Alex Blackburne finds that The Carbon Disclosure Project’s annual Global 500 report has highlighted some interesting issues around carbon reduction and stock market performance.
The number of carbon reduction policies in a company has been linked to its performance on the stock market, with those with more measures in place performing better than those without.
The annual Carbon Disclosure Project (CDP) Global 500 report showed that companies in the 2011 Carbon Disclosure Leadership Index (CDLI) and Carbon Performance Leadership Index (CPLI) “provided approximately double the average total return of the Global 500 between January 2005 and May 2011”.
The encouraging report, which was written by professional services firm PricewaterhouseCoopers, also reveals how 68% (269) of Global 500 respondents are integrating climate change policies into their business agenda –which is up from 48% (187) in 2010.
According to the CDP’s report, the apparent increase in sustainability awareness amongst Global 500 companies, and the subsequent link with increased performance on the stock market, shows that “more and more of the world’s largest companies understand the need to, and benefits of, accelerating actions to reduce emissions”.
Phillips, BMW, Honda and Tesco were four companies which came out well from the carbon emissions disclosure score. They got good overall in terms of their carbon emissions disclosure score against their performance band – a ranking used to rate “performance in contributing to climate change mitigation, adaptation and transparency” – with all of them given an A.
Paul Simpson, CEO of the Carbon Disclosure Project, said the figures prove that being friendly to the environment by reducing carbon emissions, is the clever, and ultimately profitable, way to go.
“The improved financial performance of companies with high carbon performance is a clear indicator that it makes good business sense to manage and reduce carbon emissions.
“This is a win-win for business – the short return on investments many emissions reducing activities have, can help increase profitability.
“Companies yet to take action on climate change will have to work hard to remain competitive as we head towards an increasingly resourced constrained, low carbon economy”.
However, other factors – such as the improved capability of the management team or a wider spectrum within the organisation when it comes to climate change action – should not be overlooked.
Instead they should be regarded as other influences in the overall development of sustainable businesses.
One thing is certain, though: companies that strive to reduce their carbon emissions and disclose their improvements will be looked upon more favourably than those which opt to keep their (possibly non-existent) carbon reduction measures under-wraps.
Honesty, according to the CDP’s report, is the best policy.