Share your carbon-adjusted earnings per share number, you cowards


If my PR inbox is anything (believe me, it is), corporations, and publicly traded megacorps in particular, scramble to outdo each other with stories about how the planet will breathe a sigh of relief because of the glorious administration they serve our selves slowly warming planets. EEnvironmental, social and governance (ESG) goals are popular, but few companies directly link them to bottom line.

There’s an old truism in journalism that people can’t understand distances longer than a football field and numbers bigger than their mortgage. PR professionals know this, and Again and again, the public is enthusiastic about the numbers. “Wow, Company X has put $10 million into climate protection!” means we’re collectively getting all warm and fuzzy about Company X. Few of us think about how Company X was able to spend that $10 million, and when it turns out to be a fraction of the marketing budget, it often becomes clear that the “green initiatives” are marketing spend, not spend for the betterment of the planet.

For people who believe that we are on a timeline where we are heading towards a late-stage post-apocalyptic capitalist hellscape, where humans are cogs and the planet is made to be surface mined, the only meaningful climate measurement is one they’re weighed against the only real metric companies care about: profits. And especially profits as an intermediate measure of a company’s stock price.

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A few years ago, Danone started reporting its carbon-adjusted earnings per share (CAEPS, catchy) and directly pegged its carbon emissions to its earnings with an easy-to-understand formula: Calculate the “cost” of your greenhouse gas emissions, divide it by the number of shares and subtract that from your earnings. It’s bold, especially when the leadership team is willing to maintain those numbers over time.

“Danone pioneered voluntary ‘carbon-adjusted’ earnings per share (EPS) reporting, showing shareholders that as peak emissions were already behind us, our carbon-adjusted EPS would grow faster than expected – and faster than our EPS would have grown without CO2 adjustment,” ex-Danone CEO Emmanuel Faber wrote on an article about The B Team. “This has increased our ability to pay dividends without jeopardizing the company’s long-term investments in regenerative agriculture. Yet three years later, this effort remains a relative anomaly across the business landscape.”

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It seems Faber may have done a bit too much when he was ousted as CEO after four years at the helm of the French food giant, allegedly because of his strong climate and environmental leanings.

Leadership in launching CAEPS was strong, but it certainly hasn’t lasted — the Financial Times has only three mentions of climate-adjusted earnings per share on its entire website, and they all refer to Danone. There are other companies reporting on this; S&P Global does this, and many other companies have other ways of reporting their carbon emissions. The specifics of the metric and what it’s called may have bogged down, but it’s extraordinarily telling that there seems to be little appetite in the industry for adopting a standardized income-linked metric for greenhouse gas emissions. It’s hard to take this as anything other than a staggering lack of appetite to actually join a three-pronged approach (planet, people, profit) and indicates an extraordinary amount of hot air befitting a desire for something real and meaningful change.

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Of course, measuring carbon emissions along your supply chain can be difficult, but “difficult” is no excuse not to try and collect enough data to be able to make educated guesses about the parts of your supply chain that don’t have full visibility . By measuring – and by insisting on reports from your suppliers as part of the sourcing and billing process – companies have the opportunity to be part of a chain of culture change. And hopefully over time, once companies normalize reporting standards, it will become harder to drastically underreport (Amazon, I’m looking at you…) and easier to compare like-for-like.

Running a startup gives you an opportunity to incorporate carbon metrics into your KPIs and regular reporting to your board. As your business grows, stay the course and keep reporting. It’s one of the perks of being a startup founder: you get the chance to show what you care about and run a carbon neutral business (or, heck, aim higher and go carbon positive ) company is a pretty decent place to start.



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