Europe’s Climate Leaders 2023: interactive listing

For any business leader hoping that climate issues could be quietly parked during the energy crisis, the March update from the UN Intergovernmental Panel on Climate Change offered a sharp corrective. Its summary for policymakers said: “All global modelled pathways that limit warming to 1.5C . . . involve rapid and deep and, in most cases, immediate greenhouse gas emissions reductions in all sectors this decade.”

And, while the 500 companies listed in this third edition of Europe’s Climate Leaders — compiled by the Financial Times in partnership with Statista — appear to be moving in the right direction, there is no sign that the pressure to curb emissions is about to abate.

Both the EU and the UK have set a target of 2050 for achieving net zero emissions, and further impetus for a greener economy has come from two external shocks last year: Russia’s invasion of Ukraine, which led to a steep fall in gas imports; and the US’s Inflation Reduction Act, which offers $369bn in subsidies for clean energy, and which the EU is keen to match.

Meanwhile, regulators are taking a harder line on greenwashing — when companies make inflated claims about their environmental credentials — although consumer groups have criticised the European Commission’s proposed new rules on this for lacking clarity.

But perhaps the biggest catalyst for action is the climate itself: last year’s summer was the hottest ever recorded in Europe, with adverse consequences for farmers — including a smaller cereal harvest — and intense wildfires. This year, drought is already afflicting southern Europe.

The upshot is that companies face growing scrutiny from consumers and regulators over their environmental performance, and the methodology for this year’s Climate Leaders list has been tightened accordingly.

In previous editions, the companies listed have simply been 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 — for the first time — 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 include collaboration with environmental performance monitor CDP, and with the Science Based Targets initiative (SBTi), which assesses emissions reduction plans.

Climate Capital

Where climate change meets business, markets and politics. Explore the FT’s coverage here.

Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here

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 and businesses rapped by regulators for greenwashing fell into this category.

The business with the highest score was Swedish telecommunications provider Tele2, with 86.9 points, followed by fellow Swedish telco Telia, German telco Deutsche Telekom and Spanish technology company Indra Sistemas. As in previous years, financial services accounted for the greatest number of companies, with 12.2 per cent. Next came transport, logistics, and packaging (7.6 per cent) and energy and utilities (7.2 per cent).

The UK was home to 25 per cent of companies on the list, followed by Germany with 14.6 per cent and France with 11.4 per cent — much the same pattern as last year.

As the IPCC points out, the Earth’s ‘carbon budget’ is running perilously low

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 ranking 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 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.

Though it is better to be a climate leader than a climate laggard, such caveats matter because, as the IPCC points out, the Earth’s “carbon budget” is running perilously low: if annual GHG emissions in 2020-2030 average out at 2019 levels, it says, there is a 50 per cent likelihood that global warming will hit the 1.5C ideal limit set down as part of the Paris climate accord.

Last year’s extreme weather came as warming reached at least 1.1C above pre-industrial levels — and “every increment”, the IPCC warns, “will intensify multiple and concurrent hazards”. Businesses that are already serious about tackling their emissions have more power than most to prevent those increments mounting up.

A print and online report on Europe’s Climate Leaders will be published on May 30, containing articles analysing the issues that this research raises.

The Europe’s Climate Leaders table has been amended since first publication, with the result that Tele2 now has the highest overall score. The single set of Scope 2 figures for 2016 that Tele2 reported was originally incorrectly assumed to be location-based (derived from the average emissions intensity of the grid in the country where the energy is consumed) rather than market-based (reflecting emissions from the actual suppliers that a company has chosen). Since figures for both ways of reporting Scope 2 emissions were reported in 2021, the 2016-21 comparison has changed, to Tele2’s advantage. The introductory text has also been updated to reflect this.

Methodology

Europe’s Climate Leaders 2023 is a list of 500 European companies that have achieved the greatest reduction in their greenhouse gas (GHG) emissions intensity and made further climate-related commitments. These two factors are combined to produce an overall score for each company.

For the first of these, the compilers looked for the businesses whose GHG emissions intensity fell the most between 2016 and 2021. Emissions intensity is defined as tonnes of Scope 1 and Scope 2 emissions of CO₂-equivalent per €1mn in revenue. The 2016 and 2021 figures were used to calculate the compound annual rate of reduction, expressed as a percentage, which contributed 80 per cent of the overall score.

For the second, the compilers assigned a score based on: transparency and extent of Scope 3 emissions reporting; use of offsets; and collaboration with CDP and SBTi. This accounted for 20 per cent of the overall score

All European companies — defined as having headquarters in one of 33 European countries — with a minimum revenue of €40mn or £36mn in 2021 were eligible for consideration. For non-euro countries, the currency value equivalent as of 31/12/2021 was the threshold.

A call for entries in November 2022 invited prospective participants to complete a short questionnaire about their GHG emissions between 2016 and 2021, and their revenue over the same period (or, for banks and insurance companies, total income). Statista also conducted independent research, scrutinising data from about 1,500 companies and inviting possible candidates to register.

For businesses with a rating from CDP, only those with a score of at least B- were considered. Companies that do not work with CDP were still eligible, but for any company annually emitting more than 2mn tonnes of CO₂-equivalent, a CDP rating of at least A- was mandatory.

The editors also reserved the right to exclude companies if their broader environmental records, beyond reported Scope 1 and 2 emissions, were sufficiently disputed to undermine any claim to be a “climate leader”.

All companies for which relevant data was found — both those that registered and those independently identified — were contacted so that they could review the data. Of those, the 500 with the greatest reduction in emissions intensity have made it into the final list of European Climate Leaders 2023.

Fuller information about the methodology is available from Statista. Although extensive research was carried out, the list does not claim to be complete, as some companies did not publish their figures or did not participate.