CDP turns attention to emissions cost savings

Investors managing nearly $8billion (£4.9bn, €5.6bn) have urged the world’s largest companies to implement cost-effective emissions reduction programmes, following the creation of a new arm of the Carbon Disclosure Project (CDP).

The 34 investors, including Aviva, CCLA Investment Management and Scottish Widows, have made the first request under the new Carbon Action initiative, which will encourage investors to demand action directly from companies.

They have asked FTSE Global 500 companies to cut costs and mitigate financial risk with schemes that both reduce greenhouse gas emissions and have a ‘satisfactory positive return on investment’.

Carbon Action focuses on cases where companies do not need to make a choice between emissions reductions and higher financial returns, but encourages them to make year-on-year reductions – and to identify and implement investment in greenhouse gas emissions reduction plans that produce a satisfactory investment return.

Finally, any companies that do not already have an emissions reduction target will be asked to set and publicly disclose one.

Carbon Action, which the CDP said it created ‘in response to investor requirements to protect their investments and accelerate company action on carbon reduction activities’, will monitor such company action in the same way as the CDP oversees other carbon reporting.

Steve Waygood, head of sustainability, research and engagement at Aviva Investors, a founding Carbon Action signatory, said: ‘We believe that the external costs of greenhouse gas emissions will become internalized into company cash flows and profitability. We encourage companies to consider what action they can take now to reduce emissions.’

CCLA, meanwhile, intends to divest from companies failing to disclose emissions targets. It says that by 2013 it will divest from all developed world energy, utility, industrial and materials companies in the Global 500 that have not reported a reduction target to the CDP.

Paul Dickinson, CDP’s executive chairman, said: ‘An economic revolution is needed to decouple financial growth from growth in emissions. Rising oil prices, energy supply risks and brand reputation issues are all making the reduction of carbon a strategic imperative.  

‘Carbon Action is about accelerating companies’ mitigation efforts in order to reduce the major long-term threat to the global economy which climate change represents.’

 The US-based Timberland apparel company has announced a 38 per cent absolute reduction in the amount of greenhouse gas emissions it produces. The company claims this makes it the leader in its industry. Timberland has one year left to meet its five-year target of a 50 per cent reduction, set in 2006.