UK firms disclosing more on carbon emissions, could do better

Barely over one-third of FTSE 350 companies have disclosed their targets for reducing greenhouse gas emissions, significantly less than the percentage of Global 500 firms doing so, according to the Carbon Disclosure Project (CDP).

Just 35 per cent of the FTSE 350 disclosed emissions reduction targets, compared to 51 per cent of Global 500 companies, according to the CDP.

At the same time, however, the CDP’s latest FTSE 350 Report, produced by PricewaterhouseCoopers LLP, shows UK companies are disclosing the highest-ever levels of greenhouse gas emissions: 390 million metric tonnes of CO2-equivalent, or about 61 per cent of total UK emissions.

Among the UK corporations leading the way in both measuring and disclosing greenhouse gas emissions are Interserve, National Grid, Royal Dutch Shell, Scottish & Southern Energy, Tesco, Unilever, United Utilities, Centrica and Reckitt Benckiser.

The CDP unveiled its results today in London.

“This year the UK’s largest businesses are showing year-on-year improvement in the quantity and quality of climate change data disclosed,” said Paul Dickinson, CDP’s chief executive. “Yet with regulation such as the Carbon Reduction Commitment and the EU Emissions Trading Scheme making climate change an increasingly material issue, a greater number of UK companies need to be setting emissions reduction targets.  A new global deal will be essential in providing a framework for businesses to set these targets.”

Interestingly, 55 per cent of responding UK companies identified the introduction of the Carbon Reduction Commitment in April 2010 as a risk, whilst another 24 per cent viewed it as an opportunity.

“The launch of this year’s CDP FTSE 350 report comes at a critical stage in the run up to the December Copenhagen Climate Change Conference,” said Ian Powell, chairman and senior partner of PricewaterhouseCoopers LLP. “The highest ever levels of greenhouse gas emissions reported stems from more companies being able to more accurately measure and report their emissions. More companies understand the issues, and as the performance pilot demonstrates, more are seeing climate change in business terms of opportunity and return on investment too.”

Powell added, “Markets need this kind of information, as much as business needs an international framework and agreement on carbon emissions targets this year, in order for them to invest for the transformation to a low-carbon global economy.”

This year’s CDP FTSE 350 report included a new performance scoring pilot methodology. The performance scores measure corporations’ actual performance in responding to and reducing their contribution to climate change and is intended to complement the Carbon Disclosure Leadership Index (CDLI), which rates firms according to the level and quality of their disclosure and reporting on greenhouse gas emissions and climate change strategy data.  This year, HSBC, Rio Tinto and Carnival take top positions in the CDLI.

In 2010, CDP plans to formally incorporate the performance pilot into its analysis and perform a deeper level analysis of the performance actions disclosed by participants. The analysis is intended to provide investors with greater insight into how well companies are preparing to compete in a low-carbon environment.

The best performing companies all shared the following traits:

• They are taking effective action to manage risks and capitalise on new opportunities;
• They show carbon reduction activities that deliver results; and
• They incorporate expected regulation into forward thinking and planning.

Other key findings from the 2009 FTSE 350 Report include:

• Reporting of emissions forecasts increased from 7 per cent in 2008 to 30 per cent in 2009, showing more companies are focusing on their future carbon exposure as regulation increases;
• Utilities lead as the strongest performing sector of the FTSE 350;
• Sixty-seven per cent of utility companies have achieved positive results in emissions reduction and energy-saving measures from carbon reduction programmes;
• Carbon reporting continues to advance; the standard of disclosure has increased dramatically over the past four years since the FTSE 350 were first asked to report to CDP in 2005; and
• The CDP maintained an overall response rate of 67 per cent and an increase in responses from the FTSE 100 of 4 per cent, suggesting that, despite the economic downturn, climate change remains high on the agenda.