Multinational supply chains account for a fifth of global emissions

Multinational supply chains account for a fifth of global emissions, according to a new study published in the journal Nature Climate Change. 

Researchers from University College London (UCL) and Tianjin University in China mapped the emissions generated by multinational assets and their supply chains abroad.

The researchers found that carbon emissions from multinationals’ foreign investment fell from a peak of 22% of all emissions in 2011 to 18.7% in 2016.

According to the study, this decline is a result of a trend in ‘de-globalisation’ with the volume of direct foreign investment shrinking, as well as new technologies making industries more carbon efficient.

By mapping the global flow of investment, the researchers found that there is a steady increase in investment from developed to developing countries – this means that emissions are effectively being outsourced to poorer parts of the world.

For example, between 2011 and 2016, emissions generated through investment from the US to India increased by from 48 million tonnes to 70 million tonnes.

In the same period, emissions generated through investment from China to south-east Asia also increased ten-fold, from 0.7 million tonnes to 8.2 million tonnes.

To take their study a step further, the researchers also examined the emissions that the world’s largest companies generated through foreign investment.

They found for example that BP generated more emissions through its foreign affiliates than the foreign-owned oil industry in any country except for the United States.

They also found that Walmart generated more emissions abroad than the whole of Germany’s foreign-owned retail sector and Coca-Cola’s emissions around the world were equivalent to the whole of the foreign-owned food and drink industry hosted by China.

Professor Dabo Guan from UCL said: ‘Multinational companies have enormous influence stretching far beyond national borders.

‘If the world’s leading companies exercised leadership on climate change – for instance, by requiring energy efficiency in their supply chains – they could have a transformative effect on global efforts to reduce emissions.

‘However, companies’ climate change policies often have little effect when it comes to big investment decisions such as where to build supply chains.

‘Assigning emissions to the investor country means multinationals are more accountable for the emissions they generate as a result of these decisions.’

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