Big companies making little headway on climate change

The world’s largest listed companies are failing to reduce their environmental impacts despite increasing stakeholder, political and scientific pressure, reports the CDP, the international climate change consultancy.

Fifty companies are said to be producing nearly three-quarters of the greenhouse gas emissions recorded for the 500 biggest corporates together. The emissions of these 50 have actually risen by 1.65% to 2.54 million tonnes in five years, says the report.

Meanwhile, carbon dioxide in the atmosphere, according to the researchers’ calculations, has passed the landmark level of 400 parts per million.

The CDP Global 500 Climate Change Report 2013 was co-written by the CDP – the former Carbon Disclosure Project, now known by its initials – and the professional services group PwC, at the request of 722 institutional investors representing $87tn (£54tn, €65tn) in invested capital.

Although more investors than ever are using CDP data on environmental performance, the five biggest emitters in every one of the report’s ten sectors are said to have been sluggish on climate change action and have actually increased emissions by an average of 2.3% since 2009.

Moreover, some information is patchy. Emissions from nearly half of the most carbon-intensive activities in the Global 500 companies’ supply chains have not been measured. In addition the researchers highlight the latest UN Global Compact survey of members showing supply chain management has not improved for several years.

The report emphasises that companies that deal with their environmental impact get better financial results. Corporates in this category include BMW, Cisco Systems and Nestlé.

Another bonus noted is that companies offering their employees financial incentives for cutting energy use and carbon emissions are 18% more successful in achieving reductions.

Companies are told the payback period for expenditure on emissions reduction can be three or more years but those making longer-term investments often report their actions give them an advantage over competitors.

A country breakdown in the Global 500 Climate Performance Leadership Index, released in the report, gives high scores to Germany, Switzerland and the UK.

European companies are reported as generally better performers than those in the US, but the number of North American companies represented has more than doubled since last year.

Paul Simpson, the CDP chief executive, said: “Many countries are demonstrating signs of recovery following the global economic downturn.

“However, clear scientific evidence and increasingly severe weather events are sending strong signals that we must pursue routes to economic prosperity whilst reducing emissions of greenhouse gases.

“It is imperative that big emitters improve their performance in this regard and governments provide more incentives to make this happen.

“The corporate world is an aggregator of both risks and opportunities from this challenge, so this report is written for businesses, investors and policymakers that want a clear understanding of how the world’s largest listed companies can transform themselves in order to protect our natural capital.”

Malcolm Preston, global head of PwC’s sustainability services, said: “The report underlines how customers, suppliers, employees, governments and society in general are becoming more demanding of business.
“It raises questions for some organisations about whether they are focused on sustaining growth in the long term, or just doing enough to recover growth until the next issue arises … Either business action increases or the risk is regulation overtakes them.”

The top ten rated by the CDP report are BMW, Daimler, Philips Electronics, Nestlé, BNY Mellon, Cisco Systems, Gas Natural SDG, Honda, Nissan and Volkswagen.

Altogether 97 companies refused to participate in the survey, including Apple, Amazon.com and Facebook.