The Carbon Disclosure Project has published its 2011 report which examines the carbon reduction activities of the world’s largest public corporations. It has found that, for the first time in the ten year history of the survey, the majority have climate change actions embedded as part of their business strategy. The report, written by PwC on behalf of CDP, attributes this to growing board-level awareness of the link between energy efficiency and increased profitability.
The report, entitled Accelerating low carbon growth, analyzed disclosures from 396 of the world’s largest companies, and found that 68% have climate change at the heart of business strategies, compared with 48% in 2010. There was also a marked rise in the number of companies reporting reduced greenhouse gas emissions as a result of emissions reduction activities (45%, up from 19% in 2010). In addition, 74% (294) of Global 500 respondents disclose absolute or intensity emission reduction targets, an increase from 65% (250) in 2010. A correlation was also established between higher stock market performance over time, and representation on CDP’s Carbon Performance Leadership Index (CPLI) and the Carbon Disclosure Leadership Index (CDLI). Companies with a strategic focus on climate change provided investors with approximately double the average total return of the Global 500 from January 2005 to May 2011.
The Energy sector is showing the lowest proportion of companies with targets (55%) and is underrepresented in both theCPLI and CDLI. Utilities emerged as the sector with the best average climate change performance. The sector with the lowest average performance score was Information Technology.The only sector with no companies in the CPLI was Telecommunications. Companies in Australia, Germany, Italy, Switzerland and the UK are demonstrating strong performance leadership. Canada, Japan and the USA lag behind on performance.
Specifically as regards food, Tesco ranks as one of the top ten companies both on the CDLI and the CPLI.
This chart shows the ranking of the top performing brands in the ‘consumer staples category’ – top of the rankings are Tesco and British American Tobacco.
Participating companies report this balance of opportunities and risks associated with climate change and carbon reductions:
Opportunities
- Transition towards a growing market for sustainable products with locally-sourced, low-carbon, products and sustainable packaging. Following the growing scarcity of natural resources, companies now support suppliers to adopt environmentally responsible practices
- Costs savings through improved energy efficiency of operations,reduced emissions and technological innovations
Risks
- Increased risk of disruption to facilities, business operations and supply chain due to extreme weather patterns and natural disasters
- Uncertainty surrounding future regulatory requirements which might result in increased compliance costs
- Reputational risk for the Food Retailing sector. Their visibility in the market and the increasing transparency of their operations, combined with NGO power, drives companies to source more sustainable materials
The CDP press release is here. Tesco’s press release highlights some of the actions it has taken.
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