- Analysis of the reduction of greenhouse gas emissions by the Dax groups
The heavyweights of the German stock market have reportedly reduced their greenhouse gas emissions last year, according to a recent assessment. Measured against 2022, the direct emissions of the DAX corporations dropped from 218 to 189 million metric tons of CO2 equivalents, a decrease of around 14%. This is the result of an analysis conducted 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.
The reduction amounts to nearly 30 million metric tons
Absolutely, the DAX companies' reduction is nearly 30 million metric tons of CO2 equivalents, which, according to EY, is equivalent to the annual emissions of 17.4 million average new cars with an annual mileage of 15,000 kilometers.
In total, 32 DAX companies reduced their emissions. Seven increased their greenhouse gas emissions, while one company did not provide any data. The semiconductor manufacturer Infineon and the insurer Allianz recorded the largest percentage decrease, while the sports car manufacturer Porsche AG had 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 through operational processes, such as machinery, in-house 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 obtains electricity or district heating from a supplier using fossil fuel power plants.
Expert warns against complacency
The head of EY's sustainability consulting, Simon Fahrenholz, praised the German economy's progress in reducing emissions, noting that the top companies have taken a leading role.
However, Fahrenholz 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 is not a long-term solution. This is evident in the fact that the energy consumption of DAX companies has decreased much less compared to their emissions.
Fahrenholz therefore warned 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 their business models may become a low priority. To tackle this monumental task, companies need to integrate decarbonization holistically into their business strategy.
Indirect emissions are significantly higher
The analysis also considers another category of emissions: those not directly attributed to the companies, as they occur at upstream and downstream stages of the value chain, such as supply chains, transport, product use, and disposal. Including these, the DAX companies' emissions amount to nearly 3.5 billion metric tons, representing nine percent of global greenhouse gas emissions in 2022. Consequently, the reduction compared to 2022 decreases to four percent.
According to Fahrenholz, companies' ability to gain an overview of indirect emissions is limited: To increase transparency and reduce these emissions, comprehensive efforts are needed. For instance, corporations must negotiate with suppliers and waste management companies. Changes in product development are also necessary. "This takes time, and successes may only become apparent after several years."
The DAX companies' emissions reduction in indirect categories is still considerable, amounting to a decrease of 4% compared to 2022. Germany, with its leading companies, plays a significant role in reducing global greenhouse gas emissions, as the DAX companies' indirect emissions account for 9% of the total in 2022.
