ARCHIVE: ENERGY, ENVIRONMENT AND TECHNOLOGY
Carbon Disclosure Project Takes the Measure of Emissions
May 1, 2009
Compared to well-established financial and accounting systems used to manage a company’s dollars and cents, practices to measure and report on a company’s carbon emissions are still in the early stages of development. The Carbon Disclosure Project (CDP) helps to fill this gap by obtaining climate change related information from the world’s largest corporations on behalf of institutional investors, policy makers, and companies. As the Canadian partner for the global CDP, the Conference Board administers the annual survey of Canada’s 200 largest companies on the Toronto Stock Exchange.
Practices to measure and report on a company’s carbon emissions are still in the early stages of development.
Investors Demand Climate Change Information
The effects of climate change on businesses are widely recognized. Investors see climate change risks and opportunities as important components of future business prospects in both high-carbon and low-carbon sectors. This recognition leads investors to demand that companies publicly disclose climate change related risks, opportunities, and strategies beyond the ones they outline in financial statements. In addition, many investors evaluate how companies seize opportunities offered by clean technologies, improved energy efficiency, renewable energy sources, and emissions-trading schemes.
Disclosure Benefits Companies
Companies are beginning to recognize the growing importance of providing objective information on climate change impacts and actions to their investors and to the public. Several reasons explain this trend.
- Disclosure of risks and opportunities affecting a company’s future helps to shape the firm’s long-term access to capital and its corporate image.
- Companies see the CDP reports as vehicles for communicating climate change management strategies and business opportunities.
- Firms that make the environment a priority in their manufacturing processes and product positioning can differentiate themselves from competitors and enhance their corporate reputation.
- Management decisions improve when firms—in responding to a disclosure request—obtain a more complete accounting of their greenhouse gas emissions and practices.
Highlights from the Canada 200 Report
Almost half of the survey respondents—47 per cent—disclosed financially relevant climate change information. This information included:
- fossil fuel and electric power costs;
- investments in emissions-reduction activities, such as initiatives related to renewable energy, energy efficiency, process modifications, carbon offsets, or carbon sequestration; and
- other costs or savings associated with emissions reductions.
Most respondents—84 per cent—are proactively integrating climate change into their risk management strategies.
The results for the 103 CDP respondents as a whole revealed a balanced view of risks and opportunities; 83 per cent of respondents indicated that climate change presents risks and 88 per cent reported business opportunities. Not surprisingly, the risk/opportunity perception differs dramatically from sector to sector.
Investors see climate change risks and opportunities as important components of future business prospects.
Companies involved in the oil and gas, mining, forestry, and utility sectors see more risks ahead than opportunities. New regulations, physical impacts, and concerns that greener energy sources will displace current emissions-intensive operations top the list of perceived risks among companies in high-carbon sectors.
Companies in low-carbon sectors—such as finance, retailing, insurance, information technology, and construction—perceive more climate change opportunities. For the financial sector, new market mechanisms will be required to implement emissions-trading policies, creating a new line of business. In addition, clean energy and public infrastructure projects will create new opportunities for financing in capital markets. Retailers and construction firms, meanwhile, may be able to enhance their “green” branding efforts by adopting climate change management strategies and disclosing them through the CDP.
The Conference Board of Canada gratefully acknowledges the British High Commission in Canada for its financial contribution in support of three Executive Action Briefings arising from the 2008 CDP Canada 200 Report.
|Graham Campbell |
Energy, Environment and Technology
613-526-3090 ext. 250
Carbon Disclosure Project: How Four Business Sectors See Climate Change Risks and Opportunities
Carbon Disclosure Project: Canada 200 Summary for Investors
Carbon Disclosure Project: Why Should Companies Participate?
Carbon Disclosure Project Report 2008: Canada 200
The Alberta Water Conference
Related Executive Networks
Business Council for Sustainability
Leaders’ Roundtable on Climate Change Adaptation