Companies still aren’t cutting carbon emissions says a new CDP report

Despite an increase in boardroom engagement on issues of climate change, still only 19% of the world’s biggest 500 companies are showing significant emissions reductions, according to a new report issued by the UK-based Carbon Disclosure Project (CDP).

The annual Global 500 Report details what the largest companies are doing to manage carbon and tackle climate change.

“Given little progress in [climate change] policy … and the present economic environment, we are pleased and heartened by the fact that companies are continuing to report on this issue,” says Paul Simpson, chief executive of the CDP, a not-for-profit organisation highly regarded for maintaining the largest inventory of carbon emissions of the biggest businesses in the world.

Among companies forging ahead on both disclosure and performance, the utilities sector scored highest, followed by materials, another increasingly regulated carbon-intensive sector. But leaders cover a range of sectors, Simpson points out, with the common thread being investment in new product design, the establishment of emissions reduction targets, and an ability to report emissions up and down the supply chain.

The report cites progress among leading companies driving climate change strategy across the organisation, with 85% of Global 500 respondents having introduced governance of climate change to the board or executive level, up from 77% in 2009.

Two main areas highlighted in the report are the energy efficiency of operations, often encouraged by cost savings potential, and the development of innovative products and services that enable customers to cut their emissions.

Fiat’s driver efficiency software, helping car owners to cut fuel use, is one example cited. BSkyB is praised for introducing high definition television boxes whose power-down technology cuts electricity use, while Cisco wins plaudits for video conferencing systems that cut business travel emissions.

“These companies see their products and services can help others reduce their emissions,” Simpson says. “If you can make that case, you make a great case for selling more products.”

Some targets, fewer cuts

Yet despite such progress, companies are struggling to make meaningful carbon cuts. According to the report, only 50% of Global 500 respondents have established reduction targets, a take-up level Simpson attributes to regulatory uncertainty following the climate change summit in Copenhagen last year.

“The mere act of publishing a report and getting the data out there does not in itself drive any change,” says Iain Watt of the environmental charity Forum for the Future. “An awareness of the strategic relevance of the issues being discussed is required for that. And very few companies have yet demonstrated that they understand their exposure to climate risk.” This risk, he argues, comes not only from the company’s own emissions but also from how exposed it is to the potential physical impacts of, and the societal response to, climate change.

Targets are essential, but they must be meaningful and acted upon. “A lot of rankings I see simply ask if a company has a target or not,” Watt says. “You get a tick or a minus, rather than an analysis of whether the targets are decent, or whether the company is actually making progress towards the target.”

Green business expert John Elkington, founder of consultancy SustainAbility and executive chairman of Volans Ventures, is no more sanguine. He says: “We have seen companies measure their emissions – and then retreat into their shells, particularly when they see what their indirect emissions and related impacts are.”

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