Carbon Disclosure Project — Engagement of Asset Management Industry is “woefully inadequate”

Last week saw the publication of the 2011 CDP Global 5oo Report.  With such, there have been some very interesting findings that should make those in the investment community sit up and pay attention.

Paul Simpson, the Chief Executive Officer of the Carbon Disclosure Project noted that this year’s report suggests that there is a “strong correlation” between a companies financial performance and their climate change disclosure and performance.  The report found that leading firms “provide approximately double the average total return of the Global 500 between January 2005 and May 2011.”

Now if that isn’t enough to get one’s attention, we’ve also had the chair of the Trustees of the Carbon Disclosure Project (Alan Brown, Schroders Chief Investment Officer) suggesting that the investment community has been “woefully inadequante” for it’s engagement on climate change:

The level of engagement of the asset management industry is woefully inadequate in term so of quality and quantity.” 

Brown went on to say that asset owners fiduciaries should consider wider issues than merely risk-adjusted returns, in a similar way that company directors are obliged to under the Companies Act.  He went on to mention that he was disappointed that clients rarely ask his firm about its engagement activities.

Some other interesting highlights from the report are listed below:

  • 81% of Global 500 companies responded to CDP in 2011.  Of those, 93% said their board or a senior executive oversees the company’s climate change program, compared to 85% in 2010
  • 74% of Global 500 respondents reported greenhouse gas reduction targets, up from 65% the year prior; 45% have made emissions reductions more than double the 19% that reduced in 2010
  • These climate change actions have short returns on investment (ROIs).  Nearly 60% of emission reductions paid for themselves in three years or less.
  • In terms of carbon performance, companies in Canada, Japan and the USA lag behind their peers in Australia, Germany, Italy, Switzerland and the UK
  • Most of the Global 500 companies (68%) have integrated climate change action into their overall business strategy, compared to 48% in 2010.
  • The Energy sector is showing the lowest proportion of companies with targets (55%, 22) and is underrepresented in both the CPLI and CDLI. In view of the high emissions from the Energy sector, this points to the need for improvement. The Consumer Staples sector has the highest proportion of companies with emissions reduction targets (94%, 32)

The full report can be found at:  https://www.cdproject.net/en-US/Pages/HomePage.aspx

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This entry was posted in Carbon Disclosure Project, Climate Risk, Corporate Responsibility, Environmental, Social and Governance (ESG), Sustainability, Sustainable Investing. Bookmark the permalink.

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