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


Figure 9: Opportunities identified by S&P 500 respondents


250 200 150 100 50 0


210 (62%) 145 (43%) 159 (47%)


III. Business opportunity 46 (14%) Regulatory Physical


Reputation and


Customer behavior Other


New Demands As regulation continues to emerge, leading companies also see this as an opportunity to surpass the competition in handling the new requirements and standing out as a true leader in carbon performance. Nearly 50% (159) of S&P 500 respondents also indicated reputational and customer behavior opportunities from the impact associated with positive perceptions of a company’s carbon performance and changing consumer preferences for more environmentally friendly products and services.


“To the extent that the government implements any of the well-publicized cap and trade schemes, we will likely have an advantage over our competition. A cap and trade scheme would introduce incentives to reduce carbon emissions from operations to earn a financial instrument or carbon offset credit. These carbon offsets, once earned, will have a positive economic value that Dean can hold as an asset or sell for revenue as the price of carbon changes. Also, because we have operations in Europe and the United States, the potential to generate offset credits from internal projects to meet any future regulatory obligations is a unique and distinct advantage.” Dean Foods


17


“We operate an active carbon market services business that provides risk management, market access and liquidity, and structured finance to a variety of corporate clients looking to


Many S&P 500 companies have already examined how they might deliver new products and services to meet customer concerns regarding regulatory and physical risks from climate change (see Figure 9). These opportunities are related to carbon and energy taxes, cap and trade, and increased business from mandated activities.


reduce carbon emissions or manage their carbon exposure within the context of mandatory cap and trade schemes. Our Global Carbon Markets business is a top liquidity provider in the EU ETS, the world’s largest carbon market; which accounts for 80% of the value transacted in the global carbon markets and is also an active deal originator in the carbon credits (offsets) segment of the market. To date, we have transacted more than one billion metric tons in the EU ETS. We also participate in the developing carbon markets in California. As individual countries and regions explore the potential for introducing cap and trade schemes, we have the opportunity to advise on how these might be structured, work with clients to take advantage of these new markets; and develop trading and risk management-related solutions for supporting client activity.” Bank of America


“Any tax that puts a price on carbon could drive new markets and/or grow existing ones. However to grow new markets, the cost on carbon would be key. In order to stimulate interest in our CO2 capture technologies, which also require large amounts of oxygen, the carbon price would need to be set high enough to make carbon capture sequestration economical. Carbon taxes could also grow existing markets.” Air Products & Chemicals


Marketplace impact Greater climate change responsiveness was also perceived as providing favorable reputational and marketplace impact. A proactive stance was viewed as offering long-term growth opportunities, appearing more innovative and attractive to customers and providers of capital, and helping companies to attract and retain premier current and future employees. As indicated in Figure 10, perceptions of these opportunities vary by sector, industry, and company.


Number of companies


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