The Carbon Disclosure Project (CDP) a collaboration of 385 institutional investors, with assets under management of $57 trillion, has issued its 2008 information request to the world’s largest corporations. This asks companies to measure and disclose their greenhouse gas emissions and report on their strategy for dealing with risks and opportunities associated with climate change.
The resulting information will be held on the CDP website, the largest database in the world on corporate climate change information.
Investors that have signed up to CDP include Merrill Lynch, AXA, ANZ, Banco do Brazil, Mitsubishi UFJ, AIG, Barclays, RBS Group and HSBC. Legg Mason, Insurance Australia Group and the Florida State Board of Administration are among over 70 new investors to join this year.
The collective assets under management held by CDP signatories have increased by more than 30 per cent from $41 trillion to $57 trillion, showing that an increasing number of investors are considering climate change in their investment decisions.
Paul Dickinson, chief executive officer of the Carbon Disclosure Project, said: ‘The momentum behind CDP represents the start of a unified global business response to climate change. The continued growth in investors supporting CDP and requesting the companies they invest in to respond through the CDP system demonstrates that we have entered an era when climate change has become a mainstream issue for both investors and corporations. Investors recognise that corporate engagement with climate change issues is an important indicator of good quality corporate management.’
Recent CDP research with US signatory investors discovered that CDP information is very important to investors’ decision making. It found that: 60 per cent of investors identified which companies in their portfolio were either not responding to CDP, or were providing poor or trivial answers. The investors then used this information to further engage with these companies on the issue of climate change; 26 per cent of investors supported shareholder resolutions for better disclosure on climate change from some companies not complying with CDP disclosure; all the investors interviewed agreed that the CDP data is a valuable resource and incorporated it into their decision making process at some level.
CDP has this year requested information from over 3,000 companies, up from 2,400 in 2007. It has launched operations in five new geographies and widened its scope in many existing regions.
For the first time ever CDP will write to China’s 100 largest companies, by market capitalisation. This is a key step in leveraging investor influence to support Chinese companies in measuring and disclosing their carbon emissions and climate related strategy.
The CDP information request focuses on the following factors that may affect the value of a company: total greenhouse gas emissions; regulatory risk/opportunity (eg limits on emissions); Physical risk/opportunity (eg changes in weather patterns impacting operations); Consumer sentiment risk/opportunity (eg reputation);
steps taken to manage and reduce emissions.
Corporations have been asked to respond to the CDP information request within four months. The individual company responses, plus analysis of the responses, will be launched in September 2008 and made available free of charge on the CDP website.