Disclosure: The first ever global list of climate performance leaders

Five Australian property companies and banks have made the Carbon Disclosure Project’s A List: Climate Performance Leadership Index 2014.

The list was created at the request of 767 institutional investors that between them represent more than a third of the globe’s invested capital – US$92 trillion dollars.

Australian investor signatories included Australian Ethical Investment, AustralianSuper, CBRE, Cbus Superannuation Fund, Challenger, Commonwealth Bank, Macquarie Group Ltd, National Australia Bank, Stockland, Victorian Funds Management Corporation and Westfield Capital Management Company.

Of the 76 Australian firms that responded to CDP’s request for information and were assessed by FirstCarbon Solutions against the CDP scoring methodology for climate performance, Commonwealth Bank, Dexus, Insurance Australia Group, Investa Office Fund and NAB made the A-List (shown in alphabetical order).

Several global companies with a substantial Australian market presence also made the list, including Schneider Electric, Acciona and Zurich Insurance Group. World-wide, 187 firms in total made the grade out of close to 2000 that were assessed.

CDP said this is the world’s first ranking of corporate efforts to mitigate climate change, and that the leaders have between them reduced their absolute emissions by 33 million metric tonnes in the past reporting year – equivalent to turning every car owner in London into a cyclist for two and a half years.

The analysis also showed that these companies outperformed The Bloomberg World Index by 9.6 per cent and the Dow Jones Sustainability Index by 19.1 per cent in bottom line terms.

The four qualities of an A-Lister

The four key criteria for an A-List leader set by the CDP Services include “win-win” results, where emissions reductions investments show a solid rate of return; and applying a “business lens” to climate change and identifying opportunities as well as risks.

Leaders also needed to show they were raising the bar on investment. According to the CDP the A List represents just nine per cent of the 1971 companies scored this year but accounts for US$23 billion of the annual investment to reduce carbon emissions, which is just under half of the US$50 billion invested by the full sample.

“Leaders go beyond the easy-to-achieve approach of energy efficiency. Spanish industrial technology firm Abengoa saves US$911 million annually having diversified its energy supply by installing two solar power plants,” the report states.

Leaders also need to “go beyond short-termism”.

Projects to reduce emissions have an average life span of 12 years, which “demonstrates a willingness for some long-term investing”, the report says.

“Ambition must be raised to realize the longer-term transition to sustainable economies.”

Interestingly leaders see policy as a risk and opportunity in almost equal measure.

“Companies and their trade associations should therefore engage more with governments to influence national polices that will unlock the full potential of business to decrease greenhouse gases worldwide.”

Environmental problems ARE economic problems

Paul Simpson chief executive of CDP says that the bottom line is at risk from the climate crisis. “The unprecedented environmental challenges that we confront today are also economic problems,” he says.

“The businesses that have made it onto our first ever global list of climate performance leaders are to be congratulated for their progress; they debunk economic arguments against reducing emissions. However, global emissions continue to rise at an alarming rate. Businesses and governments must raise their climate ambition. The data shows that there is neither an excuse nor the time for lethargy.”

Australia generally not up to speed

The analysis within the report showed some interesting – and in terms of the Australian market somewhat disconcerting – trends.

Almost half of the A-list is headquartered in Europe with Spain and Belgium proportionally delivering the highest number of stars, and a further third of the firms on the list originate from Japan or the USA. CDP noted that Portugal, the Netherlands and South Korea also performed well in terms of participation in CDP’s climate change program.

However, the report states that, “Canada, Switzerland and Australia have small proportional representation on the leader board.”

How they did it

In terms of what firms did to achieve substantial climate change mitigation and emissions reductions outcomes in the financial sector, which includes Investa and Dexus, the largest spend was a combined US$87 million across all financial sector firms on energy efficiency in building services, for a combined annual return of US$23m.

The sector also invested US$29m in low carbon energy installations, with an annual combined return of US$5m, and US$18m was invested in improvements to the energy efficiency of building fabrics with a US$15m annual return. Transportation use was also a target area, with US$4m invested in reducing staff travel and transport related emissions giving a close to 300 per cent return on investment in the first year of US$11m annual return.

Counting the cost of eroding natural capital

“Corporations, investors and governments must take responsibility to create the systemic change we need for an environmentally sustainable economy. For this reason we congratulate those companies that have achieved a position on CDP’s 2014 Climate Performance Leadership Index,” the CPLI report states.

“All economic activity ultimately depends upon a steady flow of natural goods and services, such as fresh water, timber and food crops, or climate regulation and flood control. These goods and services can be considered the ‘income’ generated by the world’s natural capital, the assets upon which the global economy rests. However, as is becoming increasingly clear, we are eroding that natural capital base.

“Businesses and investors are paying increasing attention to the erosion of the world’s natural capital. By some estimates, the global economy is incurring unpriced natural capital costs of US$7.3 trillion/year, or 13 per cent of global output.

“CDP has built a unique global system to drive transparency and accountability for business impacts across the earth’s natural capital, starting with climate, then moving into water and forest-risk commodities. Our programs are designed to help assess and manage corporate exposures to environmental risks and ultimately to set companies on the path to natural capital leadership.”

One reply on “Carbon disclosure: Who made the A list?”

  1. Good insights. How did the commercial real estate companies do on the Global Real Estate Sustainability Benchmark (GRESB)? Curious how consistent the various sustainability scoring/ranking organizations are…

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