Businesses slow to adapt to CO2 data demands

Corporate awareness of climate change continues to rise, the Carbon Disclosure Project (CDP) has recorded in its 2012 statement, The Future of Reporting.

When the CDP produced its first FTSE 350 report in 2006, only 49% of companies responded, including 83% of the FTSE 100. This year the figures were 69% and 96%.

But the CDP is concerned over business preparedness for legislation requiring all companies listed on the London Stock Exchange main market to disclose their gross global emissions in their annual reports. Only 64% of its respondents currently include the information.

A second CDP concern is that the proposed legislation is inadequate. The CDP says: “It [the legislation] does not currently specify a standardised reporting approach for compliance, failing to introduce reporting that will produce consistent and comparable information within a structure that could be adopted by other national jurisdictions.

“Furthermore, it does not demand companies make a full assessment of how climate change is expected to affect their business. These points directly impact how much value investors will be able to derive from any mandatory reporting. Without this being addressed, there is a risk that the regulation will not reach its full potential.”

Effective climate change reporting, says the CDP, inspires companies to make efficiency savings, manage risks and grasp opportunities. More shareholders want environmental as well as economic information. At the last count, 655 institutional investors with $78tn (£48tn, €60tn) assets wanted the data reported to the CDP.

To emphasise the need to tackle climate change, CDP chief executive  Paul Simpson says bad harvests this year have driven up grain, corn and soybean prices to record levels, while Intel lost $1bn in revenue and the Japanese auto industry lost $450m in profits through floods that disrupted supplies from Thailand.  

He observes that the message is being heeded as regulations are now being prepared in Australia, California, China and South Korea.

In Britain, Diageo highlights a record number of shareholder resolutions received last year on environmental issues, and BT says its sustainability credentials were requested in £2.7bn ($4.3bn, €3.3bn) of this year’s customer bids.  

The CDP has responded with a new framework to link financial and climate change reporting.

UK companies leading on carbon disclosure and performance, listed by the CDP, are Anglo American, Diageo, Mondi, Morgan Crucible, Reckitt Benckiser and Unilever.

Climate change reporting, says the CDP, will in future concentrate on retaining global consistency, improving data quality and showing how policies are integrated into overall business strategy.

A plan to capture one million tonnes of CO2 a year by 2020 is being researched by Canadian technology company Carbon Engineering, delegates were told at an oil and gas industry conference in London. Captured CO2 is used for enhanced oil recovery, biofuel technology and the synthesis of hydrocarbon fuels.