Cash incentives can help cut energy use and carbon emissions.

12 September 2013 — Offering financial incentives to employees can boost carbon emission reduction and energy saving efforts, a report has found. It also found more needed to be done to get big polluters to reduce emissions.

Sector insights: what is driving climate change action in the world’s largest companies?, co-produced by not-for-profit CDP and professional services firm PwC, found that businesses offering monetary inducements to employees were more likely to report carbon and energy reductions than those not offered rewards.

Eighty-five per cent of companies providing financial incentives related to energy and emissions reductions at a board level, executive team level or to all employees reported emissions reductions, compared with 67 per cent of companies not providing incentives.

The analysis was based on climate and energy data from 389 companies listed on the FTSE Global 500 Equity Index, collected by CDP at the request of 722 institutional investors representing US$87 trillion in invested capital.

The report also included a Climate Performance Leadership Index, featuring companies implementing robust climate strategies and approaches to emissions reduction. Two of 12 Australian companies listed on the FTSE index made it onto to the CPLI – National Australia Bank and Westpac, which have both made the cut for the last four years.

Another key finding was that big emitters were not doing enough to reduce emissions. While scope 1 and 2 emissions from the top 500 companies had fallen from 4.2 billion tonnes to 3.6 billion tonnes between 2009 and 2013, the biggest 50 polluters had increased emissions by 1.65 per cent from 2009 levels.

“It is imperative that big emitters improve their performance in this regard and governments provide more incentives to make this happen,” said CDP chief executive Paul Simpson.

Companies were also not reporting the full extent of their effects relating to carbon emissions, with nearly half (47 per cent) of scope 3 emissions – those from sources related to company activities as opposed to those from sources owned or directly controlled by them – not reported.

“Instead of measuring carbon-intensive activities in their value chain, companies often focus on relatively insignificant opportunities for carbon reductions,” the report stated.

“…current scope 3 reporting does not reflect the full impact of companies’ activities, and may mislead as to the full carbon impact of a company.”

Global lead, sustainability and climate change for PwC Malcolm Preston said the report demonstrated that customers, suppliers, employees, governments and general society were putting pressure on businesses to act.

“With the initial IPCC report only weeks away corporate emissions are still rising,” he said. “Either business action increases, or the risk is regulation overtakes them.”

The CDP Global 500 Climate Change Report 2013 is available to download free, and launches today at CDP’s annual Global Climate Forum broadcast live online from 6pm AEST.