Investors Worth Trillions Ask Companies to Disclose Climate Risk

NEW YORK, New York, January 31, 2007 (ENS) - A group of institutional investors with assets of US$41 trillion under management said today it is asking 2,400 of the world's largest companies for disclosure of information about the risks and opportunities they face due to climate change.

This is the fifth such request by the investors participating in the Carbon Disclosure Project, CDP.

The 284 investors say that by these requests for information they are "cementing CDP as the global standardized mechanism by which companies report their greenhouse gas emissions to investors."

Carbon Disclosure Project Coordinator Paul Dickinson said, "The increasing body of evidence confirming climate change is accelerating and is linked to human behavior, makes it clearer than ever that investors and other stakeholders require standardized information regarding the business risks and opportunities presented to corporations by climate change."

This fifth request, on behalf of $41 trillion assets under management, represents more than one third of total global invested assets and is up from the investors with $4.5 trillion under management who participated in the first CDP request in 2002.

Based on the results of the previous four requests for such information, the CDP now hosts the largest registry of corporate greenhouse gas data in the world at www.cdproject.net.

Dickinson

Paul Dickinson is coordinator of the Carbon Disclosure Project. (Photo courtesy UNEP)
"Given CDP is the largest source of such information, with 960 corporations answering CDP questions last year," said Dickinson, "we are delighted to help the investment community once again secure updated information in a comparable format that adds value for them, via a single-request mechanism that is efficient for the corporations."

The request for information has been sent to 500 of the largest companies globally, as listed in the Financial Times 500, the FT500, as well as 500 of the largest publicly traded companies in the United States, as listed in the Standard and Poor's 500, the S&P 500.

The largest companies in the world's industrialized nations are being queried, as well as 250 of the largest electric utilities globally, and 100 of the largest companies in the transport sector globally.

But a report released in Boston today based on responses of the S&P 500 companies to last year's Carbon Disclosure Project questionnaire concludes that over half are doing a poor job of disclosing climate change risks to their investors.

The Ceres/Calvert report concludes that America’s largest companies still are not taking climate change seriously enough.

Less than half, 47 percent, of the S&P 500 companies responded to the CDP questionnaire, the Ceres/Calvert report shows, and those that did respond failed to provide much of the information investors are seeking. Thirty percent of the responders declined to publicly release their responses, calling them "confidential."

"Many U.S. companies are still downplaying climate change and its far-reaching business impacts," said Mindy Lubber, president of Ceres, a coalition of investors, environmental groups and other public interest organizations.

Lubber

Mindy Lubber is president of Ceres. She also directs the Investor Network on Climate Risk, an alliance that coordinates U.S. investor responses to the financial risks and opportunities posed by climate change. (Photo courtesy Ceres)
"More extreme weather events, regulatory changes and growing global demand for climate-friendly technologies are just a few of the ways that climate change will ripple across all sectors of the economy. Yet, many U.S. companies are not addressing these trends and are leaving investors in the dark about their strategies for mitigating those risks," Lubber said.

"All companies have a duty to provide shareholders with more analysis and disclosure on climate risks and their strategies for managing or mitigating those risks," said Dr. Julie Fox Gorte, vice president and chief social investment strategist at Calvert, an asset management company that offers socially responsible mutual funds.

Gorte

Dr. Julie Fox Gorte, vice president and chief social investment strategist at Calvert (Photo courtesy Calvert)
Poor survey responses among lower-emitting companies - in particular, retailers, banks and insurers - was especially conspicuous, the Ceres/Calvert report shows.

Many companies in these sectors provide insufficient climate disclosure to investors, even after suffering large financial losses from climate-related events, such as the 2005 hurricanes.

Lubber said that all companies should disclose their risks using the three most common disclosure mechanisms - SEC filings, the CDP, and sustainability reports using Global Reporting Initiative guidelines.

"This report underscores the need for the SEC [Securities and Exchange Commission] to take action to include climate risk as part of their ‘materiality’ standard for corporate reporting, and for the companies of the S&P 500 to take heed," said Howard Rifkin, deputy treasurer for the state of Connecticut.

The Ceres/Calvert analysis of responses by the U.S. companies in the S&P 500 showed that 80 percent of the 228 companies that responded to the survey addressed the need to reduce greenhouse gas emissions, but only one in four of them, disclosed measurable emissions reductions targets and specific time frames for reductions.

Nearly 75 percent of the responding companies acknowledged bottom-line risks associated with extreme weather events such as hurricanes, fires and floods. However, very few of the companies surveyed link more extreme weather to climate change. Fewer still, only four percent, disclosed strategies for mitigating and adapting to the growing physical impacts from climate change, the Ceres/Calvert report shows.

The Carbon Disclosure Project request to corporations focuses on regulatory risks and opportunities, such as limits on greenhouse gas emissions. It covers total company-wide global greenhouse gas emissions, and steps taken to manage and reduce emissions.

The investors' group also is requesting information on physical risks and opportunities, such as changes in weather patterns that might impact operations of the responding companies.

Finally, the investors are interested in how consumers perceive the reporting companies - their reputations.

CDP says it has developed these questions together with signatory investors, recipient corporations and other experts.

Responses are requested within four months. Corporations that previously provided responses are invited to report progress. Companies that previously did not respond are requested to do so, or to provide a reason why they do not believe the request is relevant to their business.

The information received will be summarized in regional and sector reports and distributed to participating institutional investors and responding corporations.

These reports will be made publicly available at www.cdproject.net from September 2007.

Last year, 72 percent of the FT500 answered the Carbon Disclosure Project questionnair and these responses along with reports analyzing them can be downloaded without charge at www.cdproject.net

This initiative has been coordinated by the Carbon Disclosure Project, a special project of Rockefeller Philanthropy Advisors in New York.