Online Extra: Carbon Output: Methodology and Judges

How we crunched emissions data to compile our lists

To identify the companies, individuals, and institutions appearing in the tables of this special report, a team of 10 BusinessWeek reporters worked closely with two outside organizations and a panel of independent judges. Innovest Strategic Value Advisors, a leading Wall Street green investment research firm, crunched the emissions data to help define the candidates for our lists. And Britain's Climate Group, which acts as a clearinghouse for information on carbon reduction, provided company data and technical assistance to enable our panel of judges to make the final rankings.

The first step was to gather data on corporate greenhouse gas output. Since international accounting disclosure rules don't yet address such emissions, hard numbers on CO2 output are generally self-reported, largely unaudited, and sometimes anecdotal. The information flow is improving however, thanks to the Carbon Disclosure Project, a nonprofit consortium of 155 institutional investors with $21 trillion in assets.

Since its inception three years ago, CDP has been gathering data on emissions from the world's 500 largest companies (defined by market capitalization on the Financial Times stock index). In 2004, 350 of the companies surveyed responded to CDP's request for emissions data in varying degrees of detail, up from 235 in the first year of the study. (See CDP's Web site for details on the questionnaire as well as company-by-company data on carbon output.)


  In the next stage, these data were compiled and grouped. Drawing on numbers from CDP, Innovest worked with the Climate Group to sort these into 10 categories of performance. Some are strictly quantitative, while others are more qualitative. They were chosen to represent a range of activity contributing to reduction of greenhouse gas output.

To arrive at a long list of candidates, the data was then enhanced with detailed reporting and also subjected to careful scrutiny. Innovest standardized the emission numbers -- comparing similar time frames, for example -- to create compatible data sets. Analysts fact-checked emission numbers and identified companies that had reported results inconsistently. Those that achieved significant reduction through divesture of assets or alteration of reporting parameters were eliminated from consideration.

The Climate Group is a nonprofit organization supported primarily by foundations. It also has paying members who are intensely interested in matters of climate change. Some of them appear in the BusinessWeek/Climate Group rankings and tables that appear online and in the magazine, but this is strictly the result of determinations made by our panel of independent judges.

Their on-the-ground, expert perspective informed a sometimes heated winnowing process, which helped ensure that each of the companies and individuals listed deserves recognition as a leader in greenhouse gas reduction. As with any ranking exercise, the results will be open to debate -- and we welcome this, so that the next effort can be improved.


William Moomaw is a professor of international environmental policy at Tufts University's Fletcher School of Law & Diplomacy. He is also a scientific consultant and policy analyst devoted to protecting the atmosphere and water resources, as well as to curbing climate change. He serves on the Intergovernmental Panel on Climate Change, a U.N.-chartered group that evaluates options and technologies for mitigating climate change.

Karl Ulrich is a professor in, and chairman of, the Operations & Information Management Dept. at Wharton School at the University of Pennsylvania. He also holds a secondary appointment as a professor of mechanical engineering. His research interests include innovation management and product development, but the diffusion of energy-efficient technologies is his current preoccupation.

James "Gus" Speth. At Yale University, Speth is dean of the School of Forestry & Environmental Studies and a professor of environmental policy and sustainable development. Before, he was a development administrator at the U.N. and chaired President Carter's Council on Environmental Quality. He co-founded the National Resources Defense Council in 1970, and in 1982 founded the World Resources Institute.

Michael Northrop. As director of sustainable-development grants for Rockefeller Brothers Fund in New York City, Northrop keeps an eye on matters related climate change, forest protection, and marine conservation. Previously, he was executive director of Ashoka, an international development organization, and an investment banker at First Boston in New York.

James Cameron. To capitalize on new financial opportunities in carbon trading, Cameron co-founded Climate Change Capital in London. He heads the Carbon Disclosure Project and was a negotiator in the 1992 U.N. Framework Convention on Climate Change a forerunner of the Kyoto protocol. At Baker & McKenzie, an international law firm, Cameron started a climate-change trading team.

Yolanda Kakabadse is executive president of Fundación Futuro Latinoamericano, a nonprofit organization she founded to foster sustainable development in Latin America. She helped coordinate the U.N.'s Earth Summit in 1992 and has served as Ecuador's Environment Minister and president of the World Conservation Union.

Christiana Figueres. A consultant affiliated with nonprofit Winrock International, Figueres was a negotiator of the U.N. Framework Convention for Climate Change and the Kyoto Protocol -- and now promotes Latin America's participation in the Climate Convention. She founded the Center for Sustainable Development in the Americas in 1994 and led it until 2003.

Uday Khemka. He's vice-chairman of SUN Group, a diversified business conglomerate with operations in Russia, India, and the West, in sectors including technology and sustainable energy. He's also a director of The Khemka Foundation, his family's charitable trust, whose activities include environmental issues, children and youth issues, and rural microfinance and development.

Elizabeth May. Executive director of Sierra Club of Canada, May has been active in environmental circles since 1970. She campaigned against aerial insecticide, approval of uranium mining in Nova Scotia, and nuclear energy. She was a senior policy consultant to Canadian Environment Minister Tom McMillan and is on the advisory board to Canada's commissioner for the environment.

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