Carbon Disclosure Project 2011 – Global 500 Report
of responding companies in the CDLI as it only represents 5% of the responding population but 17% of the CDLI. The UK and Switzerland are also high performing countries. Sixteen countries had companies in the CDLI this year which is the same as in 2010. Notable absentees in 2011 include China, India and Russia.
CDLI and Shareholder Value
The Global 500 companies reported that climate change may have a range of financial impacts on them and consequently on investors. The main drivers reported for such impacts are varied but include:
• Regulation e.g. carbon prices set through emissions trading schemes (ETS) as seen in Europe, or through a tax as is currently proposed in Australia
urn % (US$)
• The potential impact of climate change on supply chains
• Changing consumer preferences
• The potential for an increase in the frequency of extreme weather events
Investors value the CDP responses because they clearly disclose the potential investment implications climate change may have on any given business.
Companies included in the CDLI in 2011 have a higher total return from January 2005 to May 2011 than Global 500 companies, outperforming them by a total of 40 percentage points over the six year period.
When analyzing companies included in the CDLI for the last three consecutive years, an even stronger result is revealed: they outperformed the Global 500 by over 60 percentage points over the same period. This indicates that companies which are consistently successful at measuring, managing and reporting on climate change demonstrate higher financial performance.
Figure 21: Total return % (US$) 120 100 80 60 40 20 0
-20 -40
It is noted that the relationship between strong carbon disclosure scores and total return has not been fully explored. The relationship between total return and carbon disclosure does not necessarily indicate that one causes the other; both will be influenced by a range of factors. These may include the quality of the companies’ management or the companies’ broader approach to identifying and capitalizing on opportunities or managing risks. These findings would benefit from further analysis by the investment community.
It is notable that the period when CDLI companies’ total return falls below Global 500 companies’ total return is in late 2008, during the economic downturn. Although total return fell in all sectors, the downturn particularly affected the Financials sector which makes up the highest proportion of the CDLI.
Companies included in the CDLI for three consecutive years (2009-2011) CDLI 2011
Global 500 2011 Source: Bloomberg 28
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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