CDP Season 2010, Carbon and Water
I have resisted the urge to opine on the outcome and "progress" of the COP15 "get together." Nothing substantive came out of the event so let's focus on where the action is; the voluntary carbon market. By Will Sarni
What are the drivers that compel global companies to reduce their carbon footprint in the absence of a clear public policy framework? These companies realize that we are moving (ever so slowly) to a low carbon global economy, there is brand value in reducing carbon emissions and investors are paying attention to the carbon risk.
In my view it is the Carbon Disclosure Project (CDP) that is the primary driver in getting companies to lower their carbon footprint. And this time of year brings with it a focus by companies on preparing their responses to the annual CDP questionnaire (due on May 31, 2010).
As background, the CDP was launched in 2000 with the objective "to collect and distribute high quality information that motivates investors, corporations and governments to take action to prevent dangerous climate change." CDP consists of 475 institutional investors, with about $55 trillion in assets under management and purchasing organizations such as Cadbury, PepsiCo and Wal-Mart. The CDP initiative has resulted in about 2,500 organizations in 60 countries measuring and disclosing their carbon emissions. Moreover, these organizations are setting long-term carbon reduction goals and tracking their performance against these goals.
These data are available for use by institutional investors, corporations, policymakers and their advisors, public sector organizations, government bodies, academics and the public.
To give you a feel for which companies are CDP leaders an overview (rankings by sectors) of the 2009 results (from 2008 data) is provided below:
- Carnival 87
- News Corporation 75
- Stanley Works 75
- Limited Brands 74
- Wal-Mart Stores 89
- Dean Foods 87
- Colgate-Palmolive 77
- H.J. Heinz 75
- Chevron 88
- Spectra Energy 88
- Hess 86
- Anadarko Petroleum 79
- Transocean 79
- Comerica 91
- Simon Property Group 86
- Hartford Financial 81
- Allstate 79
- Bank of New York Mellon 78
- Franklin Resources 77
- JPMorgan Chase 74
- Allergan 85
- Schering-Plough 85
- Biogen Idec 83
- Johnson & Johnson 83
- Pfizer 75
- Boeing 87
- BNSF 85
- Eaton 85
- United Parcel Service 82
- Cisco Systems 88
- Hewlett-Packard 86
- Advanced Micro Devices 82
- EMC 82
- Intel 78
- Autodesk 77
- IBM 77
- LSI 76
- Praxair 83
- PPG Industries 81
- E.I du Pont de Nemours 80
- Air Products & Chemicals 74
- PG&E 88
- PSEG 88
- Pepco 87
- Xcel Energy 85
- DTE Energy 84
- FPL Group 82
- Consolidated Edison 79
- Entergy 78
So as we start 2010, companies are rolling up their GHG data from 2009 and preparing their written responses to the CDP questionnaire. This year these companies may also be responding to the CDP Water Questionnaire as water risk comes to the forefront of investors' thinking as CDP sends out this questionnaire to about 300 global companies.
So, despite the COP15 failure, businesses are moving forward in measuring and reporting their carbon reduction efforts to stakeholders such as the CDP. This is where real progress will be made in reducing carbon emissions (and water ultimately) - with the private sector and not from public policy initiatives.
Will Sarni is CEO of sustainability consulting firm DOMANI. Will has over 30 years of experience and has worked with high-profile companies such as Alcoa, BASF, Cisco, DIAGEO, and NTT DATA in developing and implementing cost-effective sustainability strategies. He is a member of the Environmental Compliance Committee of the Chicago Climate Exchange and the Conference Board. Read Will's blog here.
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