from the operation of assets that are owned by the reporting company (acting as lessor) and leased to other entities in the reporting year that are not already included in scope 1 or scope 2.
This is applicable to lessors (i.e., companies that receive payments from lessees). A reporting company’s scope 3 emissions from downstream leased assets include the scope 1 and scope 2 emissions of lessees (depending on the lessee’s consolidation approach).
Category 14. Franchises
Emissions from the operation of franchises not included in scope 1 or scope 2.
A franchise is a business operating under a license to sell or distribute another company’s goods or services within a certain location. This category is applicable to franchisors (i.e., companies that grant licenses to other entities to sell or distribute its goods or services in return for payments, such as royalties for the use of trademarks and other services).
Franchisors should account for emissions that occur from the operation of franchises (i.e., the scope 1 and scope 2 emissions of franchisees) in this category.
Category 15. Investments
Emissions associated with the reporting company’s investments in the reporting year, not already included in scope 1 or scope 2.
This is applicable to the following parties:
Investors (i.e., companies that make an investment with the objective of making a profit).
Companies that provide financial services (e.g., commercial banks)
Investors that are not profit driven (e.g. multilateral development banks).
All information is from Greenhouse Gas Protocol - Technical Guidance for calculating Scope 3, version 1.0
II. Decarbonisation
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A company can reduce its carbon emissions in multiple ways, including:
Putting in place measures to reduce direct and indirect Greenhouse Gas emissions (Scope 1 and scope 2), e.g. for a transport company, this might involve improving eco-driving, switching to electric vehicles, etc. This transition may initially require an increase in emissions.
Contracting with a renewable energy developers to purchase renewable energy contracts (a market-based approach).
Addressing the value chain by engaging suppliers and clients to reduce their own emissions (reducing Scope 3 emissions).
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Residual emissions are those that a company cannot operate without after all efforts have been made to decarbonise. A company can “offset” part or all of its residual emissions by generating or purchasing high-quality carbon credits.
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Core residual emissions include the following:
Scope 1 direct emissions
Scope 2 indirect emissions
Only a small part of Scope 3 value chain emissions - (Business travel & Employee commuting)
Core residual emissions are therefore relatively straightforward to offset because Scope 3, which typically represents the vast majority of emissions, is not included.
It is much more ambitious for a company to offset the totality of its residual emissions, as this would include all of Scopes 1, 2 and 3.
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A company can either play a part in generating carbon credits, or purchase credits from the project developer or an online marketplace, which is more often the case.
The credit represents one tonne of CO2eq that has been either avoided or directly removed from the atmosphere somewhere else in the world. By purchasing X amount of credits, a company can then retire* them, claiming the benefit for itself and rendering them unavailable for resale. The company can then take X amount from its total carbon footprint, in what is a sort of balancing act. However, this balancing act is only effective if credits are of high quality (meaning they actually avoid / remove X emissions).
Carbon credits are issued by carbon registries according to specific standards, such as Verra's 'Verified Carbon Standard'. Each standard aims to ensure that avoidance and removal are measured, monitored and verified with the right level of accuracy and integrity. Registries keep a public record of activity relating to projects and carbon credits and each is given a unique identification number to avoid double counting.
*Retire is often interchanged with cancel.
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Cancelling carbon credits, often interchanged with “retiring” carbon credits, can be defined as removing them indefinitely from circulation by claiming the benefit as your own. This is done by subtracting the amount from your own carbon footprint.
Once this has been done, the credits can no longer be purchased or cancelled by someone else, meaning that no one else can claim the benefit of the emissions reduction/removal they represent.
Even if a company has purchased 100,000 tons of carbon credits, if they have not cancelled these, the carbon reduction/removal they represent cannot be claimed and cannot be subtracted from a company’s residual emissions.
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Our data is sourced in four different ways, namely:
Public documents - ESG and sustainability reports, generally made available on companies’ websites or any other public disclosure channel.
Company representatives - To ensure financial investors have the most up-to-date view of their carbon policy, some companies reach out proactively to us to provide us with data that is missing in their ESG reports. If you are an official representative of a public company, please visit our Companies page.
