Use Case
Thu, 12 Sep 2024
Reclassifying ESG: When Brown and Green Don’t Tell the Whole Story
	 	 

This case study provides an in-depth analysis of two companies, Advance Auto Parts and Akamai Technologies, and their ESG progress from 2020 to 2022. Despite their distinct industries—automotive parts and technology—both companies have shown significant strides towards their ESG goals. Using the ConsciESG platform’s unique methodology, which emphasizes progress rather than static categorizations, this analysis reveals that the traditional classification of Advance Auto Parts as a "brown" company and Akamai Technologies as a "green" company can obscure their real achievements and challenges.

The ConsciESG platform provides the following scores and progress data based on public sustainability reports from 2020 to 2022:

Figure 1: ESG Progress Comparison

Environmental Progress:

  • Advance Auto Parts, operating in a high-emissions industry, has achieved 27% of its 45% GHG reduction target, largely due to investments in energy-efficient retrofits and the introduction of electric delivery vehicles across its fleet. In comparison to its industry peers, this progress places Advance Auto Parts in the top quartile for emissions reductions, demonstrating their commitment to sustainability despite inherent challenges.
  • Akamai Technologies, classified as a "green" company, has struggled with Scope 3 emissions, seeing a 281% increase due to supply chain challenges and a lack of accurate tracking mechanisms. However, Akamai has made significant progress in Scope 1 emissions, achieving 172% of its target by upgrading data center efficiency and switching to renewable energy sources for their operations. This discrepancy in performance across emission categories raises questions about the adequacy of simple "green" labels.

Governance and Social Progress:

  • Advance Auto Parts has not only achieved but surpassed its board diversity targets, with women occupying 60% of its board seats—20% higher than its target and well above the industry average of 40%. This commitment to diversity extends to its management ranks, where women and minorities now make up 45% of leadership positions, a notable increase from 2020. Such efforts have strengthened the company’s governance profile, making it more attractive to investors focused on inclusive leadership.
  • Akamai Technologies also exceeds board diversity expectations, with women making up 58% of board members. However, their progress in management diversity has plateaued, raising concerns about whether the company is fostering long-term inclusivity throughout its organizational structure.

Overall ESG Impact:

  • Advance Auto Parts: The company's overall ESG impact reflects a balanced approach, with notable strengths in governance and social aspects. The environmental progress, while lower, is still commendable considering industry constraints.
  • Akamai Technologies: The company excels in governance and social metrics but has inconsistent environmental performance, particularly in Scope 3 emissions.
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