On the other hand, investors may worry that this reflects undue focus on the short term. Indeed, some companies indicate that longer-term investments are being delayed by the lack of a stable global regulatory framework. But even here, most Nordic companies regard emissions taxation and regulation as a business opportunity rather than a risk, since they believe they are ahead of the game on low-carbon technology and will benefit as global regulation tightens.


Could these benefits translate into higher returns for shareholders? The report presents data suggesting that the five-year total return on a portfolio comprising the 2011 Carbon Disclosure Leadership Index (CDLI) – the 26 companies with the best and most comprehensive answers to CDP’s questionnaire – is more than double that for the Nordic 260 as a whole2


Progress needed on measurement of carbon footprints One area where Nordic companies are lagging behind in comparison with global best practice is in disclosing total carbon footprints. While firms do reasonably well at reporting emissions from business travel and the like, only a handful are able to disclose harder-to- measure emissions from their supply chain and from the use and disposal of sold products.


This is important for investors because companies that lack control over upstream and downstream emissions face material risks of being caught out by product regulation or consumer backlashes. Measurement of emissions in the supply chain can also reveal unexpected ways to improve efficiency and cut costs.


. Whilst this represents a lasting


relationship, the data tell us little about causality; many factors are likely to influence the relationship between financial performance and high carbon disclosure scores.


Extending carbon disclosure to cover the more challenging areas of Scope 3 (indirect) emissions is therefore a key area for progress over the coming year.


Climate change in the Nordic region Melting of the Arctic ice cap, increased frequency of heavy rainfall, and extreme low temperatures in northern regions are just a few of the current phenomena that Nordic companies associate with climate change, and that are occurring in the region itself.


Most of these developments entail both risks and opportunities. But while companies consider the immediate risks to be manageable on the whole, some point out that the knock-on effects may be far-reaching and unpredictable.


Uncertainty of this nature is always difficult to manage, but what can be said is that those who are engaged in tackling climate change will be best placed to deal with concrete risks when they do emerge, and to help prevent them emerging in the first place.


That, ultimately, is the reason why the information presented in this report and in the public company responses available from CDP’s website should be of the greatest interest to investors, to companies themselves and indeed to anyone with a stake in a future that is both sustainable and competitive.


2. Total Return includes interest, capital gains, dividends and distributions realised over a given period of time. The composition of the CDLI should not be construed as investment advice. Read more on page 35.


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