Do US Companies Finally 'Get' Carbon Disclosure? Yes, But...

Do US Companies Finally 'Get' Carbon Disclosure? Yes, But...

Image CC licensed by Flickr user David Paul Ohmer

U.S. companies are getting better about disclosing their carbon footprints and integrating climate change into their business strategies, but in some areas, American businesses as a group seem to be taking a few steps backwards.

The latest report from the Carbon Disclosure Project on the climate change practices of the largest firms in the U.S. show the issue is becoming better integrated into overall business strategies. And more companies are getting high-level oversight on climate performance from senior executives and board members.

Sixty-five percent of S&P 500 respondents said climate change issues are integrated into overall business strategies, what amounts to a huge jump from 2010, when just 35 percent had done so. At the same time, the percentage of companies with board or senior executive oversight of climate change programs grew from 68 percent in 2010 to 87 percent in 2011. All of this surprised CDP analysts, given the regulatory uncertainty in the U.S., according to Zoe Tcholak-Antitch, CDP's North America director.

"I think the two are very much linked," she said. "When you have that board level or senior executive responsibility, it becomes very easy to integrate into the overall business strategy."

Other good news: Climate change action pays, literally. The percentage of companies offering monetary incentives for climate change management grew from 35 percent in 2010 to 54 percent in 2011.

But in other areas, the numbers are trending in the wrong direction, starting with the total S&P 500 responses. The number of S&P 500 companies disclosing to the CDP this year actually declined from 350 last year to 339 in 2011, a 2 percent drop, and the first time that number has declined in the history of the CDP's annual S&P 500 survey.

"The S&P 500 is based on market capitalization, so there's a lot of churn," Tcholak-Antitch said. "Some come in for the first time who've never responded before. Typically we find companies who've responded before respond again."

The percentage of companies that get their data verified or assured by a third party is also down to 14 percent in 2011, compared to 23 percent in 2010 and 26 percent in 2009. U.S. companies are obviously turning away from assurance, but the CDP now gives the practice more weight in scoring.

The Carbon Disclosure Leadership Index, comprised of the highest scoring companies for disclosure, saw its average score increase to 88 points in 2011 from 86 points last year.

But Tcholak-Antitch said her team was surprised to see the low representation of U.S. companies on the Carbon Disclosure Performance Index, which measures how companies are moving beyond disclosure to take action.

For example, in last week's CDP Global 500 2011 report, North American companies, including Canada, made up 24 percent of the CPLI, but represented 42 percent of Global 500 responders. In comparison, Europe represented 55 percent of CPLI companies, but made up just 34 percent of responders.