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November 2012
Business resilience in an uncertain, resource-constrained world

Extreme weather events drive climate change up boardroom agenda in 2012

The recent storm along the eastern coast of America that saw hurricane Sandy wreak havoc with homes and businesses caused the two-day closure of the New York stock exchange, the first weather-related interruption to trading of more than a single day since 1888. The disaster has prompted a flurry of comment looking at the connections between extreme weather and climate change.

Hurricanes can of course happen with or without global warming, but the pattern of increasing incidents of extreme weather is irrefutable and perhaps currently most apparent in the USA, where Mayor Bloomberg said regardless of the science, the recent devastation and changing climate should, “compel all elected leaders to take immediate action”. As we wait to learn the full economic cost, a figure which is already reported to be above US$6 billion, the need for businesses to ensure resilience against a changing climate becomes ever more stark.

Business resilience in an uncertain, resource-constrained world, a new publication from CDP, suggests that the leaders of the corporate world have already come to the same conclusion as the New York mayor. Following the record-breaking weather events of 2011, climate change has climbed the boardroom agenda of companies listed on the Global 500 index.

With the hottest US summer on record, fires in Russia and flooding in the UK, Japan and Thailand, among other events, more than 80% of the largest listed companies from around the world reporting to CDP now identify physical risk from climate change. 37% perceive these risks as an immediate danger, up significantly from 10% in 2010, demonstrating the real and present threat of climate change to businesses. This is likely to have contributed to a 10% rise in companies integrating climate change into their business strategies, a figure which now stands at 78%.

This new report, co-written by CDP and professional services firm PwC on behalf of 655 institutional investors representing $78 trillion, provides an annual update on greenhouse gas emissions data and climate change strategies at the world’s largest public corporations and is available on the CDP website.

The climate change report was launched on a global virtual stage at CDP’s Global Climate Change Forum, which connected decision-makers from some of the most powerful companies and investment institutions around the world to explore how businesses can succeed in an uncertain, resource constrained world. This discussion which was broadcast live via CISCO TelePresence is available to view now on the CDP website. The Forum marks the start of CDP’s “report season”, when country-specific analysis on corporate approaches to climate change and carbon management are released worldwide. Visit our website for details of upcoming report launches.

Businesses slow to act despite increasing water-related risk

There is a sharp rise in company reports of detrimental impacts from drought and other water-related issues, yet little change in the number of companies with board level oversight of water strategies and no increase in the number of corporations providing transparent water-related risk assessments to investors. These are some of the key findings from an analysis of the largest listed companies globally released in the CDP Global Water Report 2012.

The water report helped inform debate at last month’s CDP Global Water Forum, which included expert insight from speakers such as Nancy Stoner, Acting Assistant Administrator for Water, US Environmental Protection Agency and Rachel Kyte, Vice President of Sustainable Development, The World Bank. The event was hosted by Greenbiz Editor Joel Makower and can now be watched online.

Carbon reductions generate positive return on investment

Around two thirds of the emissions reduction projects reported by Global 500 companies to CDP this year exceeded a 30% return on investment and 88% of projects exceed firm level return on invested capital. These and other findings are included in new CDP analysis which will equip the investor community with further evidence of the business case for reducing carbon emissions, to use when engaging companies on climate management. A public version titled Carbon reductions generate positive ROI is available from the CDP website.

Investors drive companies to aim for A in CDP rankings

CDP investor member CCLA has been building an "Aiming for A" coalition of UK mutuals, faith investors and pension funds. Each year CDP scores companies on their carbon management performance, which are represented in bands A - E. Following this year’s release of the 2012 carbon performance bands, the ‘Aiming for A’ investor coalition would like ten major UK-listed extractives and utilities companies to achieve or maintain an “A” CDP performance band over time.

The investors convened by CCLA are currently planning to co-file supportive shareholder resolutions at the Annual General Meetings (AGMs) of some of the ten companies listed below between October 2013 and July 2014. The aim being to help amplify long-term investors' requests, to the companies they expect to hold in their portfolios for many years, about the need to balance the short and longer-term aspects of shareholder value creation. Importantly individuals will be able to ask pension funds, mutual funds and other investment managers who act on their behalf, how they voted on these 2013/2014 shareholder resolutions.

Read more from the CCLA on our website.

2012 performance band Companies
A Anglo American (up from a C in 2011)
B BG Group (down from an A); BHP Billiton (no change);
Centrica (down from an A-); National Grid (up from a D);
Royal Dutch Shell (down from an A-); SSE (no change)
C BP (down from a B); Rio Tinto (down from a B); Xstrata (no change)

Brazilian financial committee CODIM recommends using CDP system for disclosure

CODIM, the Brazilian steering committee for information disclosure to the market, has released Guidance Statement No. 14, which includes a recommendation for companies to use the CDP system to disclose climate, water and forest risk commodities information to the marketplace. The committee, which consists of 12 leading financial entities including Abrapp, ABRASCA, Anbima, Apimec and IBRI, were in full consensus on the introduction of this guidance, which reinforces the need for companies to view their climate change strategies and use of natural capital as material, and to publically provide this information alongside their financial reports to generate value for shareholders.

New technology for climate change reporting is now available to trial

CDP and the Climate Disclosure Standards Board (CDSB), a special project of CDP’s, has released an XBRL climate change reporting taxonomy which is now available to trial. It is designed to transform the way companies report their climate change information by using technology to streamline the process. It will also facilitate the future integration of climate change data into mainstream financial reports by enabling easy extraction of material climate information.

Visit our website to learn more about the taxonomy, how it works, who will benefit from using it and how it complements CDP’s system and existing reporting structure. Companies wishing to trial the climate change reporting technology and be at the forefront of progressing climate disclosure should contact CDSB’s expert working group or their CDP account manager and the taxonomy files can also be downloaded from the CDP website.

CDP’s data from cities is now easier to access, analyze, share and download

A series of .csv files containing data from all publicly reporting cities is now available from the cities pages on our website. Whilst the data that cities report publicly to CDP has always been available on our website this format improves ease of use and comparability.

Topics available for download:

- Incentives for climate change action
- Adaption actions taken by cities (searchable by risk, status, type and financing)
- Emissions reduction actions (including status, type and source of financing)

We plan to include more downloads in the future, please contact us to let us know which data you want to see next.

Would you like to better manage your supply chain risk?

This year, more than 2,400 suppliers disclosed information to their customers about their actions to manage carbon, through CDP. The CDP Supply Chain members received custom analysis of the climate data provided by their suppliers and are using this information to reduce risk across their supply chain and to collaborate on innovative projects that save money and lower emissions. If your company is looking for this kind of opportunity, contact us today to find out more.

Support for disclosing companies

CDP offers a consultancy partnership program which consists of a limited number of organizations that can help companies with the challenges of reporting greenhouse gas emissions. We are pleased to announce that Carbon Solutions America and WSP are renewing their silver consultancy partnership with CDP in the US.

CDP also runs a carbon calculator partnership program to assist companies throughout the data gathering process. We are delighted to announce support for companies around the world through our new silver partnership with Manage CO2, and our continued silver partnerships with Ecova and Ecometrica.