Hundreds of the world’s largest companies across all industries — from Nestlé to Lockheed Martin — remain concerned about the impacts of climate change on their future business, and are well aware that implementing emissions reductions programs and other eco-friendly initiatives would improve their business future, but few are making long term commitments in these arenas yet, according to the latest reports compiled by the Carbon Disclosure Project and PricewaterhouseCoopers.
The Carbon Disclosure Project (CDP), a UK-based company that seeks to compile and publish carbon emissions disclosure data and statements from the globe’s top companies by market capitalization, published its 2012 reports for both the world (Global 500) and the U.S. (S&P 500).
The reports were authored by UK-based professional services firm PricewaterhouseCoopers (PwC) and sponsored primarily by Microsoft, Accenture and SAP, all of which, aside from PwC, also participated in the report’s disclosure section. (PwC and CDP did not respond to TPM’s press inquiries as to why PwC’s own emissions disclosure was not included in the report in time for this article’s publication).
As CDP’s CEO Paul Simpson wrote in an opening statement of the Global 500 report:
The pressure is growing for companies to build long-term resilience in their business…Business and economies globally have already been impacted by the increased frequency and severity of extreme weather events, which scientists are increasingly linking to climate change…Last year, Intel lost $1 billion in revenue and the Japanese automotive industry were expected to lose around $450 million of profits as a result of the business interruption floods caused to their Thailand-based suppliers.
Overall, disclosure by companies surveyed for the Global 500 was slightly down from 2011, with 99 percent rather than 100 percent of surveyed firms disclosing their greenhouse gas emissions, but with more companies this time around, 82 percent compared to 75 percent last year, willing to disclose “absolute and/or intensity emissions reduction targets,” meaning absolute goals, cutting a specific percentage overall, or targeted percent decreases from a base year.
The following chart from PwC illustrates how the report is better in some ways from 2011 and worse in others:
As PwC noted in its summary of the Global 500 report’s findings: “Companies continue to invest in emissions reductions, but these are typically short term, cost cutting measures such as energy or resource efficiency, rather than long term capital investments in low carbon technology.”
Further, although “82% of companies have set targets to reduce emissions, these are not nearly ambitious enough to achieve governments’ goals to limit warming to 2°C,” under the Durban Platform agreed to by nations earlier this year.
The report does credit some companies, such as Nokia, for taking ambitious goals to cut emissions (Nokia has a goal of a 30 percent absolute emissions reduction by 2020), but “the proportion of companies with targets has stayed roughly constant over the [four] years,” since the report was first published in 2007.
Here’s a chart included in the global 500 report showing the breakdown of respondent companies by their emissions-reduction targets and their reasons for the targets they selected.
But its statements from surveyed companies provide the most telling picture of where their thoughts and actions about climate change are presently situated.
As a statement from Nestlé in the Global 500 report reads:
“Changing temperatures and precipitations patterns may lead to decreased availability of critical raw materials in the supply chain, especially agricultural commodities. These will lead to the increased operational cost or even disrupt the business operations along the entire value chain of Nestlé.”
Nestlé is also one of few companies that is putting its money where its mouth is, according to the Global 500 report, which gave the company its highest “disclosure score,” 100 out of a possible 100. Disclosure scores are awarded based on the level of detail and comprehensiveness with which a company makes its emissions public, according to the CDP.
“For leaders, the high scores reflect their deep, long-term understanding of how they manage the climate risks to their business and disclose this to their stakeholders,” the Global 500 report reads, specifically praising Nestlé for working “to ensure the development of resilience among its suppliers and mak[ing] significant contributions to smallholder farmers to develop long-term relationships,” as well as “recognizing that their competitiveness and the long-term prospects of society are mutually dependent.”
Overall, the types of emissions-lowering activities companies are taken vary widely, as the following chart from the global 500 report illustrates:
In the U.S. version of the report, restricted to the S&P 500, things were slightly more improved, with “a marked increase in the number of companies addressing these issues at the board and executive level…The data suggests that, in the absence of global or national regulation, business is stepping into the leadership vacuum and embracing climate change as a business imperative,” according to S&P 500 report’s opening summary.
Specifically, 52 percent, or a total 177 respondents, disclosed their emissions reduction activities this time around, up from 35 percent (117 respondents) in 2011.
Lockheed Martin, which received an “A” rating on the 2012 S&P 500 CDP report card, as well as the 2011 one, gave the following statement included in the report as the rationale behind its emissions-reductions program:
“The financial implications of a positive reputation associated with climate change include an increase in investor interest thereby increasing Lockheed Martin’s stock value. For example, Lockheed Martin’s environmental performance (including carbon emissions) is included in the Bloomberg terminal that is used by investors. The positive public perception associated with carbon management and reduced emissions may result in increased revenue. Lockheed Martin’s reputation affects the likelihood of capturing new contracts, thereby increasing business.”
Overall, based on the findings of the new CDP reports, it seems that companies in the U.S. and around the globe are not only beginning to recognize the negative impact that climate change could have on their business, but starting to make more efforts to mitigate it and reduce their own carbon footprints, despite a perceived lack of leadership from world governments.
Both new 2012 CDP reports, as well as industry-specific breakdowns, can be downloaded here via PwC.
