Companies’ heads in the sand over cuts in emissions

Tricia Holly Davis
SOME of the world’s largest companies are failing to plan for the longer-term impact of climate change, according to an influential report that will be published tomorrow.
The sixth annual survey of the world’s top 500 companies by the Carbon Disclosure Project (CDP) will show that only a fraction have a blueprint to cut their level of greenhouse gas emissions beyond the next two years.
The CDP is a non-profit firm backed by institutional investors. The survey asks companies to reveal their emission levels, how they plan to reduce their emissions, and the potential business risks and opportunities related to climate change.
The CDP then scores companies based on the breadth and sophistication of their responses, such as whether companies measure supply-chain and business travel emissions in addition to direct operational emissions.
This year, for the first time, the CDP will include a performance index that measures how companies are putting their stated environmental plans into action. The findings of the report suggest a correlation between disclosure and performance.
This year, 82% of the global 500 responded to the survey. Of these, only 169 firms reported any kind of emissions reduction target and only a third of those outlined plans to cut emissions beyond 2012.
The report will suggest that businesses seem to be keeping their heads down and getting by with minimum effort. Of the firms with plans to cut their emissions, many have targets of less than 2.5% a year. Climate-change experts say businesses should be aiming for a minimum 4% annual reduction to put them in line with national targets to remove 80% of emissions from the atmosphere by 2050.
Companies’ reluctance to plan beyond 2012 is in line with the expiry of the 1997 Kyoto treaty on climate change, which capped the emissions of the industrialised nations.
“Companies are concerned about being adversely affected by new policies so they are waiting to see what governments do before they make any long-term plans and investments,” said Alan McGill of Price Waterhouse Coopers, the accountancy group that co-wrote the new report.
Sak Nayagam of Accenture, the consultancy and technology services company, said: “The findings demonstrate that most businesses still don’t see how being green translates to their bottom line.”
The CDP survey is entirely voluntary, but is the most comprehensive source on what companies are doing to tackle climate change.
Today companies are not required to disclose their environmental impact, but this is likely to change. Under the Climate Change Act, the government has until October 1 to publish guidelines on how companies should report on their greenhouse gas emissions. Businesses believe that eventually the government will make it compulsory for companies to issue an environmental report in the same way that they must disclose their financial figures.
“This is the only way to ensure that businesses’ climate-change targets are in line with national policy,” said Neil Harris of Cisco. His company gave carbon reporting responsibility to its finance team earlier this year in anticipation of the government’s action.
Though the findings of the report may be disappointing, they are well-timed. The United Nations climate-change meeting begins this week in New York. Officials will discuss what industries are likely to be affected by new emission reduction targets and how to stabilise the price of carbon so that it discourages pollution and entices investment in green products and services.
A syndicate of 500 companies brought together by the Prince of Wales’s Corporate Leaders Group on Climate Change will issue a call for action to coincide with the UN event. Later this week G20 leaders meeting in Pittsburgh will discuss how governments could pay for the transition to a low-carbon economy.
Decisions made at these meetings will be taken to the UN climate-change convention in Copenhagen in December, which is expected to produce a successor to the Kyoto agreement.