Heather Zichal, deputy assistant to President Obama for energy and climate

25 September 2013 — The number of climate leaders has doubled, and their actions are paying off, according to two new report from CDP, formerly the Carbon Disclosure Project.

The CDP S&P 500 Climate Change Report, by CDP and PwC, showed that more than twice as many companies from the S&P 500 were on the 2013 Climate Performance Leadership Index – a measure which rates a company’s climate change mitigation, adaptation and transparency efforts – compared with 2012.

The report provides an annual update on greenhouse gas emissions data and climate change strategies at America’s largest public corporations in response to CDP’s disclosure request from 722 investors representing $87 trillion.

S&P 500 companies were investing on average more than four per cent of annual capital expenditure on emissions reductions, representing around $50 billion in investment. Greenhouse gas emissions were reported to have been reduced on aggregate by 6.1 per cent.

The complementary report covering the Global 500, Linking Climate Engagement to Financial Performance: An Investor’s Perspective, co-written by CDP and Sustainable Insight Capital Management, found that high transparency on climate engagement was associated with better financial performance.

Industry leaders provided a higher return on equity (plus 5.2 per cent), more stable cash flow generation (plus 18.1 per cent) and higher dividend growth (plus 1.6 per cent).

Heather Zichal, deputy assistant to President Obama for energy and climate said companies in the report were taking actions President Obama had outlined in his climate plan, and proving that environmental performance and economic growth were not at odds.

CDP president, North America Tom Carnac said the findings showed that companies incorporating environmental stewardship into their business models and investment decision making process could gain strength and protect their competitive advantage.

“The release of today’s report findings show the link between climate change management and superior financial performance is building,” he said.

PwC partner Doug Kangos said the results indicated a turning point in the corporate response to climate change.

“The overarching story is business transformation,” he said. “Leading companies are innovating to create value on many levels while demonstrating increasing sophistication and confidence in addressing the risks and opportunities associated with climate destabilisation.”

Chief executive of Sustainable Insight Capital Management Kevin Parker said: “This analysis, one of the most extensive studies on the link between corporate profitability and climate change engagement to date, shows that industry leaders are not only taking critical steps to establish the requisite governance, management systems and environmental efficiencies to engage on climate, but that they are also generating superior profitability, cash flow stability and dividend growth for investors.”