Companies face investor pressure to reduce CO2
reduce the amount of greenhouse gases produced by their
manufacturing operations.
The UK is leading the charge, with the minister for climate change, Joan Ruddock, yesterday calling on investors to send "strong signals" to the market about the importance of a company's environmental record as part of its financial strategy. She was speaking at the launch of this year's survey of the top 500 public companies in the world by the Carbon Disclosure Project (CDP), an independent not-for-profit organisation that acts as a global secretariat for institutional investor collaboration on climate change. In recent years, consumer and regulatory pressure has been forcing processors and other manufacturers to cut down on the environmental impact of their operations. The effort in relation to climate change has focused on reducing carbon dioxide production all along the supply chain, including packaging and transportation. Companies such as Nestle, Coca-Cola, PepsiCo., Unilever, Kraft, and ConAgra Foods have been publishing regular reports on their efforts to assess and reduce that impact. The CDP survey pushes companies to disclose to the market their CO2 production and what they are doing about reducing greenhouse gases. The Carbon Disclosure Project is run by Rockefeller Philanthropy Advisors in New York, and today is a coalition of about 315 global investors holding $41 trillion in assets. The UK government has funded the global survey for the past two years. The disclosure is part of push by the UK government to meet the EU's CO2 reduction targets. "Investors have a particularly key role to play in this," Ruddock said. "They should give consideration to environmental and social credentials, sending out signals to the financial markets to say that carbon disclosure is vital and show companies that it will affect their investment decisions." This year, about 91 per cent of companies on the FTSE100 and 70 per cent of those on the FTSE350 responded to the UK survey by supplying information on their CO2 emissions. By comparison 83 per cent of FTSE100 companies and 49 per cent of those on the FTSE350 responded in 2006. The CDP survey included UK and overseas based companies. CDP is an independent not-for-profit organisation with the aim of acting as a global secretariat for institutional investor collaboration on climate change. The UK's environmental department has been part of the CDP process since it was launched in 2000, including contributing to the funding for the distribution of the questionnaire in 2006 and 2007. Despite being voluntary, the CDP questionnaire has a very high response rate. In 2007, CDP sent off the survey to 2,400 companies globally, 1,350 of which responded. The total emissions reported to CDP from all companies, including those in the UK, made up 14 per cent of all greenhouse gas emissions attributed to human activity, the CDP estimates. About 95 per cent of responding companies on the FT500, which tracks the top 500 global companies by market capitalization, reported climate change to be a commercial risk and have implemented an emissions reduction programme. About 46 per cent of FTSE 350 companies provided details of quantitative emissions data, with increasing numbers reporting on indirect emissions, including electricity, business travel and external distribution and logistics. About 34 per cent of all global responding companies claimed to be purchasing a percentage of their energy from a renewable source. CDP states that the 2007 responses indicated improvements in carbon accounting and the quality of responses, particularly in dealing with complex issues. "This means the responses are more comparable and provides investors with more useful information," the CDP stated. Other information on companies' environmental impacts is also captured by the Dow Jones Sustainability Indexes. Launched in 1999, the Dow Jones sustainability indexes track the financial performance of the leading companies worldwide that are identified sustainability as a priority. The indexes provide asset managers with reliable and objective benchmarks to manage portfolios based on whether companies are meeting environmental goals. Among food and drink companies Unilever was rated as 'Best in Class' in its approach to climate change disclosure by the CDP. Unilever was also elected leader in the Dow Jones Sustainability World Indexes (DJSI World) in the food and beverage sector for the ninth consecutive year. The Dow Jones Sustainability Index researchers mentioned Unilever's nutrition labelling system designed to make it easier for consumers to identify healthier food options, and Swasthya Chetna - the company's hygiene programme in India. "These external, objective indicators demonstrate our progress both in improving social and environmental performance and of disclosure in an area that is increasingly important to investors," stated Patrick Cescau, Unilever's group chief executive.
