2011 Themes and Highlights
Commentary Douglas J. Kangos, Partner, PwC
blank certain fields, such as emissions data. Upon further examination it appeared that these companies simply didn’t have the information to respond effectively.
The S&P 500 2011 CDP leaders, however, had plenty of high-quality data available because, fundamentally, they saw the issue differently. They use sustainability to differentiate themselves in the same way they approach brand quality, product quality, service quality, market share, and so on.
Sustainability as competitive advantage
The CDP information request is designed to give S&P 500 companies an opportunity to explain their sustainability performance to investor signatories and the public across a broad range of areas, such as in strategy, governance, and GHG emissions management. The S&P 500 companies that scored the best in the 2011 CDP questionnaire provided responses that revealed possession of superior GHG emissions information and strong understanding of the impact of climate change on their companies.
But in many cases we found the silences just as revealing as the actual responses provided. The companies that scored poorly tended to leave
Leaders viewed climate change as a business imperative and responded accordingly. They put in place programs, processes, procedures and controls to generate higher, board- level intelligence necessary to base resource allocation decisions. And they put the right people in charge, incentivized them monetarily, and insisted on actionable business plans that could be integrated into their overall strategies.
The lesson we gleaned from all the data was a simple one. Whether it’s cutting costs and waste, producing new revenues, meeting current and future regulatory requirements in an efficient manner, or responding to investor questions, senior executives must have high-quality data in order to plan and execute accordingly.
The responses of the S&P 500’s 2011 CDP leaders showed some striking differences from the rest of the pack. Leaders exhibited a
thorough integration of managing GHG emissions and increasing shareholder value. Their responses cited specific examples in which they used their superior data and green- product experience to widen the gap with competitors. Some leaders indicated they were moving beyond mere differences in operational spend, market share and first-mover advantage to establish substantive barriers to entry.
Stepping back and assessing the S&P 500 results of the 2011 CDP information request provided an interesting perspective. While each company’s approach to the effects of climate change on their business was unique, it was in the actions of the leaders where we found the greatest similarities. The leaders possessed higher quality GHG emissions data that they freely shared with investors and other stakeholders. They also had firmly embedded the lens of climate change within the operations of their organizations. But, perhaps most importantly, senior executives drove the efforts by establishing and holding their organizations to both absolute and emissions intensity goals.
The S&P 500’s 2011 CDP leaders are now distancing themselves from the rest. The expanding GHG regulations across the globe are seen as an opportunity — rather than as a threat — to further secure their leadership positions and build market share.
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