October 08, 2008
Carbon Disclosure Project Publishes Sixth in Annual Series Detailing Corporate Emissions
by Robert Kropp
Investors network elicits data from corporations globally and finds improved focus on risks and
opportunities of climate change.
When a global network of investors with assets of $57 trillion wants corporations to quantify and
disclose information on carbon emissions, boardrooms the world over increasingly accept the
strategic benefits of measuring and managing carbon emissions.
The investors network in question is the Carbon Disclosure Project, a UK-based
organization which has recently released the sixth iteration of its annual series of reports on
corporate greenhouse gas emissions. Paul Dickinson, the organization's founder and CEO, describes
CDP as "By far the largest investor network in the world."
Dickinson added, "CDP engages
over 1500 corporations in its efforts to increase reporting on emissions. It also works with some
of the world's largest cities to do the same."
CDP's goals in assembling the world's
largest database of corporate greenhouse gas emissions are the management and reduction of
emissions and climate change impacts by private and public sector organizations. Investors using
CDP's reports gain a better understanding of the risks and opportunities from climate change in
This year's output consisted of three reports: the CDP6 Global 500
Report, which analyzed responses from 383 of the 500 largest corporations in the FTSE Global Equity
Index Series; the CDP6 S&P 500 Report, which received responses from 321 of the US-headquartered
companies of the S&P 500; and the CDP6 Asia Report, which sought responses from the region's 220
The reports, as well as several others by the Carbon Disclosure
Project, can be found on the organization's web
According to the CDP6 reports, the mindset in corporate boardrooms has evolved
over the past decade, from characterizing concerns over climate change as the work of an
environmental fringe to a more proactive role in monitoring and, in some cases, addressing the
impact of carbon emissions.
In Dickinson's view, "The single most important positive trend
to emerge from these reports is that many corporations have reduced their carbon emissions.
"Global warming occurs because of human activity, and worldwide emissions continue to rise.
When corporations begin to employ energy efficiencies that reduce emissions—a couple of examples
are attention to supply chains and the use of teleconferencing to replace air travel—they have a
positive impact, one that has grown through the years of our reports."
In its CDP6 Global
500 Report, the Carbon Disclosure Project recorded a response rate of 77% to its requests for
information, a response consistent with CDP5. Leading the way was the response rate of 83% among
European companies, attributed by the CDP to the "relative maturity of the climate change issue in
The North American response rate, up from 76% to 82%, reflected "increasing
engagement on the climate change issue," according to the report. On the other hand, only 50% of
Asian Global 500 companies responded.
Among the leaders in reporting from carbon-intensive
industries were BASF, Iberdrola, Nissan Motor, and Bayer. Leaders from among the
non-carbon-intensive industries included Barclays, Merrill Lynch, Taiwan Semiconductor
Manufacturing and Tesco.
Members of the CDP Leadership Index are the companies with the
highest scores for disclosure in response to the CDP6 questionnaire.
Overall, the CDP6
Global 500 Report found an increased corporate engagement with climate change issues. As climate
science has grown more unequivocal about the extent of global warming, improvements in policy and
the growth of carbon markets has led companies to take more active and public stands on climate
change. Increased consumer awareness has prompted companies such as Wal-Mart to focus on carbon
emissions along their supply chains.
Kevin Biernacki of EMC, a Massachusetts-based high
tech company whose score of 98 placed it atop the CDP Leadership Index, said, "One of the areas we
found more difficult to evaluate was the emissions along the supply chain. So we went to CDP asking
for help, and we've begun working with other companies in our industry—many of whom share the same
supply chain companies—to gather and report accurate information about such emissions."
the other hand, the report also found much room for further improvement. Companies seek consistent
guidance from regulatory agencies in order to "define organizational boundaries and carbon
accountability." For example, utility companies that are seeking to build new facilities need a
predictable regulatory environment. "These facilities are used for decades. What would the
financial impact be if because of regulatory uncertainty the wrong materials were used in
construction?" said Dickinson.