Crowdsourcing - Voluntary contributions from individuals. This entails checking, to the extent possible, that the source is reliable. We welcome any contributions to update data or add companies that are not currently featured on our tool. To submit data, please visit our Individuals page.
Calculation - To address any gaps where a company has not disclosed data, our team carries out an analysis of similar companies in the particular sector and industry to calculate a best estimate.
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Publicly traded companies are much more accessible to investors than private ones. Investors have two levers to encourage companies to improve their rating, both through funding (minimising risk) and engagement (improving financial value through an improved rating).
Public companies are often also subject to carbon disclosure requirements which makes their data much more extensive and reliable than that of private companies. In the EU, for example, a new Directive entered into force on 5 January 2023 called the Corporate Sustainability Reporting Directive or “CSRD”. Aiming to boost transparency, the Directive updates and reinforces the rules around what companies should report, as well as extends the obligation to a broader set of large companies and listed SMEs.
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We opted for data relating to companies with the largest market cap from 9 key indexes (Nasdaq, NYSE, DAX, FTSE, etc.).
We intend to expand our selection of companies in the near future.
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As companies report their emissions data annually, data for any given financial year usually becomes available the following year (e.g. data from the 2021 financial year should have become available in early 2022). This will then be updated systematically onto our tool.
Throughout the year, small modifications to existing data may be required if companies wish to correct information, or data that was previously unprovided has become available.
III. Data
IV. Ratings
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We rate companies based on their residual emissions, which are emissions that a company cannot operate without after all efforts have been made to decarbonise. We take into account the following criteria:
Transparency of carbon reporting (completeness, verification, etc.)
% of core residual emissions offset (core residual emissions = Scope 1 + Scope 2 + Business travel + Employee commuting)
% of total residual emissions offset (Scope 1 + Scope 2 + full Scope 3)
Financial ability to progress further by purchasing additional carbon credits
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A company’s financial capacity is their Income before Tax (“IBT”) per ton of CO2eq emitted, which is calculated in the following fashion:
Income before tax / Total residual emissions
Where:
Total residual emissions = Scope 1 + Scope 2 location-based + all Scope 3 categories
If a company has high financial capacity, it is easier for them to purchase carbon credits and to offset their residual emissions without impacting greatly on their overall profit. Here are 2 concrete examples of how this type of information can be useful:
Company A has an IBT/ton of 3,000 USD. It wishes to offset with high-quality carbon credits priced at 100 USD per ton. Offsetting all its residual emissions will negatively impact its overall profit by around 3.3% (100/3000).
Company B has an IBT/ton of 1000 USD. In the same way, it wishes to offset all its residual emissions with high-quality carbon credits priced at 100 USD per ton. This will negatively impact its overall profit by around 10% (100/1000).
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Transparent disclosure is at the core of any credible plan towards reducing residual emissions. Some companies are further ahead than others with regard to transparency, but even the highest rated companies have room to improve.
To help investors better understand how transparent companies are with regard to their carbon emissions, we have created a transparency index. This index ranges from 0 (no transparency) to 100 (perfect transparency) and is calculated as follows:
V. Using the tool
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There is an option for users to download each analysis in CSV or XLSX format in the left-hand menu of the tool.
You can also share company profiles on social media by clicking on either the Twitter, Facebook or Linkedin icons on the top-right of each company profile.
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Access to our data through an API is currently unavailable. If you wish to have this type of access, please contact us.
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We welcome any contributions to:
Update existing data
Add a public company that is not currently included in our tool
If you are from the company itself, please visit our Companies page. If not, please submit data through our Contact page under the ‘Submit data’ section.
Once you have completed the form with the relevant information, our team will get back to you as quickly as possible.
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Publicly traded companies are listed on different stock exchanges, each of which may each apply a different standard to classify companies into sectors and industries.
All companies on our tool are classified by sector and industry group according to the Global Industry Classification System (GICS). We decided to choose this standard to apply across the board to all companies, regardless of where they are listed, to ensure that data is classified homogeneously.