Transport companies that do not have a carbon reduction strategy are exposing themselves to risk – particularly regulatory risk, according to a report by the Carbon Disclosure Project.
The Carbon Disclosure Project was launched in 2000 and is used by about 2,500 organisations in 60 countries to measure and disclose their greenhouse gas emissions and climate change strategies.
In its “Transport Report”, the CDP warns: “A future impacted by regulation and a likely increase in the cost of carbon will place a hefty financial burden on excessive polluters who will be forced to modify their products and services to emerging new standards.
“More stringent regulations will increase the materiality of climate change for investors and drive up costs for companies unable to manage their greenhouse gas inventories,” it says.
Other risks include the loss of strategic profit opportunities that can be derived from fuel efficiencies and new, more carbon efficient products and services and reputational damage.
The report says that fewer than half of the transport companies surveyed have a clear understanding of the risks and business opportunities associated with regulations. Only nine per cent of companies reported having current investments in new technologies or emission reduction initiatives.
In addition, it says, there is a relatively low level of awareness and readiness to effectively leverage regulations and low-carbon alternatives from a competitive standpoint.
“There are, however, a handful of transport companies that are setting the bar in carbon reduction initiatives and investments, including UPS, Toyota and Air France,” it says.
South American and European companies demonstrate the highest levels of setting reduction targets. In South America, 60 per cent and in Europe 52 per cent of all transport companies asked to report through CDP have set a emissions reduction plans, compared to 18 per cent in Asia and 47 per cent in the US and Canada.
The report says that transport accounts for 13 per cent of global emissions. Within that, road transport accounts for some 80 per cent of the transport sector’s total contribution to CO2 emissions, while rail accounts for 0.5 per cent, air represents 13 per cent, and sea transport accounts for seven per cent.
It argues that the most effective carbon management route for transport is an emissions reduction.
The most popular targets within Transport are either CO2, energy, or fuel related. This illustrates the sector’s heavy focus on fuel use.
Within the subsectors, airlines, airports, air freight & logistics outstrips road and rail in terms of setting targets. This suggests regulation on the airline industry is encouraging companies to set targets, ahead of their peers in road and rail.
The benefits for companies in planning for emissions reductions will increase as the spotlight continues to shine on the sector.