Increasing Profits by Reducing Greenhouse Gas Emissions

Carbon Disclosure Project

CDP Global 500 Report 2011: Accelerating Low Carbon Growth

A recent report by the Carbon Disclosure Project, “CDP Global 500 Report 2011: Accelerating Low Carbon Growth,” describes how low carbon growth is now widely accepted as “fundamental to generating long term shareholder value, avoiding dangerous climate change, and helping the global economy recover from recent turmoil.” According to the report’s key findings, companies in the 2011 Carbon Disclosure Leadership Index (CDLI) and Carbon Performance Leadership Index (CPLI) provide returns that are approximately double the average total return of the Global 500 (the largest companies by market capitalization in the FTSE Global Equity Index Series.) For the period 2005-2011, the CDLI companies and CPLI companies produced returns of 82.44% and 85.72%, respectively, versus 42.71% for the Global 500. The Carbon Disclosure Project sent out its annual request to the Global 500 companies, asking them to measure and report what climate change means for their business. 74% of the responding companies indicate that they have adopted absolute or intensity emission reduction targets, and 68% are integrating climate change initiatives into their overall business strategy. With respect to the issue of profitability of emissions reduction activities undertaken by these companies, 59% of these activities have a payback period of three years or less. In other words, it makes good economic sense to integrate climate change initiatives into an overall business strategy, and the strong correlation between good climate change disclosure and performance, and higher financial performance, confirms it.