The Carbon Disclosure Project’s (CDP) latest report released today puts many European firms in the newly created Carbon Performance Leadership Index. The index has been compiled from all Global 500 and S&P 500 CDP respondents who scored more than 50 in the existing Carbon Disclosure scoring system. Each eligible firm was placed in the Carbon Performance Leadership Index (CPLI) where league position was based on a Carbon Performance score.

European firms such as Tesco, Royal Dutch Shell, Barclays, RBS, Munich Re, Swiss Re, Phillips Electronics, Siemens, Nokia, British Telecom, E.ON, National Grid and Scottish & Southern Energy all made the list.

The traits that make for good carbon performance leadership were also published which highlighted the difference between leading and lagging firms. The most prevalent characteristics of high-performers were:

• Integration of climate change risks or opportunities into overall business strategy
• Implementation of emissions reduction targets
• Top-level management involvement
• Monetary incentive schemes for staff
• Emissions verification
• Disclosure of climate change information in mainstream filings or other external communications
• Progress towards meeting targets
• Significant emissions reduction in the past year¹

The performance data mark a shift in focus from simple disclosure to providing evidence of the credibility of disclosed information. Alan McGill, a specialist in carbon and climate change reporting for PriceWaterhouseCoopers explains that investors were increasingly demanding the kind of detailed data released by CPLI firms:

The issues for investors have shifted, originally they wanted to know the information was being disclosed by the companies. Now they are asking more questions about the robustness and credibility of the data. Disclosure alone is not enough. They are asking if the management team are using the information to drive business strategy, and performance improvement. That’s why the new Performance Index this year, and the trends that emerge from it over the coming years will become more and more important.²

This stakeholder sentiment is clearly good news for the environmental agenda within business, which had been frustrated by the lack of a binding agreement in the UN’s Copenhagen Summit last year. It seems that whilst global legal framework creation may be slow and arduous, social pressure and the current trend of corporate transparency may force businesses to push environmental issues to the fore in order to compete. Those firms that fail to proactively respond to how they interface with the environment will ultimately lose out.

The CDP 2010 report can be found at: https://www.cdproject.net/en-US/Results/Pages/All-Investor-Reports.aspx

Footnotes

1. Carbon Disclosure Project 2010. Available at: https://www.cdproject.net/en-US/Results/Pages/All-Investor-Reports.aspx [↩]
2. McGill, A. in BusinessGreen.com. 2010. CDP: Gap Between Climate Leaders and Laggards is Widening. Available at: http://www.businessgreen.com/business-green/news/2270035/cdp-gap-climate-leaders [↩]