CDP Global 500 Report 2011: Accelerating Low Carbon Growth

The 2011 edition of the annual CDP Global 500 report examines the carbon reduction activities at the world’s largest public corporations.

 
 

Executive Summary

Low carbon growth is now widely accepted as fundamental to generating long term shareholder value, avoiding dangerous climate change and helping the global economy recover from recent turmoil1. It is for these reasons that in 2011, the Carbon Disclosure Project (CDP) sent its annual request to the Global 5002 companies on behalf of 551 investors with US$71 trillion of assets, asking them to measure and report what climate change means for their business. This year, 81% (404) of corporations from the Global 500 responded to the CDP questionnaire.

These responses provide a valuable insight into how companies are preparing for a resource constrained world and show a shift in company strategy to prepare better for a low carbon economy and act on the business opportunities. The report3 looks at how companies that are strategically focused on accelerating low carbon growth – i.e. those in the Carbon Performance Leadership Index (CPLI) – tend to perform better, not only in terms of greenhouse gas emissions management, but also in terms of financial performance.

Figure 3: Total return % (US$) for Global 500, CDLI & CPLI 2011

Key findings

  • Companies in the 2011 Carbon Disclosure Leadership Index (CDLI) and Carbon Performance Leadership Index (CPLI) provide approximately 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.
  • 74% (294) of Global 500 respondents disclose absolute or intensity emission reduction targets, an increase from 65% (250) in 2010. This indicates that more and more of the world’s largest companies understand the need to, and benefits of, accelerating actions to reduce emissions.
  • 68% (269) of companies are integrating climate change initiatives into their overall business strategy, up from 48% (187) in 2010. The majority (93%, 368) of 2011 respondents report board or senior executive oversight for their company’s climate change program, up from 85% (328) in 2010. This shows a marked rise in companies linking their climate change strategy with their overall business strategy.
  • 65% (259) of respondents provide monetary incentives to staff for managing climate change issues, versus 49% (188) in 2010. This suggests more active commitment in advancing greater management of carbon.
  • A total of 1,780 emissions reduction activities are 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.
  • 59% of emissions reduction activities reported by Global 500 respondents 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.
  • 45% (178) of respondents have made emissions reductions in some or all of their business from specific measures. This compares with 19% (75) of respondents that had reduced emissions in 2010. The leaders are clearly moving ahead in this regard with all of the CPLI (2010: 52%, 25) and 73% (38) of the CDLI (2010: 47%, 24) showing emissions reductions.
  • The Energy sector is showing the lowest proportion of companies with targets (55%, 22) and is underrepresented in both the CPLI and CDLI. In view of the high emissions from the Energy sector, this points to the need for improvement. The Consumer Staples sector has the highest proportion of companies with emissions reduction targets (94%, 32).
  • Utilities emerged as the sector with the best average climate change performance (band B). The sector with the lowest average performance score was Information Technology (band C). The only sector with no companies in the CPLI was Telecommunications.
  • The CDLI contains 52 disclosure leaders in 2011 and reports the highest ever scores attained, demonstrating that the quality and completeness of disclosure continues to improve.
  • For the second year, CDP published a CPLI, in which there are 29 performance leaders (23 companies are on both the CDLI and CPLI) who have demonstrated their commitment to achieving low carbon growth.
  • Companies in Australia, Germany, Italy, Switzerland and the UK are demonstrating strong performance leadership. Canada, Japan and the USA lag behind on performance5.

Figure 4: Top ten companies recognized on both the CDLI and the CPLI

Figure 5: Total response rates and disclosed emissions over time by
geography (All Scopes)

Despite carbon measuring and reporting becoming widespread, some companies did not report this year. Many of these are from countries that have less mature corporate disclosure practices and/or climate change regulation.

Figure 6: Largest non-responders by market capitalization

Figure 7: Year-over-year disclosure levels

  1. International bodies that recognize this include the World Economic Forum (WEF) and Organisation for Economic Cooperation and Development (OECD).
  2. The Global 500 are the largest companies by market capitalization included in the FTSE Global Equity Index Series.
  3. Please see the Important Notice on the back cover of this report regarding its content and use.
  4. Total Return includes interest, capital gains, dividends and distributions realised over a given period of time.
  5. See Figure 27 on page 33
  6. In total, there are 23 companies recognized on both the CDLI & CPLI, see tables in the Carbon Leaders section for the full lists.
  7. The data for response rate is based on data at time of printing. Data for other areas are based on data for those companies received by July 31, 2011. Whilst every effort has been made to ensure that comparisons between years are direct, a number of questions have changed year on year in the questionnaire which has meant that the closest possible match has been made where an exact match is not possible.
  8. Verification of emissions has decreased in the year on year analysis in this report because CDP has set more stringent criteria to reflect the importance of verification. See details in the Verification section of this report.
  9. 404 companies responded to CDP, of which 3 referred to a holding company’s answers and 5 submitted their answers after the deadline for inclusion in analysis of the report.

Download the report

Download the report


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