Carbon Disclosure Project 2011 – Global 500 Report


“ To face these challenges, the Carbon Strategy unit has been created in 2010. The components of the long term strategy that have been influenced by climate change are: the investment portfolio strategy (e.g. investments in renewable energy sources and energy efficiency); and the research & development strategy (Enel focuses on low carbon technologies and emission reductions from existing technologies e.g. CCS, smart metering, smart grids, electric cars).”


Enel


PwC commentary: Non-Financial Reporting Alan McGill, Partner, PwC


The 2011 responses to the CDP Global 500 Investor questionnaire clearly show that organizations are incorporating sustainability concepts into their business strategies. Corporations are acknowledging the business opportunities presented by a low carbon and sustainable growth environment, and are reporting on a broad range of initiatives to inform investors of their low carbon objectives.


Currently, profit remains the dominant measure of success in our economic system. Increasingly though, there is recognition that historic financial performance is unlikely to be sufficient for an assessment of the long term prospects of a business where the dynamic of wealth creation is changing. In response to this, the business community is disclosing significantly more non-financial information which underpins how value is and will be created. Disclosures include detailed plans for low carbon products and services, and employee incentives to reduce greenhouse gas emissions. This type of additional information gives a broader perspective on a company’s strategy and positioning and reflects a growing recognition that this type of information is important to stakeholders and the ability of a business to retain its long term license to operate.


This shift in thinking is occurring at a time when global reporting frameworks continue to place heavy emphasis on financial disclosure and performance. While financial systems were not


designed to capture all of the non- financial inputs needed to reflect the contribution of business to society, there is a growing realization that a more progressive reporting model is needed. A few leading companies are beginning to experiment and challenge established boundaries of how performance is measured and reported.


These leading corporations are going so far as to rethink their business and reporting models, how they manage and drive sustainable, profitable growth and how they measure critical non-financial information. In turn, this shift in mindset appears to help corporations envision the future and build competitive advantage – enhancing their brand, influencing consumer behavior and supporting new product development. This is all being achieved in a manner which also helps redefines the business’ overall contribution to society. The examples in this report show how companies are forging ahead in these areas.


These innovations in business cry out for a new reporting model, one that recognizes the importance of non-financial issues such as carbon emissions and climate change. By its nature, regulatory reporting is slow to change but the speed of innovation inside many progressive companies suggests that the regulatory model will adapt more quickly than many believe. The opportunity for most companies is not to wait for regulation but to ensure that their internal reporting is moving forward and remaining ahead of the curve.


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