(Photo Credit: Laurent De Brito, Unsplash)Global investors holding more than $10 trillion in assets are urging hundreds of corporations to improve their environmental disclosure today. The investor initiative is part of the nonprofit CDP’s 2020 Non-Disclosure Campaign, which encourages transparency around corporate performance on the themes of climate change, deforestation, and water security.
The 1,051 companies from 49 countries being urged to share environmental data are estimated to emit more than 4,800 metric megatons of carbon dioxide equivalent annually, according to CDP.
These companies include Exxon Mobil, Facebook, Domino’s Pizza, Berkshire Hathaway, Nintendo, Chevron, and Imperial Oil, the nonprofit said.
Companies that fail to disclose environmental data risk trailing behind the competition in access to capital, says Emily Kreps, who leads the global capital markets team at CDP. She discusses the nonprofit’s latest campaign, and what’s at stake for corporate leaders who are reluctant to engage.
Which factors were used to select the companies included in the 2020 CDP Non-Disclosure Campaign?
The starting point is the list of companies that were requested to disclose to CDP in 2019, but did not disclose. CDP shares that list with our investors to ask with which companies the investors would like to engage. CDP identifies high-priority companies to help investors with their selection.
This selection is based on a company’s market cap, disclosure record, and environmental impact. That said, investors can and do select to engage with any company that does not respond to CDP.
How did the results of this year’s campaign compare to previous ones?
A record number of investors are engaging our highest-ever number of companies.
What’s even more encouraging is that we’re seeing this level of interest despite the global pandemic, which could understandably be distracting businesses and investors alike.
What are the biggest risks for companies that don’t disclose environmental data?
At CDP, we firmly believe in the adage that ‘you can’t manage what you don’t measure,’ so the greatest danger is companies failing to understand and manage their environmental impact. This could be a costly mistake on many levels.
CDP’s research showed that 215 of the biggest global companies report almost $1 trillion at risk from climate impacts, with many likely to hit within the next five years.
Of course, the other risk worth mentioning is that investors might not feel as confident about companies that aren’t demonstrating their preparedness and resilience, and might therefore even choose to divest if a company fails to engage.
Which steps should corporate leaders take to improve disclosure?
First, understand your own business. Once you’ve built that understanding, it’ll be a lot easier to work out where you can reduce your impact and exposure. If you’re a company looking to improve your disclosure, CDP has a number of resources to guide you.
Any other advice, especially for leaders at the companies that investors are calling out?
No one is expecting a perfect first disclosure so don’t be afraid to bite the bullet. The sooner you start, the sooner you can start to minimize your exposure and impact, and that can only be a good thing.
