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Corporate Execs, Boards & Climate Change: What, Me Worry?

| Thursday December 11th, 2008 | 0 Comments

alfred_e_neuman.jpg Climate change adaptation and mitigation is largely a non-issue for executives at the world’s largest apparel, pharmaceutical, retail, and technology corporations according to a survey released today by Ceres, a non-profit coalition of environmental groups, investor and other public interest organizations.
Select companies are responding to the risks and opportunities climate change presents by setting greenhouse gas emissions targets, implementing energy efficiency programs, purchasing renewable energy, and integrating climate factors into product design, according to Ceres’ analysis of survey results, but the majority of respondents are in large part ignoring climate change, especially at the CEO and board level.
“More action is needed to align company strategies with greenhouse gas emission reductions that scientists say are needed to avoid dangerous impacts from climate change,” according to Ceres, which concludes its report with a list of recommendations for corporate executives and boards of directors.
*Image credit: Norman Mingo, MAD Magazine


A Corporate Governance Framework for Climate Change

Ceres’ report on corporate governance and climate change brings together information at 63 of the world’s largest apparel, pharmaceutical, retail, technology and other consumer purchase driven companies– 48 based in the U.S., 15 based outside. Securities filing data, company reports, websites, third-party questionnaires and direct company communications were used to compile and complete the report, which took six months from start to finish.
Ceres rated individual corporate climate change performance on a 100-point scale according to a “Climate Change Governance Framework” that assesses how companies are addressing climate change through board of director oversight, management execution, public disclosure, GHG emissions accounting, and strategic planning and performance. Companies spanning 11 industry sectors were included in the survey. In addition to those already mentioned, these included: Beverages, Real Estate, Restaurants, and Travel & Leisure.
The results were very mixed and indicate that corporate execs and overseers largely regard climate change as external to their businesses. Boards at just 11 of the 63 companies surveyed receive updates of climate related information from management. Only seven CEOs have taken leadership roles on climate change initiatives while none of the companies have linked executive compensation to climate related measurements or performance.
IBM, UK-based supermarket chain operator Tesco’s, and Dell were the three top-rated companies with scores of 79, 78, and 77, respectively. More than half the companies surveyed scored below 50, however, with 38 being the median score.
Corporate management and boards need to get on their horses and take action in order to avoid the worst of climate change’s potential impacts, as well as position themselves to take advantage of new opportunities, Ceres asserts. They recommend the following:
- elevate climate change as a governance priority for board members and CEO;
- link CEO and senior executives’ compensation packages to GHG reduction targets and/or other climate performance measures;
- set company-wide energy efficiency evaluations for all major capital investments;
- pay greater attention to supply chain management by including supply chain GHG emissions, such as from raw material extraction, production, transport, and packaging in emissions inventories and setting emission standards for suppliers;
- set renewable energy purchase targets;
- expand programs to educate, empower, and reward employees for climate-related initiatives.


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