Scaling laws in global corporations as a benchmarking approach to assess environmental performance

TL;DR

This paper identifies power-law scaling relationships in corporate environmental impacts, enabling sector-specific benchmarks to objectively assess and improve companies' sustainability performance.

Contribution

It introduces a quantitative framework based on scaling laws to evaluate corporate environmental impact relative to company size, aiding objective benchmarking.

Findings

Environmental impacts scale with company size via power laws.

Most impacts exhibit sublinear scaling, indicating efficiency gains with size.

Applying these benchmarks could reduce emissions by approximately 15%.

Abstract

The largest 6,529 international corporations are accountable for almost 30% of global CO2e emissions. A growing awareness of the role of the corporate world in the path toward sustainability has led many shareholders and stakeholders to pursue increasingly stringent and ambitious environmental goals. However, how to assess the corporate environmental performance objectively and efficiently remains an open question. This study reveals underlying dynamics and structures that can be used to construct a unified quantitative picture of the environmental impact of companies. This study shows that the environmental impact (metabolism) of companies CO2e energy used, water withdrawal and waste production, scales with their size according to a simple power law which is often sublinear, and can be used to derive a sector-specific, size-dependent benchmark to asses unambiguously a company's environmental performance. Enforcing such a benchmark would potentially result in a 15% emissions reduction, but a fair and effective environmental policy should consider the size of the corporation and the super or sublinear nature of the scaling relationship