Investors with $31 trillion pressure firms on climate change
Rhett A. Butler, mongabay.com
February 1, 2006
A group of 211 institutional investors with assets of $31 trillion under management is writing to 1,933 of the world’s largest public companies asking for the disclosure of investment-relevant information concerning their greenhouse gas emissions.
This is the fourth such annual request by the Carbon Disclosure Project, a coalition of institutional investors concerned about the impact of greenhouse gas emissions on their bottom line. The shareholders want to know how companies are preparing for both the effects of climate change and changes in emissions policy.
Last year’s request for information–sent to 500 firms–had a 70 percent response rate, up from 59% in year 2 and 47% in year 1. OF the respondents, more than 90 percent said climate change as posed commercial risks and/or opportunities to their business, while 86 percent reported allocating management responsibility for climate change. 63% of the companies were taking steps to assess their climate risk and institute strategies to reduce greenhouse gas emissions.
The newest request (2006) will include 500 of the largest companies in the USA based on market capitalization (S&P 500), 258 of the world’s largest electric utilities, 300 of the largest emitters in Canada, 200 of the largest companies in Germany, 150 of the largest companies in Japan, 150 of the largest companies in Australia and New Zealand, 120 of the largest companies in France, 100 of the largest companies in the UK, 50 of the largest companies in Brazil, and 40 of the largest companies in Asia outside of Japan.
Commenting on the information request, Paul Dickinson, the Carbon Disclosure Project Coordinator, said:
New York-based banking giant J.P. Morgan Chase & Co. joined the ranks of a select group of firms in the financial sector who have adopted environment policies with an increased focus on more ecologically responsible business practices. This move signals a larger trend and is indicative of the current state of the marketplace as well as that of the government
A new report by Friends of the Earth shows that America’s property and casualty insurers are doing a very poor job in disclosing climate change-related risks in their SEC filings on material risks facing the firms. Only 5 companies out of the 106 surveyed referenced climate change issues in their SEC reporting, despite the growing body of evidence that climate change will produce increasingly intense storms.
The Rainforest Action Network (RAN) today issued a release commending Goldman Sachs for becoming the first global investment bank to adopt a comprehensive environmental policy. The policy acknowledges the scientific consensus on climate change and calls for urgent action by public policy makers and federal regulators to reduce greenhouse gas emissions.
Companies which contribute to climate change will increasingly face legal action according to a U.N.-sponsored report accounced last week but scheduled for release in March 2006. London-based law firm Freshfields is working with Dutch bank ABN Amro to produce the U.N. report which aims to encourage investors to address environmental, social and governance issues in their investment decisions. Below is the news released from UNEP
“The numerous indications of accelerating human induced climate change make it clear that there are business risks and opportunities that have implications for the value of investments in corporations worldwide. Examples include changes in weather patterns; political and regulatory momentum moving against significant carbon emitters; the development of emissions-sensitive technologies, products and services superseding those existing today; and shifts in consumer sentiment due to a corporation’s stance on climate change.
This makes it necessary for investors to improve their understanding of climate change risks and opportunities. The data to assess these issues is not always available, sometimes lacks comparability or is of poor quality. The Carbon Disclosure Project aims to encourage the development of a common emissions measurement methodology and to facilitate its integration into general investment analysis. The signatories recognize that companies face pressure to comply with constant demands for information and so have joined in this single call for information to reduce the number of requests.”
The recipient corporations have been asked to respond within four months and the information received will be distributed to participating institutional investors and companies that respond to the questionnaire. The summarized reports will be made publicly available at www.cdproject.net in September 2006.
Already, corporations are adopting responses to climate change. In early 2006, General Electric (GE), one of the world’s largest corporations, announced a new push for environmental technologies, one that would both promote the development of new products and services as well as reducing the company’s impact on the environment. Under the initiative, every GE business unit will have to cut its output of carbon dioxide to meet strict internal targets, while research spending on clean products will be more than doubled by 2010.
This is a modified news release from the Wildlife Conservation Society.