Climate action tracking

Top 10 US CO2 Emitters And Their Track Record on Climate Action

As the chances of limiting global warming to 1.5°C fade away, we assessed the biggest polluters’ track record on climate action.

It won’t be much of a spoiler alert if we tell you “yes, they are way behind.”

Some “fun” facts before we get to the data

  1. Yes, some of the “bad boys” are really bad.
  2. Some of the poster boys are much better at marketing than actually making emission cuts.
  3. Asset managers don’t walk the talk.

The top 10 US companies by CO2 emissions

For our analysis we identified the top 10 CO2 emitters within publicly traded companies in the US. The list contains many of the companies you would expect to see. The sectors they operate in are oil & gas (4), utilities (5) and steel production (1).

Exxon Mobil is by far the biggest emitter at close to 120 million tons of Scope 1+2 emissions (Scope 1 emissions are emissions caused by production activities, Scope 2 emissions are indirect emissions from the purchase of energy). The number two spot with close to 100 million tons of Scope 1+2 emissions is taken by Vistra Energy Corp., a Texas-based utility. Southern Corporation comes in third with roughly 80 million tons of Scope 1+2 emissions.

Biggest CO2 emitting companies in the US

Climate action, or lack thereof

The most effective way to evaluate companies’ efforts to tackle emissions is by looking at the change in carbon intensity over time. Carbon intensity represents a normalized view as it relates the emissions generated to revenue, thus accounting for revenue growth (or decline) as well as corporate actions, such as mergers or spin-offs.

Only 2 out of 10 companies have made meaningful progress since 2018

Only two companies – Vistra Energy Corporation and AES Corporation – have made significant progress in reducing carbon intensity over the past 3 years with reductions of 26% and 22% respectively. Exxon and Marathon have seen their operations’ carbon intensity actually increase. NextEra Energy – the proclaimed poster child among utilities and often the biggest holding in ESG ETFs –  has seen its carbon intensity go up by 9% relative to 2018.

3 out of 10 companies have net zero targets

We also checked whether any of the 10 top-emitting companies had proper 2050 net zero targets in accordance with the criteria applied by Climate Action 100. ESG fund and rating agency favorite NextEra Energy does not.

CEO pay not meaningfully tied to climate action

Finally, we looked at whether companies have tied compensation to climate action. Only two of them have, albeit at limited scale: Southern Company and Marathon Petroleum Corp. On the topic of pay for climate performance, the non-profit organization As You Sow recently published a highly insightful report.

Do Boards have a proper mandate from shareholders?

Clearly, most company boards are keenly aware of the harmful effects on humanity resulting from an extensive rise in global temperatures. Yet, we need to ask ourselves: Do they have a clear mandate to invest billions within our capitalist framework? Isn’t the CEO’s set to priorities still driven by short-term maximization of shareholder value, and his or her own annual compensation incentives?

The largest shareholders and asset managers, such as Blackrock, Vanguard or State Street, are best placed to shift Boards’ mandates to include decisive climate action. Many of them have released promising sound bites promising to engage corporations to act. We wanted to know whether this is yet more greenwashing or whether they actually walked the talk.

In 2022, 6 of the top 10 CO2 emitters in the US received shareholder resolutions asking them to act on climate change. All 6 resolutions were filed by not-for-profit organizations. No institutional investors filed a resolution with any of the top polluters to speed up climate action. 4 of the 10 were not addressed any shareholder solution at all.

Ultimately, many of the findings from this analysis are as expected. If you are, like us, an optimist, you may have hoped for a more positive outcome and gotten a reality check instead. The levers to get meaningful reductions in emissions are clear.

The production of energy must become substantially cleaner.

Company Boards must be given a clear mandate to cut emissions at scale. Regulation may contribute on the margin. But the main responsibility now lies with shareholders.

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