- Analysis: Dax companies reduce greenhouse gas emissions
The heavyweights of the German stock market have reportedly reduced their greenhouse gas emissions last year, according to a current evaluation. Measured against 2022, the direct emissions of the DAX companies fell from 218 to 189 million tonnes of CO2 equivalents, a decrease of around 14 percent. This is shown in the analysis carried out by the auditing and consulting firm EY, which evaluated the sustainability reports of the 40 companies. In these reports, they document their efforts towards climate neutrality.
Decrease of almost 30 million tonnes
Absolutely, the DAX companies' reduction amounts to almost 30 million tonnes of CO2 equivalents, which corresponds to the annual emissions of 17.4 million average new cars with an annual mileage of 15,000 kilometers, according to EY's data.
In total, 32 DAX companies reduced their emissions. Seven emitted more greenhouse gases than in 2022, and one company did not provide any data. The chip manufacturer Infineon and the insurer Allianz recorded the largest percentage decrease, while the sports car manufacturer Porsche AG recorded the largest increase. In 2023, the largest emitter was the building materials company Heidelberg Materials, followed by the energy company RWE and the chemical company BASF.
These figures include emissions generated by processes during operation, such as by machinery, own power plants, or the company's vehicle fleet. However, they also include greenhouse gases emitted during the production of purchased energy, for example, when a company buys electricity or district heating from a supplier with fossil fuel power plants.
Head of EY's sustainability consulting, Simon Fahrenholz, praises the German economy's progress in reducing emissions, with top companies taking a leading role. However, he does not expect the current pace to continue, as many companies have so far focused on individual measures, such as switching to renewable energy sources. While this is relatively easy to implement and has a strong initial effect, it does not lead to sustained reduction. The energy consumption of DAX companies has decreased less compared to their emissions, indicating that more needs to be done.
Fahrenholz warns against complacency, stating that further reduction of the CO2 footprint will not happen automatically. Many companies are currently under pressure due to uncertain business prospects, and the sustainable transformation of business models may not receive sufficient attention. To tackle this challenge, companies need to integrate decarbonization into their overall business strategy.
Indirect emissions are significantly higher
The analysis also considers another category of emissions: those not directly attributable to the companies, as they occur in upstream and downstream value chains, such as supply chains, transportation, product use, and disposal. Including these, the DAX companies' emissions amount to nearly 3.5 billion tonnes, representing nine percent of global greenhouse gas emissions in 2022. The reduction compared to 2022 then decreases to four percent.
According to Fahrenholz, companies' ability to gain insight into their indirect emissions is limited: To increase transparency and reduce these emissions, comprehensive efforts are required. For instance, corporations must negotiate with suppliers and waste management companies. Changes in product development are also necessary. "This process takes time, and successes may only become apparent after several years."
The DAX companies' reduction in greenhouse gas emissions, amounting to almost 30 million tonnes, is significant, equivalent to the annual emissions of over 17 million new cars. However, indirect emissions, which include those from supply chains and product use, make up a substantial portion of their total emissions, accounting for nearly 3.5 billion tonnes and nine percent of global greenhouse gas emissions in 2022.
Despite Germany's heavyweights in the stock market reducing their direct emissions by 14%, the Head of EY's sustainability consulting, Simon Fahrenholz, emphasizes that this progress may not continue at the current pace. He suggests that companies need to integrate decarbonization into their overall business strategy to tackle the challenge of further reducing their CO2 footprint.
