Assessments of the environmental performance of global companies need to account for company size

Rossana Mastrandrea; Rob ter Burg; Yuli Shan; Klaus Hubacek; Franco Ruzzenenti

doi:10.1038/s43247-024-01200-5

Assessments of the environmental performance of global companies need to account for company size

Rossana Mastrandrea, Rob ter Burg, Yuli Shan, Klaus Hubacek, Franco Ruzzenenti^*

^*Corresponding author for this work

Geography, Earth and Environmental Sciences

Research output: Contribution to journal › Article › peer-review

Abstract

While the awareness of the corporate world toward sustainability is growing, how to assess corporate environmental performance objectively and efficiently remains an open question. Here we estimate the relationship between company size and four environmental indicators to understand the environmental performance of nearly 6500 companies, building on the concept of allometric scaling and using Thomson Reuters EIKON data for the year 2018. We highlight that carbon dioxide emissions, energy use, water and waste production scale with the size according to a power law. This can be used as a benchmark to assess unambiguously a company’s environmental performance. We find that the adopted Environmental, Social & Governance rating is uncorrelated with the environmental performance. Our results suggest that a fair and effective environmental policy should consider the nature of the scaling relationship. Scaling laws suggest the existence of a nexus between an underlying network and corporate metabolism, whose understanding would help in discerning the determinants of environmental impacts.

Original language	English
Article number	5
Number of pages	11
Journal	Communications Earth & Environment
Volume	5
Issue number	1
DOIs	https://doi.org/10.1038/s43247-024-01200-5
Publication status	Published - 19 Jan 2024

Bibliographical note

Acknowledgements
The authors would like to thank Noam Abadi for his reviewing contribution and Professor Luis Bettencourt for his valuable and regarded comments which helped us improve the paper. A warm thank also to Doctor Swarnodeep from the Faculty of Economics of the University of Groningen, for sharing data and most importantly, his informed views on the topic. RM acknowledges support from the Italian “Programma di Attività Integrata" (PAI) project “PROsociality COgnition and Peer Effects" (PRO.CO.P.E.), funded by IMT School for Advanced Studies Lucca and the European Union - Horizon 2020 Program under the scheme “INFRAIA-01-2018-2019 - Integrating Activities for Advanced Communities”, Grant Agreement n.871042, “SoBigData++: European Integrated Infrastructure for Social Mining and Big Data Analytics” (http://www.sobigdata.eu).

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Cite this

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abstract = "While the awareness of the corporate world toward sustainability is growing, how to assess corporate environmental performance objectively and efficiently remains an open question. Here we estimate the relationship between company size and four environmental indicators to understand the environmental performance of nearly 6500 companies, building on the concept of allometric scaling and using Thomson Reuters EIKON data for the year 2018. We highlight that carbon dioxide emissions, energy use, water and waste production scale with the size according to a power law. This can be used as a benchmark to assess unambiguously a company{\textquoteright}s environmental performance. We find that the adopted Environmental, Social & Governance rating is uncorrelated with the environmental performance. Our results suggest that a fair and effective environmental policy should consider the nature of the scaling relationship. Scaling laws suggest the existence of a nexus between an underlying network and corporate metabolism, whose understanding would help in discerning the determinants of environmental impacts.",

author = "Rossana Mastrandrea and Burg, {Rob ter} and Yuli Shan and Klaus Hubacek and Franco Ruzzenenti",

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N1 - Acknowledgements The authors would like to thank Noam Abadi for his reviewing contribution and Professor Luis Bettencourt for his valuable and regarded comments which helped us improve the paper. A warm thank also to Doctor Swarnodeep from the Faculty of Economics of the University of Groningen, for sharing data and most importantly, his informed views on the topic. RM acknowledges support from the Italian “Programma di Attività Integrata" (PAI) project “PROsociality COgnition and Peer Effects" (PRO.CO.P.E.), funded by IMT School for Advanced Studies Lucca and the European Union - Horizon 2020 Program under the scheme “INFRAIA-01-2018-2019 - Integrating Activities for Advanced Communities”, Grant Agreement n.871042, “SoBigData++: European Integrated Infrastructure for Social Mining and Big Data Analytics” (http://www.sobigdata.eu).

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Assessments of the environmental performance of global companies need to account for company size

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