Executive Summary
Accelerating Low Carbon Growth
Low carbon growth is now widely accepted as fundamental to generating long term shareholder value, avoiding dangerous climate change and helping the global economy recover from recent turmoil1
. It is for these reasons that in 2011, the Carbon Disclosure Project (CDP) sent its annual request to the Global 5002
companies on behalf of
551 investors with US$71 trillion of assets, asking them to measure and report what climate change means for their business. This year, 81% (404) of corporations from the Global 500 responded to the CDP questionnaire.
These responses provide a valuable insight into how companies are preparing for a resource constrained world and show a shift in company strategy to prepare better for a low carbon economy and act on the business opportunities. The report3 looks at how companies that are strategically focused on accelerating low carbon growth – i.e. those in the Carbon Performance Leadership Index (CPLI) – tend to perform better, not only in terms of greenhouse gas emissions management, but also in terms of financial performance.
Figure 3: Total return % (US$)4
Total return % (US$) from January 2005 to May 2011
Source data: Bloomberg Key findings
• Companies in the 2011 Carbon Disclosure Leadership Index (CDLI) and Carbon Performance Leadership Index (CPLI) provide approximately double the average total return of the Global 500 between January 2005 and May 2011. This suggests a strong correlation between higher financial performance and good climate change disclosure and performance.
• 74% (294) of Global 500 respondents disclose absolute or intensity emission reduction targets, an increase from 65% (250) in 2010. This indicates that more and more of the world’s largest companies understand the need to, and benefits of, accelerating actions to reduce emissions.
• 68% (269) of companies are integrating climate change initiatives into their overall business strategy, up from 48% (187) in 2010. The majority (93%, 368) of 2011 respondents report board or senior executive oversight for their company’s climate change program, up from 85% (328) in 2010. This shows a marked rise in companies linking their climate change strategy with their overall business strategy.
• 65% (259) of respondents provide monetary incentives to staff for managing climate change issues, versus 49% (188) in 2010. This suggests more active commitment in advancing greater management of carbon.
• A total of 1,780 emissions reduction activities are reported by 97% (384) of responding companies in 2011. Energy efficiency (building fabric, building services and processes), low carbon energy installations and behavioral change are the most commonly identified activity types.
• 59% of emissions reduction activities reported by Global 500 respondents have a payback period of three years or less and 41% of initiatives have paybacks of over three years. This willingness to invest in activities with a medium to long term payback is evidence that companies regard energy and emissions reduction as an important strategic priority.
for Global 500, CDLI & CPLI 2011
Global 500 42.71%
CDLI 82.44% CPLI 85.72%
1. International bodies that recognize this include the World Economic Forum (WEF) and Organisation for Economic Co- operation and Development (OECD).
2. The Global 500 are the largest companies by market capitalization included in the FTSE Global Equity Index Series.
3. Please see the Important Notice on the back cover of this report regarding its content and use.
4. Total Return includes interest, capital gains, dividends and distributions realised over a given period of time.
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