FTSE 100: rankings show how ready companies are for climate change

Louise Gray, Environment Correspondent
Last Updated: 6:01pm BST 08/10/2008

Companies that fail to assess the impact of climate change are storing up problems for the future in a similar way that the financial community built up debt leading to the current financial crisis, according to City experts.

The Carbon Disclosure Project asseses how well prepared the world's top companies are for the challenges of climate change.

The Bloomberg indices board on the Cromwell Road in London
The aim is to inform investors about the risk these firms will face in the event of rising carbon costs and environmental disaster.The not-for-profit organisation's latests rankings of the FTSE 100 show companies are getting better at measuring carbon emissions and setting targets to reduce greenhouse gases.
Some 90 per cent of companies in the FTSE 100 responded to the CDP questionaire this year, although not all were willing to make the results public.
However the FTSE 250 had a far worse response rate at just 58 per cent.
Paul Simpson, chief operating officer at CDP, said those companies that are failing to try to reduce carbon emissions and protect the environment are storing up problems for the future.

Like the "credit crunch", where banks borrowed against assets they were unable to pay back, he said companies are currently using up resources that are irreplaceable.
This will eventually cause a "carbon crunch" where those companies that have not cut carbon emissions find they are fined by government or even face environmental disaster from climate change.
"Looming on the horizon is the credit crunch. If we say for the next five years lets ignore climate change and concentrate on getting the economy back on an even keel, we may find climate change will come back to bite us," he said.
"Everything, including our economy is reliant on the ecosystem. What we are doing is pushing the ecosystem beyond its sustainable limits to the point where it breaks and that is basically what we have done with the economy by lending money that does not really exist and people cannot afford to pay back."
The Carbon Disclosure Project was set up on behalf of 385 investors worth around £33 trillion in order to assess how well prepared different companies are for climate change.
The organisation aims to inform investors of the risks companies face from the changing climate, such as fines for producing too much carbon.
Mr Simpson said a company that understood the risks and opportunities of climate change would be far better prepared for the future.
For example those companies promoting renewable technology and cutting energy use are likely to boom in the future whereas those still reliant on fossil fuels will struggle.
He added: "Clear understanding and disclsoure of these opportunities and risks will help avert long term undisclosed exposure to climate change bringing down the value of companies - as the current economic crisis shows, failing to address undisclosed risk in the short term can lead to substantially larger problems in the long term."
The FTSE 100 companies that did not respond to CDP included InterContinental Hotel Group, Thomas Cook and Reuters.
Well known companies in the top 20 companies best prepared for climate change included: Barclays, Lloyds TSB, HBOS, RBS, HSBC, Tesco, Cadbury, Unilever and BT.