CDP: Investors fail to match corporate carbon interest

Corporations are increasingly taking into account the business risks and opportunities involved with carbon emissions, but investors are failing to follow suit, according to the fifth survey of the Carbon Disclosure Project (CDP) launched by former US president Bill Clinton in New York on Monday.
The CDP, whose members are 315 of the world’s largest institutional investors with assets of $41 trillion (€29 trillion), analyses carbon data from the FT500 index of listed companies.
The report generated its highest ever reaction to emissions disclosure from FT500 companies with 77% (383 in number) responding. Under half did so when the survey began five years ago. Over three quarters of companies said they now had a corporate strategy to reduce greenhouse gas emissions compared to 48% in the previous year’s survey. The CDP said a majority now recognised the financial and reputation benefits of improved carbon performance. A minority of resistant corporations – 12% of respondents – still failed to answer the carbon disclosure request. In addition, the report said two-thirds of companies had yet to allocate any responsibility for carbon issues to top management.
Significantly, the report concluded that investorresponse to climate change, such as introducing strategies to profit from companies taking steps to reduce emissions, had not shown any signs of increase.
The CDP said its role was to provide investor-relevant information about climate change to enable such action, but noted that: “until governments take clearer action on material taxation or regulation of greenhouse gas emissions, then investors will lack sufficient incentives to act, more systematically and in greater numbers.”
The CDP said this came despite increased evidence of corporate awareness: 82% of companies said they saw commercial opportunities for existing and new products as a result of climate change issues, while 79% also identified commercial risks from the same phenomena.
The report said investors, outside of a handful of leading pension funds, were failing to grasp the significance of regulation such as the EU carbon emissions trading system on company profits.
As an example, it said that of the 61 companies who reported their positions with regards to EU carbon allocations, only 21% showed a shortfall, with responding firms reporting a surplus of more than 39 millions credits worth an estimated $11.9m.