Corporate Carbon Performance Indicators

TLDR

The growing reliance on carbon‑based materials and energy, coupled with rising greenhouse gas emissions, has made carbon management a critical 21st‑century challenge, with companies playing a central role due to their large material flows and innovation capacity. The study aims to assess each company's stake in carbon issues and to quantify their performance. The authors introduce four systematic indicators—carbon intensity, carbon dependency, carbon exposure, and carbon risk—to standardize corporate carbon performance assessment for policymakers and investors.

Abstract

Summary The dependency on carbon‐based materials and energy sources and the emission of greenhouse gases have been recognized as major problems of the 21st century. Companies are central to the effort to grapple with these issues due to the large material flows they process and their capabilities for technological innovation. It is important, on the one hand, to determine the individual stake companies have in these issues and, on the other, to measure companies' performance. Since the results of studies thus far have been ambiguous, we define four comprehensive and systematic corporate carbon performance indicators: (1) Carbon intensity is physically oriented and represents a company's carbon use in relation to a business metric. (2) Carbon dependency illustrates the change in physical carbon performance within a given time period. (3) Carbon exposure reveals the financial implications of using and emitting carbon. (4) Carbon risk estimates the change in financial implications of carbon usage within a given time period. On the basis of these general definitions, we specify the indicators for a standardized application that can support two important stakeholders in their decision making: policy makers, who can include such information when evaluating current climate policies and formulating future ones, and investors and financial institutions, which can compare companies with respect to their carbon performance and corresponding financial effects.