How Tracking GHG Emissions Accelerates Value and Strengthens Companies

First, tracking GHG emissions enables companies to engage in the kind of meaningful, transparent dialogue that stakeholders demand. A 2019 Environmental Defense Fund assessment indicated that across all surveyed sectors, over 80% of stakeholders are seeking additional actions related to climate impacts. Private markets in particular have room to grow in making available robust and consistent climate disclosures, as highlighted and supported by recent efforts such as iCi’s GHG accounting and reporting guidance for private equity. Measuring emissions equips companies with the information they need to approach these conversations with confidence, able to articulate what they’ve done, what they plan to do and how they plan to get there.

Second, GHG accounting can help companies manage strategic risks. Governments representing about half of the collective global economy have implemented policies that price carbon, which aim to reduce GHG emissions. Similarly, regulations that require companies to report GHG emissions are being enacted in various jurisdictions around the world. Measuring and managing emissions can help companies get ahead of the risk these factors pose, mitigating future financial burdens or operational constraints.

Third, GHG inventories are a window into a company’s operations that can help leaders spot other opportunities for value creation and cost savings. For instance, companies that identify significant emissions from office spaces can select more energy-efficient buildings for new spaces. High-performing energy-efficient commercial office buildings can use as much as 40% less energy than the average commercial office building, reducing utility costs.

For these reasons, we focus on emissions measurement as an operational capability rather than as a compliance request.  We start with the company’s goals and operational strategy, and then we look to help them build infrastructure internally or externally to track emissions. Because of our scale, we can invest in developing approaches that can be leveraged by many companies – partnerships with software and consulting providers (including a few in our own network like Sphera and RE Tech Advisors), detailed accounting guidance and capability-building for those who want to do inventories in-house, and experts on hand to help companies collect, analyze and interpret emissions data.

For companies in the scope of our emissions reduction program, this GHG accounting process feeds directly into decision-making for emissions reduction. For all our companies, it can help set the right goals, understand the opportunities and costs associated with decarbonization, and create stronger partnerships with customers, employees and other stakeholders.

We undertook this initiative because we believe it will unleash significant value for our companies and our investors. We view decarbonization the same way we view other operational interventions like data analytics, healthcare, talent development, brand strategy and technology and product – that is, an opportunity to accelerate value by making our companies stronger.

Rightly understood, then, tracking GHG emissions is neither greenwashing nor a compliance checkbox. It’s a critical tool that investors can use to build more valuable businesses. We urge leaders to take full advantage of this tool, applying it alongside other operational interventions to accelerate their company’s growth and prepare it for the changes of the coming decade.

Learn more about Blackstone’s approach to sustainability.