Respondents were often unwilling to provide emission
forecasts, believing them to be too commercially sensitive for publication. And while 74% of
respondents reported having greenhouse gas emissions reduction targets in place, only 56% would
The CDP6 S&P 500 Report found that 64% of North American companies
responded to the CDP's requests for information, up from 47% in 2006. The number of respondents
reporting greenhouse gas emissions rose to 73%. The report also found that an increasing number of
companies are developing emissions target programs.
According to the report, "More
companies are viewing climate change risk not simply as an environmental or public relations issue,
but as a game-changing set of business imperatives." Companies displayed a growing trend away from
reporting generalized risks associated with climate change, instead revealing more thoughtful
conclusions about risks personalized for their specific business operations.
EMC said, "In order to rank as the highest-scoring company in CDP6, we spent a great deal of time
assembling information in response to the questionnaire. Our goal was transparency, and to
accomplish it we had to provide as much information as we could on such data as emissions rates and
Furthermore, the report found that more companies are beginning to view
climate change as an economic opportunity. "Forward thinking companies are recognizing that a
strategy for addressing climate change can drive significant cost savings and efficiency
improvements," the report states. "Companies are also seeing new-found opportunities in the
Katie Keita, Senior Manager of Global Investor Relations for
EMC, said, "In the past couple of years, the convergence of mainstream and social investing has
accelerated and is likely to continue to do so for the next few years at least. Our policy of open
dialogue with our investors—we meet twice a year with them, and sustainability issues increasingly
accompany interest in profitability—place us at strategic advantage for attracting responsible
However, the report also found that US companies lag behind their European
counterparts in addressing the issue of climate change. Only 33% have greenhouse gas emissions
reduction targets in place, compared to 74% of respondents in the CDP6 Global 500 Report. Emissions
trading schemes were relatively untested in the US until the first carbon dioxide emission permit
auctions were held in the Northeastern U.S. in September 2008 under the Regional Greenhouse Gas Initiative.
When asked why the US lags
so far behind Europe in the application of emissions trading—a practice that originated in the
US—Dickinson said simply, "The law. Cap and trade programs are mandatory in Europe. The few
voluntary programs in the US are just games."
Dickinson did say that the recent auctions
held in the Northeastern U.S. should lead to a more widespread practice. "Regulations making such
programs mandatory at the federal level have to be passed for the programs to be effective," he
Among the US leaders in reporting from carbon-intensive industries were PPG, Exelon,
FPL and Consolidated Edison. Leaders from among the non-carbon-intensive industries included EMC,
Merrill Lynch, Comerica and ProLogis.
Despite a relatively low response rate to the third
version of the CDP6 Asia Report, the CDP nevertheless detected several heartening improvements.
"The findings highlight the extent to which Asian companies critically affected by climate change
are moving rapidly from a basic understanding of the issues to the implementation of practical
corporate policies," the report states.
Companies have begun to view the risks from
extreme weather as a function of climate change, a change in focus probably due to the recognition
of the implication for corporate operations of such events. Additionally, global brands have
encouraged Asian supply chain companies to begin reporting on carbon emissions.
countries involved in the study, Taiwan had the most respondents—44 percent of the companies from
which the CDP requested information. Korea followed, with 33 percent of companies responding (Japan
was not included in the CDP6 Asia Report).
Overall, the report found that as market
capitalization increased, so did the pressure to improve reporting on emissions. The report
theorized that shareholder pressure was largely responsible for this phenomenon. An exception to
this trend was China, where "relatively few large Chinese companies currently possess the systems
or management commitment needed to address climate change issues at the company level."
Dickinson believes that improvements in corporate reporting over the years of the CDP studies
give cause for cautious optimism. He stated, "Companies that do not address climate change as a
force behind decision-making will only get poorer and poorer. Those that do will find opportunities
to get richer and richer."
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