Finding strategic advantage through climate change action 2011 Key Themes and Highlights
Accelerating Low Carbon Growth
Taking action towards low carbon growth is important if business is to protect itself against risks such as resource scarcity and create more sustainable business models that generate long term shareholder value. The World Economic Forum, for example, in 2009 began to examine how the growth of a low carbon economy could be accelerated – including a specific Task Force on Low Carbon Economic Prosperity. The Organization for Economic Co-operation and Development’s Environmental Action Programme Task Force marks the change from treating environmental protection as an economic burden to recognizing it as a driver for global and national economic development.
Companies in the CDLI and CPLI delivered approximately double the total return of Global 500 companies between January 2005 and May 2011. This suggests a strong correlation10
120 100 80 60 40 20 0
-20 -40
Figure 8: Total return % (US$) 100
80 60 40 20 0
-20 -40
between good climate change disclosure and performance, and higher financial performance.
CDP 2011 submissions reveal that many companies are now accelerating along a model of low carbon growth. In particular, the financial outperformance of the CPLI companies demonstrates how companies that understand the need to identify, manage and optimize climate related risks and opportunities can strengthen their business and future growth prospects.
Emissions Targets
74% (294) of respondents disclose that they have an emissions reduction target. This is an increase from 65% (250) in 2010, and shows the increased engagement of companies who manage greenhouse gas (GHG) emissions. When considering the underlying data, intensity targets are marginally more common than absolute.
Absolute and intensity targets Absolute targets Intensity targets No targets
Figure 9: Companies disclosing targets 14% 26%
29%
31%
CDLI 2011 Source: Bloomberg
CPLI 2011
Global 500 2011
10. Statistical correlation, based on daily returns, between 2011 CDLI and the Global 500 is 0.5, and between the 2011 CPLI and Global 500 is 0.6 (from 1 January 2005 to 31 May 2011). It is likely that other factors will influence the relationship between financial performance and high carbon disclosure and performance scores. These could include the capability of the management team or the company’s broader approach to identifying and capitalizing on opportunities or managing risks.
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Total return % (US$) Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10 Jan 11
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