Green action now embedded at majority of leading global firms
Green business news – by GreenWise staff
14th September 2011
The majority of the world’s biggest companies are for the first time placing climate change at the heart of their businesses, latest research from the Carbon Disclosure Project (CDP) has found.
The
2011 annual CDP Global 500 report, published today, revealed for the first time in the 10 years since the survey begun more than two-thirds (68 per cent) of leading
global businesses have embedded
climate change actions in their business strategies, a 20 per cent jump on 2010. The CDP Global 500 report, which examines
carbon reduction activities at the world’s largest public corporations, also found 45 per cent of companies are now reducing and reporting reductions in their greenhouse gas emissions, a marked increase on last year when it was just 19 per cent. Professional services firm PwC, which carried out the research on behalf of CDP, attributed the rises to growing board-level awareness of the link between
energy efficiency and increased profitability.
Further CDP figures show a link between higher stock performance and those companies with a strategic focus on climate change. Those companies represented on CDP’s Carbon Performance Leadership Index (CPLI) and the Carbon Disclosure Leadership Index (CDLI) provided investors with approximately double the average total return of the Global 500 between January 2005 and May 2011, PwC said. They included UK retail giant Tesco, which has cut its energy costs by £200 million a year through the green actions it has taken. Today's report, entitled 'Accelerating Low Carbon Growth', shows that 59 per cent of reported emissions reduction activities delivered payback in three years or less.
"The improved financial performance of companies with high carbon performance is a clear indicator that it makes good business sense to manage and reduce carbon emissions. This is a win win for business – the short ROIs many emissions reducing activities have, can help increase profitability. Companies yet to take action on climate change will have to work hard to remain competitive as we head towards an increasingly resourced constrained, low carbon economy," Paul Simpson, ceo of the Carbon Disclosure Project, said.
Boardroom oversight
According to the CDP report, 93 per cent of top firms now have board or senior executive oversight for climate change, up from 85 per cent in 2010, while 62 per cent have board level responsibilities and monetary incentives for achieving climate change strategy.
"We’re seeing the highest levels of board oversight and engagement on climate change strategy ever, with significant increases in the levels of monetary incentives linked to achieving targets," said Alan McGill, PwC sustainability and climate change said.
Performance by sectors
In terms of sectors, today’s report shows the utilities sector has the best average climate change performance, but the energy sector has the lowest proportion of companies setting targets (55 per cent) and is underrepresented in both the CDLI and CPLI. Telecommunications is the only sector not represented in the CPLI this year, a finding PwC described as "surprising" given the sector’s expected role in supporting emissions reduction activities.
There were 14 new entrants to the 2011 CPLI. They include UK entrants British American Tobacco, BG Group and Glaxo SmithKline.
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