How companies pretend to be greener

A lot of greenhouse emissions come from companies. Often they state their emissions in the annual report. But sometimes they're a bit tricky about it.

What's the trick?

It's a little thing called emissions intensity. Intensity is a company's carbon footprint divided by how much business it does.

Why is it used?

It's a handy way to compare different-sized companies in a similar industry. A larger company may pollute more but (for its size) be cleaner than its competitors in terms of pollution per customer, or per item made.

How can it be mis-used?

A company with a range of products may report emissions per dollar of revenue.

For example, a T-shirt that causes 20kg of emissions and costs $20 has an emissions intensity of 1 kg/$.

If the price goes to $25, the emissions intensity becomes 0.8 kg/$ - an apparent 20% reduction even though nothing has changed except the price.

It's very tempting for companies to use this figure in annual reports.

24% or just 4%

Telstra this year reported a 24% decrease in carbon intensity - measured per petabyte of data transmitted (a petabyte is a million gigabytes).

I wasn't fooled. It sounded good, but I wanted more info. Their total emissions are down - but by just 3.9%. Not bad. But nowhere near 24%.

So while the total greenhouse emissions are only slightly decreasing (the green bars in the graph) the carbon intensity (the numbers in the circles) give a far rosier picture.

Does this seem like a scam to you?

In this graph alone, data (green line) almost tripled. "Intensity" can trick shareholders and customers us into thinking we're making huge progress - while we continue to pollute as much as before (sometimes even increasing our pollution).

Personally I think yearly emissions should be reported as tonnes of carbon pollution. Intensity should only be used to compare with other companies in the industry.

Are you a shareholder?

If you're going to an AGM, why not ask a question about your company's emissions?

I raised the question at a recent Telstra shareholder meeting - asking about actual emissions rather that intensity. the representative couldn't even tell me whether emissions had gone up or down in the past year. We need to get this on their radar.

PS. I also asked another question. Subscribe to be notified when I write about that.