FAQ
1. What does CSR mean?
CSR stands for Corporate Social Responsibility. According to CSR, companies are responsible for helping to address social and environmental concerns. Many companies have public CSR reports.
2. What does ESG mean?
ESG is the Environmental, Social, and Governance rating to assess companies’ commitment to sustainability. ESG ratings are often used by investors to make more ethical investments. Several versions of ESG ratings exist.
3. What does LCA mean?
LCA is Life Cycle Assessment, a method for analyzing the environmental impact a product has throughout its lifetime. The analysis includes the initial stage of gathering the raw materials for production to the product's final stage when it is disposed.
4. Why did you not use ESG measures to assess companies?
In 2019, Professor Roberto Rigobon of MIT Sloan and the Sloan Sustainability Initiative published Aggregate Confusion: The Divergence of ESG Ratings. In this paper, he showed that divergence in sustainability ratings is high and examined what drives these differences. Given how noisy the data is, we decided to not rely on ESG ratings, but rather to rely on publicly available raw data (carbon emissions and financials) and on our own direct investigations, where we would engage companies directly with our own questions.
5. What are total emissions, intensity, and trend?
Total emissions are Scope 1 and 2 emissions.
Intensity is the amount of carbon emissions per each good and service provided. We calculated emission intensity by dividing emissions over refined operating costs.
The trend is the slope of the line of best fit of the company's intensity for the past ten years.
6. What are Scope 1 and 2 emissions?
Scope 1 emissions are produced directly from owned or controlled sources. Scope 2 emissions are produced indirectly from the generation of purchased energy. You can learn more here.
7. Why aren’t Scope 3 emissions included in the analysis?
Scope 3 emissions are all other indirect emissions. Scope 3 is more difficult to classify and account for, and different companies report Scope 3 to varying degrees. Therefore, to simplify our analysis and ensure a fair comparison across companies, we excluded Scope 3.
8. What are refined operating costs?
Refined operating costs are directly related to the company's day-to-day activities, such as research and development, administrative needs, and production costs. Things that are not related to the core operations of a company, such as amortization, are not included.
9. How did you calculate the group ranking?
We ran a k-means clustering algorithm to sort the companies into different groups based on performance in log(emissions) and log(intensity). The group with the lowest values is Group 1, while the group with the highest values is Group 6.
10. Why are some companies missing?
Due to bandwith, we only included companies registered for the MIT Fall Career Fair. To view the list of companies registered for the Career Fair excluded from our dataset, click here. These companies lack transparency in emissions data, financial data, both emissions and financial data, or are excused. Excused companies include smaller firms (<100 employees) and start-ups (founded 2015 or earlier).
11. Why are some companies included that are not at the Career Fair?
We included companies from past Career Fairs to make the dataset more representative of companies that normally attend the Career Fair, despite the Covid-19 disruption this year.
12. Where did you get your emissions and financial data from?
Emissions data was provided by the CDP (formerly the Carbon Disclosure Project), a third-party organization that companies report their emissions to. If we could not access company data from the CDP, we retrieved emissions data from the company sustainability report. Financial data was retrieved from company annual reports.
13. I’m a company and want to talk with someone about the data presented here. Who can I contact?
You can contact Sarah Meyers at cf-sustainability@mit.edu.