Carbon management is becoming a strategic business priority and competitive driver for the largest global companies, despite the lack of global agreement on climate change. These are among the findings of the 2010 Global 500 report and leadership index released by the Carbon Disclosure Project (CDP), produced by PwC and sponsored by Bank of America Merrill Lynch.
Carbon performance leaders are forging ahead of competitors - 85 percent of these leading global companies surveyed reported having board or senior executive level responsibility for climate change and nearly half (48 percent) are now embedding climate change initiatives into the overall business strategy and across the organization.
Amidst global regulatory uncertainty, nine out of 10 companies surveyed identified significant commercial opportunity arising from climate change, separating the companies driven by risk-factors, from those companies identifying and seizing competitive advantages and cost-benefits.
The top five Global 500 leaders for 2010 include Siemens, Deutsche Post, BASF, Bayer and Samsung Electronics. These companies are in the new Carbon Performance Leadership Index (CPLI) and scored highest (95 or above out of 100) in the Carbon Disclosure Leadership Index (CDLI).
Despite the significant increase of boardroom and executive-level engagement, and 65 percent of Global 500 respondents implementing emissions reduction targets, still only 19 percent of the Global 500 companies are showing significant emissions reductions.
This growing lead demonstrated by the CPLI - those companies with the highest performance scores and demonstrated commitment to strategy, setting emissions reductions plans, governance and stakeholder communications - also highlights the disparity between incorporating climate change strategy across the business and actually seeing concrete cuts in emissions for many businesses.
North America significantly lags Europe in disclosure and performance. Twenty-one percent of European respondents are in the CPLI, compared to 6 percent of North American respondents.
The global report shows two main areas of focus for action: the energy efficiency of operations, likely encouraged by cost savings potential, and the development of innovative products and services that enable customers to cut their emissions.
"Fueled by opportunities to reduce energy costs, secure energy supply, protect the business from climate change risk and reputational damage, generate revenue and remain competitive, carbon management continues to rise as a strategic priority for many businesses," said Paul Dickinson, CEO of CDP. "Companies globally are seizing commercial carbon opportunities, often acting ahead of any policy requirements. More companies than ever before are reporting through CDP and measuring and reporting their emissions which is the first building block in working towards a low-carbon economy."
"As companies evaluate sustainability trends-such as competition for natural resources, economic globalization, and climate change-the likely outcome is a fundamental shift in business strategy," said Dennis Nally, chairman, PwC International. "We are finding that leaders in this area design corporate-level objectives to aggressively pursue growth while simultaneously reducing emissions."
The Global 500 Report was launched last week at the CDP Global Forum at Bank of America headquarters in New York, marking the beginning of Climate Week. Influential business leaders and government officials from around the world and across the spectrum of industries - from financial services, energy, consumer products and manufacturing - will explore key issues and solutions around the central theme of: "Climate Innovation = Commercial Opportunity".
