Last week, over 100 global investors, which between them manage more than $10 trillion in assets, announced they would join forces with CDP to exert more pressure on companies they say are generating the most environmental impact worldwide.
Within this coalition’s crosshairs is a who’s who of some of the world’s most recognizable brands, including Domino’s Pizza, ExxonMobil, Facebook, Rolls-Royce and Volkswagen.
“The importance of investor engagement to drive disclosure cannot be overstated,” said Emily Kreps, global director of capital markets at CDP. “Climate change, water security and deforestation present material risks to investments, and companies that are failing to disclose their impact risk trailing behind their competitors in their access to capital.”
Allianz Global Investors, HSBC Global Asset Management, Nuveen and Trillium Asset Management are among the investment firms that say they are aligned with CDP’s latest Non-Disclosure Campaign.
CDP argues that the push for greater disclosure is necessary as short- and long-term business risks such as climate change, deforestation and water scarcity are now even more material to companies than they had been in the recent past. This coalition points to a study the World Economic Forum commissioned earlier this year, the conclusion of which said that threats such as extreme weather, the failure of climate action plans, and the loss of biodiversity could result in “economic confrontations” and “domestic political polarization.”
Of course, we are seeing those aforementioned forces at play now due to the novel coronavirus pandemic and protests demanding racial equity. It’s clear, however, that the massive global problems wreaking havoc are not separate challenges but in fact are intertwined. “The recent public health crisis has highlighted that business resilience and adaptability to external shocks are critical indicators of a business’ strength,” said CDP.
In fairness, non-disclosure to CDP doesn’t necessarily mean a company is dropping a ball on the climate action front. “Sustainability reporting fatigue” has long been a topic of discussion in this space. On that point, CDP has noted that close to a fifth of the companies on its current target list now report to the organization on one theme, such as climate, forests or water.
The argument from CDP and these investors, however, is that these companies aren’t disclosing data related to a risk that is material to their business. On that point, such companies that can expect to receive a CDP love note to that effect include Adidias, AccorHotels, Costco, Gap Inc. and Tesco.
Image credit: Martin Ceralde/Unsplash
Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's worked an lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.