Industrial giant Honeywell International took a pledge Thursday to makes its operation carbon neutral by 2035, one of a growing number of companies worldwide that are implementing environmental goals and policies.
How an increased focus on sustainability ultimately plays with investors isn’t easy to figure out because it is a long-term trend. In midmorning trading Thursday,
(ticker: HON) stock was down 0.3% to $217.82.
“Companies like Honeywell have a unique role to play in shaping a future that is safer and more sustainable for our children and our grandchildren,” CEO Darius Adamczyk said in a statement. “Honeywell has a long history of improving our own environmental and sustainability profile while providing innovative products and services that improve our customers’ profiles as well.”
The goal sounds simple: Stop all emissions of carbon dioxide, or CO2, the gas tied to global warming, in roughly 15 years. But figuring out how to make that happen is tricky.
Companies usually talk in terms of two kinds of emissions, Scope 1 and Scope 2. Scope 1 emissions come directly from things controlled by the company, such as smoke stacks. Scope 2 emissions come from things such as electricity that the company has purchased. Electricity often is produced from burning coal, which emits CO2.
Now, companies can reduce their footprint any number of ways. Some purchase buy electricity from renewable sources to make their operations more efficient. Others, though, snag net CO2 reductions by purchasing carbon credits, or even something so basic as planting trees.
Today, more companies are making carbon pledges. The International Energy Agency reports that about 370 S&P 500 companies have CO2 emissions policies and about 280 have Scope 1 and Scope 2 goals.
Honeywell believes its a little different because it is building a business out of it, and others, sustainability pledges.
Sustainability, for Honeywell, is a growing business and the company, in many of its divisions, makes a host of products that impact emissions ranging from gas leak detection technology to improved refrigerants which end up anywhere there is an air conditioner or frozen food aisle, general counsel Anne Madden explains.
Chief sustainability officer Evan van Hook tells Barron’s that Honeywell has always been a player in energy efficiency. “About 50% of our R&D on new products is for research that will improve environmental and social outcomes for our customers,” he said. Honeywell’s direct spending on research and development over the past three years totals about $4.7 billion.
That money Honeywell expect to turn into new products. The market for sustainable technologies is growing as more big businesses set carbon emissions targets.
Year to date, Honeywell shares are up about 3%, trailing behind the 9% gains of both the
Dow Jones Industrial Average.
But Honeywell shares are up almost 90% from their 52-week low. The S&P is up closer to 50% off that number.
Write to Al Root at firstname.lastname@example.org