Tesla's Impact Report Reveals Significant Supply Chain Emissions
The 2022 Impact Report by Tesla, the famous electric car company, provided a more comprehensive picture of its carbon footprint. The report was significant because it revealed the numbers of supply chain emissions, which showed that Tesla's carbon footprint was more significant than what it had reported in the past. In 2021, Tesla only shared direct greenhouse gas pollution from its operations and customer charging, which accounted for about 2.5 million metric tons of CO2. However, this failed to include the substantial indirect emissions from supply chains, which are usually a significant part of a company's carbon footprint.
This year, Tesla made a significant breakthrough by disclosing data on its supply chain emissions. According to the data, Tesla's supply chain emissions were about 30.7 million tons of CO2 in 2022. This figure was significantly different from what the company had reported in the past, indicating the importance of accounting for both direct and indirect emissions.
Typically, a company's carbon footprint is divided into three categories or "scopes." The first scope involves direct emissions from a company's factories, offices, and vehicles. The second scope includes emissions from electricity use, heating, and cooling. The third scope includes all other indirect emissions from supply chains and the life cycle of a company's products. Companies typically share only their Scope 1 and 2 emissions, which may make their carbon footprint appear smaller than it is.
Tesla's Scope 1 and 2 emissions in 2022 were only 610,000 metric tons of CO2, which was negligible compared to its indirect Scope 3 emissions. The SEC has proposed regulations that would require public companies to disclose their Scope 1 and 2 emissions and, in some cases, their indirect Scope 3 emissions. However, the SEC has delayed finalizing the rule, and the final rule may not require Scope 3 disclosures, which has concerned some Democratic lawmakers.
Tesla's carbon footprint is an excellent example of how the proposed SEC rules could make a difference. The company has lagged behind other automakers in disclosing details about its greenhouse gas emissions. Ford has received "A" grades for its climate change disclosures since 2019, while Tesla has received "F" grades from the CDP, a nonprofit that evaluates companies' environmental reporting.
Despite being an electric car company, Tesla's carbon footprint is still substantial. While Ford's carbon footprint is larger than Tesla's, Tesla's pollution seems to be increasing. Although Tesla has made efforts to make each of its electric vehicles less carbon-intensive, its combined Scope 1 and 2 emissions increased by almost 4% last year. Without disclosing its supply chain emissions until this year, it was difficult to manage what was not measured. Nonetheless, the recent disclosure is a positive step towards transparency and accountability for Tesla's environmental impact.