CDP S&P 500 Report 2011 – Strategic Advantage Through Climate Change Action


Energy costs represent a significant component of the S&P 500 respondents’ operational spend, making efficiency and effectiveness an ongoing area of focus at the board and management level.


II. Energy efficiency and operational effectiveness


Rising energy prices are expected to impact S&P 500 companies for the foreseeable future. Emerging markets now account for more than half of world demand for oil. In June, the International Energy Agency raised its five-year oil price forecast by US$19 a barrel, citing that oil demand will increase more than previously expected in a supply-constrained market.7


In addition


to these higher cost inputs, S&P 500 companies realize that higher energy prices will continue to pinch household discretionary incomes.


Opportunities for reduced costs and increased margins have encouraged S&P 500 companies to move along the enterprise value continuum from risk management toward a greater emphasis on energy efficiency and operational effectiveness. As shown in Figure 7, energy costs represent a significant component of the S&P 500 respondents’ operational spend, making efficiency and effectiveness an ongoing area of focus at the board and management level. To reduce this overhead, S&P 500 companies have been examining their energy or carbon footprints across their global value chains, including how suppliers, internal operations, and consumers use the company’s products and services.


Figure 7: Energy costs as a percentage of operational spend disclosed by S&P 500 respondents8


Utilities 24% Materials 14% Financials 10% Energy 8% Information Technology 8%


Consumer Staples 5%


Health Care Consumer Discretionary


7. www.marketwatch.com/story/iea-raises-five-year-oil-price- forecast-by-19brl-2011-06-16


8. Energy costs as a percentage of operational spend per the 2011 CDP Information Request is defined as the amount a company spends for energy to operate the company within its organizational boundary as a percentage of total operational spend.


Industrials


5% 5% 5%


Telecommunication Services 3%


0% 5% 10% 15% 20% 25% 30%


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