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Is corporate America living up to its net-zero pledges? A new report breaks down the numbers

April 22, 2021, 12:27 PM UTC

Over the past decade, sustainability has gone from being a quiet afterthought to a deciding factor for businesses around the globe.

As Earth Day arrives, and ESG considerations become more entrenched, Bank of America analysts have compiled a list of 10 “surprising” statistics on this green investment shift and how it’s finally paying off.

In a study into the S&P 500 index, BoA Securities’ Savita Subramanian and Marisa Sullivan found that using sustainability as a measure of investment is now mainstream, with 90% of companies in the S&P 500 publishing corporate social responsibility (CSR) reports—up from 20% in 2011.

And while it seems that every company has come forward with their own pledges for net zero, according to trades on the market, there is a substantial incentive to do so. S&P 500 companies that have set dates for reaching carbon neutrality trade at a significant premium to those that have not. 

Furthermore, companies with high emissions trade at a 15% discount to companies with low emissions. Not disclosing any emissions data pushes stocks to trade even lower.

Water efficiency is another factor correlated to higher stock prices.

Looking into different sectors, most emissions come from the industrial, utilities, and energy sectors, which account for more than 70% of direct and indirect emissions while making up only around 15% of the index.

But while the utilities sector accounts for 27% of the carbon footprint in the S&P 500, half of all utilities have committed to carbon neutrality—a higher percentage than any other sector.

Overall, the financial sector companies have committed to reaching zero carbon emissions in the shortest time frame with a sector median target date coming in at around 2022. This is followed by consumer staples companies, which have a median target date of 2025.

Tech companies, meanwhile, although regarded as one of the “most overweighted sectors by ESG funds” cause some of the highest indirect emissions among service industries.

In the tech industry and the boom in cryptocurrencies, the report warned the increasing number of companies exposed to Bitcoin are pushing up emissions, with every $1 billion inflow into Bitcoin producing the same emissions as 1.2 million cars driven over a year’s time.