Report highlights importance of measuring, managing emissions

NSF International, a public health and safety organization, and Trucost Plc, a global provider of environmental data and analysis, on August 19 announced the availability of a new report entitled, Carbon Emissions – Measuring the Risks. This free report examines the greenhouse gas (GHG) emissions of S&P 500 companies in several different sectors, including industrial goods and services.

Many U.S. companies will soon have to pay for GHG emissions under the planned cap-and-trade program, an approach used to control pollution by providing economic incentives to companies achieving reductions in pollutant emissions. This report looks at the GHGs emitted by S&P 500 companies in several sectors that NSF works with: chemicals, food and beverage, healthcare, industrial goods and services, personal and household goods, automobiles and parts, and retail.

“Climate change represents serious challenges to the environment, as well as risks and opportunities to U.S. corporations. The first step in mitigating those risks is to calculate carbon emissions and their potential costs from direct operations and supply chains,” said Malcolm Fox, Vice President Corporate Services, Trucost, an NSF International Partner. “Industry by industry, this report presents those impacts and identifies critical strategies to prepare for upcoming legislation and turns risks into a competitive advantage. For example, the average industrial service firm needs to prepare for the fact that over 70 percent of their carbon emissions are embedded in their supply chain, representing a significant financial risk.”

The report also highlights other significant environmental challenges facing these industries, by addressing the following:

• Are companies measuring and reporting GHG emissions?
• Which sectors emit the most direct operational GHGs?
• Which sectors are most exposed to carbon costs under regulations to control GHG emissions?
• Beyond carbon, what are the other significant environmental impacts of each sector?

“Carbon-intensive companies will be most exposed to carbon costs under the cap-and-trade program to be introduced in 2012 under the draft American Clean Energy and Security Act of 2009 (Waxman-Markey Bill),” said Koen Bontinck, Vice President of NSF Sustainability Services. “The goal of this report is to not only provide companies with an affordable analysis of their current operations and exposure to carbon costs, but also to help them implement sustainable business practices and verify their GHG emissions data in preparation for the new regulations.”

The report is based on findings from Trucost’s study Carbon Risks and Opportunities in the S&P 500, which assessed GHG emissions, carbon intensity and exposure to carbon costs of S&P companies internationally using publicly disclosed information. Using Trucost’s unique methodology to provide an overview of each industry’s impact on the environment, the key components of the report, Carbon Emissions – Measuring the Risks include:

• Carbon benchmarking – Carbon intensity can be used to assess a company’s carbon emissions relative to its sector peers. Companies that are more carbon-efficient than their competitors can gain a competitive advantage under carbon constraints, such as carbon pricing.
• Financial risk – The report reveals calculated carbon costs relative to earnings to identify potential profit risk.
• Other environmental impacts – To compare the importance of other environmental impacts for each sector, such as impacts on natural resources, Trucost calculated environmental costs based on the financial value of damages caused by each impact.
• Strategic implications – Companies with more energy efficient operations and supply chains will be well-positioned during the shift to a low-carbon economy to attract investors and increase market share.

Trucost’s key findings among the industrial goods and services sector include:

• The average major U.S. industrial good/services company emits 1.2 million metric tons of GHGs annually.
• Over 70 percent of emissions originate from supply chains, representing a serious financial exposure as costs are passed on to manufacturers.
• The cost of carbon may reach as high as 18 percent of earnings for some firms, as measured by earnings before interest, taxes, depreciation and amortization (EBITDA).
• Companies that compete with more carbon-efficient peers could lose market share.

To view the free report, visit http://www.nsf.org/info/sandpcarbonemissionsreport/ or contact Kelly Nichols at knichols@nsf.org or 734-827-6850. To find out more about NSF and Trucost’s sustainability services, visit www.nsfsustainability.org.

About Trucost Plc
Trucost Plc is a world-leading environmental research organisation, which helps companies and investors understand the environmental impacts of business activities (www.trucost.com). Trucost provides data and analysis on company emissions and natural resource usage in financial, as well as quantity terms to help investors, fund managers and analysts understand how environmental issues could affect companies' future earnings. Institutional investors use the information to assess the carbon or environmental footprints of their portfolios, to identify differences in performance, to address environmental risks and create structured products with lower carbon or environmental impacts. Trucost has offered expert advice and research to major corporations, institutional investors and to government departments and associated agencies since its launch in 2000.

About NSF International
NSF International (www.nsf.org) is an independent, not-for-profit organization that develops public health standards for food, water, dietary supplements and consumer goods, and certifies products to minimize adverse health effects. Founded in 1944, NSF is committed to protecting public health and safety worldwide. NSF is a World Health Organization Collaborating Centre for Food and Water Safety and Indoor Environment. NSF’s sustainable business solutions include carbon footprinting, greenhouse gas verification, as well as standards development and certification for sustainable products. Additional service offerings include safety audits for the food and water industries, organic certification provided by Quality Assurance International, dietary supplement certification, toy and consumer product testing, management systems registrations through NSF International Strategic Registrations and education through the NSF Center for Public Health Education.