Multinationals’ supply chains are a fifth of all emissions

A fifth of carbon dioxide emissions come from multinational companies’ global supply chains, according to a new study led by UCL and Tianjin University.

Rather than looking at where emissions are created, the authors proposed that emissions be assigned to countries where the investment comes from. The study, published in Nature Climate Change, maps the emissions generated by multinationals’ assets and suppliers abroad, finding that the flow of investment is typically from developed countries to developing ones – meaning that emissions are in effect outsourced to poorer parts of the world.

Professor Dabo Guan (UCL Bartlett School of Construction & Project Management) said: “Multinational companies have enormous influence stretching far beyond national borders. However, companies’ climate change policies often have little effect when it comes to big investment decisions such as where to build supply chains.”

But the study did find that carbon emissions from multinationals’ foreign investment fell from a peak of 22 per cent of all emissions in 2011 to 18.7 per cent in 2016. Researchers said this was a result of a trend of “de-globalisation”, with the volume of foreign direct investment shrinking, as well as new technologies and processes making industries more carbon efficient.

Mapping the global flow of investment, researchers found steady increases in investment from developed to developing countries. For instance, between 2011 and 2016 emissions generated through investment from the US to India increased by nearly half (from 48.3 million tons to 70.7 million tons), while in the same years emissions generated through investment from China to south-east Asia increased tenfold (from 0.7 million tons to 8.2 million tons).

The study also examined the emissions that the world’s largest companies generated through affiliates. For instance, Total SA’s foreign affiliates generated more than a tenth of the total emissions of France.

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