About
If companies were required to permanently remove the greenhouse gases they emit, assuming a cost of $100/tCO2e, 46 of the 500 largest U.S. publicly traded corporations would operate at a loss and 67 would have negative stockholder’s equity.
Every power plant, refinery, and factory on a company’s balance sheet was placed in service assuming the greenhouse gases it emits stay free. Carbon Quotient® puts a number on what happens if that assumption breaks.
Financial risk, not ESG scores
The ESG/sustainability data market is plagued by “aggregate confusion,” driven by subjective black-box scoring systems. While financial data are highly standardized, different ESG rating agencies frequently arrive at completely different conclusions for the same company. ESG ratings consider a mix of qualitative judgments and quantitative data, including carbon intensity metrics that divide annual emissions by revenue or market cap — numbers that have nothing to do with the physical assets that emit CO2 and that are at risk of being stranded by the energy transition.
Our namesake metric — the Carbon Quotient Ratio — divides by tangible assets instead, then weights the result by how long those assets have left on the books and the cost to permanently remove CO2 from the atmosphere. The effect is an unbiased (and fully reproducible) cross-sector measure of financial risk, not another proprietary ESG “score.”
Risk is correlated with asset lives
The productive life of a carbon-emitting asset can range from a few years to several decades. The longer it stays in service, the more it will emit. Long-lived carbon-intensive assets are most at risk of being stranded by the energy transition.
A barometer of transition risk
The Carbon Quotient 500 Index (CQ500™) assesses firms in a Reference Index of 500 U.S. large-cap publicly traded firms by how exposed their physical assets are to premature climate-driven obsolescence — not by how much carbon they emit today, but by how much unrealized carbon cost is already baked into the assets they operate. Unlike stock price indices, a declining CQ500 Index is good: over time, it will track the progress of companies, industries, and the overall economy toward carbon neutrality, or “net zero.” Because the CQ500 Index applies uniform calculations to objective data, results cannot be manipulated to mask corporate greenwashing.
The future that has already happened: traditional climate ratings rely on past emissions data. The CQ500 Index accounts for the future carbon emissions already “baked in” to a company’s physical asset base.
A sector-by-sector risk map
The CQ500 Index reflects the weighted-average Carbon Quotient Ratio of the overall economy, weighted by tangible assets. The result is a stark, sector-by-sector map of transition risk. Fossil-fuel power generators — NRG Energy, Vistra, AES — carry unrealized carbon expense worth multiples of their tangible assets. Asset-light software and financial-data companies carry almost none. That roughly 297x spread between sectors, calculated entirely from companies’ own SEC filings and disclosed emissions, is the CQ500 Index’s central finding: climate transition risk isn’t evenly distributed across the market, it’s concentrated in exactly the assets you’d expect, and it’s now measurable.
Carbon Quotient Ratio variability is not limited to sectors. It holds even within a single industry: Duke Energy’s Carbon Quotient Ratio of 1.26 runs roughly 12 times higher than fellow Multi-Utility Consolidated Edison’s 0.11, and the gap is even wider among Electric Utilities — Dominion Energy’s 1.35 versus Eversource Energy’s 0.01, a roughly 125x spread (see FAQ for why).
A tool for corporate managers and investors
Investments in real assets drive future returns. Carbon Quotient Ratio tracks results of capital allocation decisions by corporate managers, not just inherited asset mix.
NextEra Energy carries the largest balance sheet of any electric utility in the index — larger than Southern Company, American Electric Power, or Dominion Energy — yet its Carbon Quotient Ratio of 0.79 sits well below all three, reflecting a multi-decade shift toward wind and solar generation and the retirement of coal at its Florida Power & Light utility. Constellation Energy, spun off from Exelon in 2022 to isolate a largely nuclear, carbon-free fleet, scores almost identically at 0.76. Because Carbon Quotient Ratio is emissions per dollar of assets, neither company’s low score can be explained by revenue or market cap — it reflects how they generate power.
Coverage
For fiscal year 2024, the CQ500 Index includes 439 (87.8 percent) of the 500 companies in the Reference Index — every company that disclosed the data needed to compute the Carbon Quotient Ratio. The other 61 are excluded outright, not estimated or filled in (see FAQ for the sector-by-sector breakdown).
455 companies (91 percent) reported 2024 absolute Scope 1 emissions measured in metric tons of carbon dioxide equivalent (tCO2e), mostly in standalone sustainability reports. Only one company, Oneok, disclosed direct emissions in its Form 10-K. Three excluded companies (Conagra Brands, Lululemon Athletica, and Royal Caribbean Group) reported only combined Scope 1 and Scope 2 emissions.
Carbon Quotient data are free
Input data, source attributions, company metrics, and reports are free for use by journalists, academics, investors, lenders, and corporate managers who can check the numbers and validate the logic for themselves.
Founder
The Carbon Quotient methodology and the CQ500 Index were developed by Greg Rogers, a Fellow and accounting program advisor at Cambridge Judge Business School; an environmental lawyer; a retired Certified Public Accountant; and the author of Financial Reporting of Environmental Liability and Risk after Sarbanes-Oxley (Wiley 2005). The index is published independently through C.G. Rogers & Co., LLC — with no institutional affiliation.