New research published in Nature Climate Change suggests that one-fifth of humanity’s carbon dioxide emissions come from multinational companies' global supply chains. The study highlights how multinational companies hailing from the richest countries in the world effectively “outsource” emissions to the poorer parts of the world.
The authors argue that multinationals have a huge responsibility when it comes to reducing emissions and helping slow down the climate crisis. By mapping the emissions generated by their assets and suppliers abroad, the study shows that just because the emissions are not happening in the countries these companies’ headquarters are based, doesn’t mean they are not happening or responsible. The researchers suggest that to help to push these companies on a more sustainable path their foreign emissions should be assigned to the country that the company is from.
"Multinational companies have enormous influence stretching far beyond national borders. If the world's leading companies exercised leadership on climate change – for instance, by requiring energy efficiency in their supply chains – they could have a transformative effect on global efforts to reduce emissions,” corresponding author Professor Dabo Guan, from University College London, said in a statement.
"However, companies' climate change policies often have little effect when it comes to big investment decisions such as where to build supply chains. Assigning emissions to the investor country means multinationals are more accountable for the emissions they generate as a result of these decisions."
The data looked at how emissions have changed between 2005 and 2016. They found carbon emissions from foreign investment peaked in 2011, with 22 percent of global emissions. By 2016, these emissions were around 18.6 percent of the global total for the year. The reason for this small decrease is in the emergence of green technologies as well as a push for de-globalization in the production of goods.
Mapping the global flow of investment showed steady increases in investment from developed countries to developing countries. Between 2011 and 2016, emissions from US corporations in India increased from 48.3 million tons to 70.7 million tons. During the same period, investment from China to south-east Asia increased went from 0.7 million tons to 8.2 million tons.
The paper delivers specific examples of the carbon emissions of some of the world's largest companies. For example, Coca-Cola and PepsiCo's emissions abroad were only slightly smaller than the carbon emissions for the whole food and drink industry in China and the US, respectively. BP has more foreign carbon emissions than the oil refinement industry in Canada, China, and Germany combined.
The researchers also showed that things are changing. By 2017, the Coca-Cola company had reduced its emissions by 19 percent compared to 2010. But most companies will only slowly and cautiously move towards greener policies, and international changes are needed to curb these emissions more effectively for everyone’s benefit.