Are S&P 500 companies prioritizing environmental sustainability?

Faced with climate turmoil and a changing definition of corporate social responsibility, we at Refinitiv are seeing fast-growing demand for sustainable investment opportunities and transparent ESG data to inform what environmental sustainability actually encompasses.

1. Of all the S&P 500 companies, 18 account for half of the generated CO².
2. 354 of the S&P companies have emission policies. Of those, 245 have specific reduction targets.
3. The S&P would yield near-identical returns if you exclude high-polluting companies, including in historical investments (i.e. if you had built a portfolio in 2005 and excluded the 29 energy companies in the S&P, you’d reduce the total S&P’s emissions by 19.20% and see a negligibly higher annualized return (9.85% vs. S&P’s 9.54%) since 2005.

Environmental Sustainability

In partnership with Quartz Creative, we used Refinitiv’s robust ESG data offerings to develop a new data visualization that reveals the companies in the S&P 500 that are prioritizing environmental sustainability, and those that aren’t.

First, we look at corporate greenhouse gas emissions and climate activism among S&P 500 corporations. Here we bring to light which companies have climate-forward policies and how selective investment in sustainability could affect investment returns.

Watch: Refinitiv Perspectives LIVE – ESG Investment, a cure all for Asset Management?

Some of the thought-provoking insights that have come out of this work include:

The Biggest Offenders

• • Of all the S&P 500 companies, 18 account for half of the generated CO².
    • Unsurprisingly, these biggest greenhouse gas emitters are fossil fuel, transport, petrochemical, and utility companies.

Reduction Targets

• • It’s important to have emissions policies, but they don’t hold you to specific actions unless you include reduction targets.
    • 354 of the S&P companies have emission policies. Of those, 245 have specific reduction targets.
    • The Paris Agreement outlined even more aggressive targets to reduce greenhouse gas emissions.
      • Before the US withdrew from the agreement in 2017, the country’s target was 17% reduction by 2020 and 80% reduction by 2050. Just 85 S&P companies are on track with the US’ pledge.
    • The EU set even more aggressive goals: cutting emissions 20% by 2020 and upwards of 95% by 2050. Just 44 S&P companies are on track with the EU’s pledge.

Leading the Charge

• • The 44 S&P companies tracking with the EU Paris Agreement emissions reduction pledge account for 28% of the S&P’s carbon emissions. This is good news, as their reductions will have a much bigger impact.

The Bottom Line

• • • The financial risk of divesting from fossil fuel companies is statistically irrelevant.
      • The S&P would yield near-identical returns if you exclude high-polluting companies, including in historical investments (i.e. if you had built a portfolio in 2005 and excluded the 29 energy companies in the S&P, you’d reduce the total S&P’s emissions by 19.20% and see a negligibly higher annualized return (9.85% vs. S&P’s 9.54%) since 2005.
      • This is demonstrated through several examples within the interactive.
    • Support for enacting stronger emissions policies is growing. Since 2015, 38 more S&P companies have adopted emission targets.
      • This is driven by: regulation, bottom-line performance, and stockholder pressure.

Explore the full data visualization for yourself at Refinitiv.com/bubble.

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