Philips, Bayer Top CDP Rankings; Amazon, Apple and Warren Buffett Fail to Respond

by | Sep 14, 2011

Philips Electronics, Bayer and Cisco have topped the Carbon Disclosure Project’s 2011 carbon performance and disclosure rankings, as for the first time, a majority of the world’s largest public companies report that climate change actions are embedded in their business strategy.

This year’s Global 500 report (pdf), written by PricewaterhouseCoopers for the CDP and released today at the CDP Global Forum, reveals that 68% of 396 companies analyzed have climate change at the heart of business strategies, compared with 48% in 2010. The report attributes this phenomenon to growing board-level awareness of the link between energy efficiency and increased profitability.

This year there was also a marked rise in the number of companies reporting reduced greenhouse gas emissions as a result of emissions reduction activities (45%, up from 19% in 2010).

Alongside these results, the CDP revealed the leaders of its Carbon Performance Leadership Index (CPLI) and Carbon Disclosure Leadership Index (CDLI), which are revised annually based on company submissions, and present the leaders of the Global 500 in carbon performance and disclosure respectively. Twenty-three companies are on both the CDLI and CPLI.

The top 10 best performing companies on both measures this year are listed in the chart, above left. Of the top ten, two are American (Cisco and Bank of America), two are Japanese (Honda and Sony), three are German (Bayer, BMW and SAP), and one each are British, Dutch and Australian (Tesco, Philips and Westpac).

Bayer and Philips are tied for first place this year, up from last year’s fourth place for the pharmaceutical company, and joint sixth for the electronics firm. There are no other repeat top-ten performers.

There are 14 new entrants to the 2011 CPLI, which includes just 29 companies this year, due to more demanding criteria applied by CDP. The new entrants are:

  • USA: Air Products & Chemicals, Lockheed Martin, Morgan Stanley
  • Japan: Honda Motor Company, Sony Corporation
  • Germany: SAP
  • France: AXA Group, Schneider Electric
  • Italy: ENEL, FIAT
  • United Kingdom: British American Tobacco, BG Group, Glaxo SmithKline
  • Switzerland: Novartis

The largest non-responding companies in the Global 500, by market capitalization, were Amazon, Rosneft, Bank of China and Warren Buffett’s firm, Berkshire Hathaway. Apple was the other U.S. company among the big ten non-disclosers. Most of the big ten were American, Russian or Chinese, with one Indian company (Reliance Industries) and one Mexican (American Movil). “Many of these [companies] are from countries that have less mature corporate disclosure practices and/or climate change regulation,” the CDP noted.

The report found that companies in the CDLI and CPLI provided about double the average total return of the Global 500 between January 2005 and May 2011. This suggests a strong correlation between higher financial performance and good climate change disclosure and performance, the CDP said.

Companies in Australia, Germany, Italy, Switzerland and the UK are demonstrating strong carbon performance leadership, the CDP says, while Canada, Japan and the U.S. lag behind on performance. Utilities emerged as the sector with the best average climate change performance, and IT the sector with the lowest. The only sector with no companies in the CPLI was telecommunications.

The CDLI contains 52 disclosure leaders in 2011, its second year, including 29 performance leaders that the CDP says have demonstrated their commitment to achieving low carbon growth.

The CDP found that 74% (294) of Global 500 respondents disclose absolute or intensity emission reduction targets, an increase from 65% (250) in 2010. The Consumer Staples sector has the highest proportion of companies with emissions reduction targets (94%, 32). The Energy sector is showing the lowest proportion of companies with targets (55%, 22) and is underrepresented in both the CPLI and CDLI, the report said.

The number of respondents making emissions reductions from specific measures more than doubled, from 19% (75 companies) in 2010 to 45% (178) in 2011. A total of 1,780 emissions reduction activities were reported by 97% (384) of responding companies in 2011. Energy efficiency (building fabric, building services and processes), low carbon energy installations and behavioral change are the most commonly identified activity types, while 65% (259) of respondents provide monetary incentives to staff for managing climate change issues, versus 49% (188) in 2010.

Of the emissions reduction activities reported by Global 500 respondents, 59% of have a payback period of three years or less and 41% of initiatives have paybacks of over three years. This willingness to invest in activities with a medium to long term payback is evidence that companies regard energy and emissions reduction as an important strategic priority, the CDP said.

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