His name may mean nothing to you. But Getlink, better known by its former name Eurotunnel, transports more than 22 million passengers and nearly 2 million trucks under the Channel each year. On April 13, the group kicked into the CAC40 anthill by publishing for the first time its “carbon-free margin”, an innovative financial indicator linking its financial performance to its CO2 emissions via a carbon bill.
This is calculated by subtracting from the operating margin – earnings before interest, taxes, depreciation and amortization – the cost of both direct and indirect emissions. For the company, which emits little CO2 and mainly consumes electricity of nuclear origin, the impact is very relative. In 2022, Getlink’s operating margin (or Ebitda) reached 886 million euros. Once the carbon bill has been deducted, it drops by 3.3%, to 857 million euros.
In doing so, Getlink is preparing for the future consequences of the European Green Deal which plans to require several sectors, including maritime and road transport, to pay carbon credits, on the polluter-pays principle. “It’s a strategic decision. We will soon add an additional invoice. It is important to understand how this will influence our financial balance and that of our competitors”, develops Yann Leriche, general manager of Getlink. To develop this new method of calculation, Getlink worked from 2021 with the Toulouse School of Economics where a chair was even created. “Decarbonizing our businesses has a cost. If we want to do it well, we have to optimize this cost to have the best impact”, assures Yann Leriche.
Axylia’s work rewarded
Turning for the CAC 40, the announcement of the rail operator is also a victory for Vincent Auriac, the president of Axylia. This consulting firm specializing in responsible finance developed a similar method in 2019 and has published the Vérité 40 index since 2021, a ranking that compares the Ebitda of CAC 40 members to their carbon bill. In 2022, almost half of them, such as TotalEnergies, Airbus or even Michelin, were unable to pay for their impact on the environment! “If we apply the carbon score, it’s a CAC 20”, sums up Vincent Auriac.
The reception reserved for this methodology was not icy, far from it. “When we created the model, we got in touch with the leaders. We saw 30 companies: all of them told us that this is how it should be done”, continues this former HSBC employee. Ultimately, he hopes that Getlink’s decision will move the lines: “There is a lot of audacity on their side. We have to put the carbon bill in the accounts, it’s the missing link”.
A simpler and more transparent method
But between approval and official publication, there is a world. Currently, in terms of responsible finance, companies rely more on ESG ratings, which are supposed to represent their environmental, social and governance performance. Rankings issued by multiple specialized agencies, with various criteria. “An ESG rating is a 60-page questionnaire where questions are asked on 50 to 200 criteria. This creates a whole lot of bias,” laments Vincent Auriac.
Orpea, for example, had an excellent rating before the resident abuse scandal broke, as did Volkswagen before the “dieselgate”. Conversely, when a company multiplies its efforts to reduce emissions in one of its divisions, the ESG rating drowns out all these efforts. “It’s not an effective management tool,” said Vincent Auriac.
Displaying the carbon invoice would have the merit of simplifying the process and avoiding road trips. “For finance to play a credible and understandable role, it is important to make things transparent. The carbon bill is something easy to understand, if the calculations are made transparently”, explains economist Christian Gollier, director from Toulouse School of Economics and author of the Giec, who participated in the development of the indicator used by Getlink.
In addition, he adds, “it encourages the company to take climate change into account. As climate ambition is going to increase over time, companies will have to increase this carbon value. Economists say that in 2030, the price of carbon will be around 250 euros per tonne of CO2, then 600 euros in 2050.” Axylia currently applies a carbon price of 113 euros per ton of CO2, while Getlink sets a price of 197 euros, based on the latest study by the American Environmental Protection Agency. In the wake of Getlink, other companies could follow. But the road is still long.