Survey of Global Executives Shows Link Between Shareholder Value, Climate Change
"The investment community is showing a profound new awareness of its fiduciary responsibility relating to climate change, and sending an unmistakable message to corporations that their investors will no longer tolerate a lack of accountability about their exposures and practices," said James Cameron, chair of the Carbon Disclosure Project (CDP). "The results are more than we'd hoped in so short a time frame, though we know it's the early stages of a long journey," he continued. The full report looks at the broad landscape of responses, breaks down analysis by sector and includes verbatim answers from respondents. It is available at www.cdproject.net.
Since its inaugural report in 2003, the Carbon Disclosure Project has seen a 171% increase in the number of signatories involved (35 to 95), and the 150% increase in the represented assets under management ($4 trillion to $10 trillion). Further, the report reveals a corresponding 20% spike in the percentage of FT500 companies that participated (47% to 59%) and a more geographically diverse base of respondents (64% of participating investors in CDP2 were European, down from 83%).
This year marks the debut of the project’s "Fabulous 50 Climate Leadership Index," which lists companies whose responses best addressed the breadth of climate change issues.
"Our analysis indicated a marked improvement not just in the quantity of responses, but also in quality and sophistication," said Dr. Matthew Kiernan, CEO of Innovest Strategic Value Advisors, the New York-based investment research firm that prepared the report.
Although the increase in awareness and action among both signatories and corporations bodes well for the future, work remains in many areas. The report revealed significant differences among companies within the same sector on the importance of climate change, with many companies "behind the curve." Microsoft, for example, failed to acknowledge the potential for computer operating systems to reduce the energy demands of the global information infrastructure. Further, there are major "disconnects" between some companies' response status and what is publicly known about their climate change stances, the group says.
Twelve corporations failed to respond at all to the survey even though CDP signatories hold between ten and 15% of their outstanding common shares. These 12 top the list of 71 that did not respond to their investors' call to action. An additional 77 responded, but declined to participate in the survey.
U.S. companies that did not comply with the request for information include, but are by no means limited to, Honeywell, which has 15.5% of its common shares held by CDP signatories; Sears, Roebuck & Co. (15.4%); Boeing (13.9%); ConAgra (12.5%); Target (11.7%); and Morgan Stanley (11.2%).
"Companies ignoring their investors will invite -- and warrant -- particular scrutiny," said Cameron. "More than ever, investors of all sizes are making their wishes known on this key issue and are willing to reallocate their assets if necessary. Our report gives them the information they need to justify an investment strategy that reduces the risk associated with accelerated global warming."
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