FAQ

What about the rebound effect?

Why did you choose GDP and not GNP?

Why did you choose the year 2009?

Why did you include scope 1 and 2?

Why did you not include supply chains?

Why did you not use profits?

Is "efficient" and "sustainable" the same?

 

What about the rebound effect?

The rebound effect describes a situation in which a higher efficiency leads to a higher resource use. This can for example be the case when a more efficient use of a resource use results in a lower price and a lower price results in more demand for this resource. The amount of CO2-emissions that will be emitted in the future is regulated by commitments that European countries have made. There will be no rebound effect on the societal level, if these commitments are being met.

Why did you choose GDP and not GNP?

GDP desribes the economic activity that is taken place in a country. GNP describes the activity that is taken place by companies of a country. The international activities of a German company will therefore be part of GNP but not of GDP. The CO2 emisssions that fit the scope of GNP would cover the emissions of German companies (among others) in Germany and abroad but not the emissions of foreign companies in Germany. This figure does not exist. By choosing GDP as return figure we are therefore making sure that the scope of the return figures fits the scope of the CO2-emissions. The implicit normative assumption is that companies should be benchmarked against the CO2-efficiency of the country of their origin.

Why did you choose the year 2009?

Companies take time to report CO2-emissions. The data mining for this exercise took place mostly in 2011. At this point comprehensive data for 2010 was not yet available.

Why did you include scope 1 and 2?

One can argue that scope 2 emissions are taking place outside the boundaries of the companies and should therefore not be considered in the analysis. On the other hand these emissions are linked entirely end exclusively to the activities of the company assessed. We therefore include scope 1 and 2 emissions.Strictly speaking a double-counting takes place when the emissions of utilities are assessed. Their emissions are mostly scope 2 emissions of other companies.

Why did you not include supply chains?

The Sustainable Value approach links environmental burdens to economic returns. When calculating any kind of efficiency we need to make sure that both burden and return have the same scope, i.e. that they cover the same part of the production process. In the financial markets efficiency is usually calculated for the operations of a company. For this purpose the capital employed by the company is related to the return (e.g. profit) generated by the company. The profitability of suppliers or clients is usually not considered. We follow this example of the financial markets in the context of the analysis presented here. Supply chains could also be included. To do this the burden of the supply chains would have to be matched by the return that is created by these parts of the supply chain. This would have to be done on both the company and the benchmark level. In the practical application this quickly becomes a problem of data availability.

Why did you not use profits?

The Sustainable Value approach can use different return figures. In the context of Sustainable Development we believe that the return created for a broad group of stakeholders is particularly useful. The government, employees, and providers of debt all benefit from the company next to shareholders. The return created for these stakeholders is part of the value added created by companies. Value Added is therefore a particularly useful indicator in the context of a societal concept like Sustainable Development.

Is "efficient" and "sustainable" the same?

No. Using resources efficiently does not mean that resources are used sustainably. However, in the light of limited resources and pressure for economic growth an overall more efficient use is a necessary though not sufficient condition for a sustainable use of resources in the future.