Realizing Opportunities from Effective Corporate Management of Climate Change- Carbon Disclosure Project 2011

The Carbon Disclosure Project (CDP) is an independent not-for-profit organization working to drive greenhouse gas emissions reduction and sustainable water use by business and cities. By leveraging market forces including shareholders, customers and governments, CDP has incentivized thousands of companies to measure and disclose their greenhouse gas emissions, climate change risk and water strategies.

CDP recently published the report “CDP Canada 200 Report 2011: Realizing Opportunities from Effective Corporate Management of Climate Change” summarizing activities and results from a number of leading Canadian corporations in tackling climate change. It is noted that last year, global energy-related carbon dioxide emissions reached a record high. All official forecasts stress the need to take action if catastrophic climate change is to be minimized.

In their message to institutional investors, the report recommends to engage with the companies in which they invest to encourage performance improvement. A new initiative from CDP named “Carbon Action" is driven by a group of investors to encourage their portfolio companies to reduce emissions by investing in emissions reduction activities with a satisfactory payback period. The report states: “Carbon Action reflects a growing recognition that there is a huge range of carbon reduction activities that companies can undertake that have a very clear business case. It is therefore in the interests of all investors, and not just the more active owners of investments, to ensure these actions are taken”.

Although there remains uncertainty in Government regulation, firms in the Energy sector in particular must continue to forge ahead, innovate and seek out energy efficiency opportunities.

Key Findings

• Canada’s leading corporations have clearly signaled their willingness to disclose. A significant number of Canadian companies responded to the Investor CDP Information Request in 2011. A steady increase in responses has been reported by CDP and it does include leading Oil & Gas companies such as Suncor, Cenovus and Encana.
• Climate innovation is providing commercial opportunities. Companies are taking a strategic approach to climate change and are taking action to seize commercial value from its effects. Specifically, Canadian companies are using climate change awareness to:
  
  • Generate new revenue streams – by providing products/services to aid third parties in reducing their GHG emissions.
  • Build brand value – Respondents stated that communications about their climate-friendly practices and emission-reducing actions could increase brand value. For the energy companies the pressure from the public is directly related to their “license to operate”.
  • Reduce cost and mitigate the risk of rising energy prices – companies are planning and implementing energy reduction initiatives to reduce this growing operational expense. Energy efficiency initiatives in operations and building services were among the most popular activities, while transportation-related initiatives were commonly cited.

Carbon policy and emissions regulation continue to pose both risks and opportunities. The majority of respondents see regulatory risks as causing low to medium increases in their operational costs.

The majority of respondents are already integrating climate change into overall business strategy, confirming a commitment to long-term, sustainable growth while dealing with regulatory uncertainty and the physical effects of a changing climate. Canada’s carbon regime is still marked by significant differences from province to province.

Reference:

CDP Canada 200 Report 2011 “Realizing Opportunities from Effective Corporate Management of Climate Change” 

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