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Corporate climate leaders outperform peers
New research from the voluntary disclosure group CDP shows that firms taking a leading position on emissions reduction outperformed the Bloomberg World Index by 9.6% over the past four years. The comparison is based on total financial returns, including interest, capital gains, dividends and distributions. The 187 companies comprising CDP’s so-called “A List” have reduced their absolute emissions by 33m tonnes in the past reporting year. And according to CDP’s calculations, the average internal rate of return on carbon emission reduction projects undertaken by this top tranche of companies is 57%. CDP cites the example of US carmaker General Motors, which has implemented carbon reduction measures that have resulted in emissions savings of 244,000 metric tonnes per year and cost savings of $287m.
In addition, CDP reports that 75% of the A Listers, which appear in its new Climate Performance Leadership Index, are on track to meet their stated emissions reduction targets. This compares with 59% of their non-leading peers. The A List represents 9% of the 1,971 companies that submit emissions data to CDP. Yet the collective investment of this leading group in efforts to reduce carbon emissions totals $23bn, just under half of the $50bn invested by the full sample
Company disclosure ‘disconcertingly low’
The vast majority of the world’s largest companies continue to fall short when it comes to disclosing key non-financial information, a report by Canadian investment advisory firm Corporate Knights Capital finds. Only 128 (or 2.8%) of the 4,609 largest companies (i.e. those with a market capitalisation of over $2bn) listed on the world’s stock exchanges disclose performance data on the full set of “first generation” sustainability indicators: employee turnover, energy, greenhouse gas (GHG) emissions, injury rate, pay equity, waste and water. Scores for individual categories are marginally better, but remain “disconcertingly low”, the report states. Only two-fifths of the world’s large listed companies currently disclose their GHG emissions, for instance. Scores for disclosure on water use and employee turnover are even lower, at 25% and 12% respectively.
Of all the 46 stock exchanges surveyed, companies listed on the Helsinki Stock Exchange performed best overall. The exchange’s more impressive statistics include 21 of its 23 large listings currently disclosing payroll data, 20 disclosing GHG emissions and 19 disclosing energy usage. The least transparent stock markets are those of Saudi Arabia, Poland, Qatar, Kuwait and Peru.
Top UK firms spend £2bn on CSR
The UK’s largest 26 firms by market capitalisation spend £2.02bn on corporate social responsibility activities every year. In-kind contributions comprise almost half (46%) of the total, with employee volunteering and fundraising making up just over one third. The research, which was commissioned by Unesco and carried out by economics consultancy firm EPG, finds that 9% is directed towards education. If this proportion were increased to 20%, it would enable 750,000 additional children per year worldwide to study in primary school, Unesco estimates.
Businesses wary of low-carbon costs
A YouGov survey of 600 senior business decision-makers in the UK reveals that 58% of respondents say their firms would be “unwilling” or “unlikely to be willing” to increase their energy bills to fund low-carbon government schemes. The primary concern for most (73%) centres on the cost implications of so-called “Contracts for Difference” (which guarantee a payment in case of a market shortfall). These could increase bills by an estimated 10% by 2020. Only two-fifths of business leaders say that moving to a low-carbon economy is important, while a mere one-fifth are confident that the government’s existing energy policies reflect their needs. The survey was commissioned by npower, an energy company.
CEOs back social purpose
It seems that business leaders, both present and future, believe “the private sector should have a social purpose”. Almost nine out of ten of the 300 individuals polled in a survey for Coca-Cola Enterprises agree with the statement. Interestingly, the survey participants disagree radically on progress towards this goal. Of the 150 European chief executives surveyed, 86% believe companies already have a clear social purpose. In sharp contrast, only 19% of the 150 MBA and MSc students and recent graduates who comprised the other half of the survey agreed.
The two groups also differ over the barriers to businesses combining social purpose with profit. Two-thirds of chief executives view external factors such as government and regulation as the main hurdle but 55% of future leaders point to management attitudes and other internal factors.
Growth in EU ethical investment
The size of the ethical investment industry is growing in Europe, as are the returns posted by ethically minded fund managers. According to the European Sustainable Investment Forum (Eurosif), the total assets governed under some kind of sustainable theme in Europe increased by nearly one quarter between 2011 and 2013. The fastest growing sectors of the socially responsible investment field include assets subject to exclusion criteria (such as munitions and landmines), which grew by 91% over the two years to 2013 and are now worth €6.9tn; and assets subject to engagement and voting policies, which are up 86% over the same period and are valued at €3.3tn. While still relatively niche, impact investing has shot up an impressive 132% since 2011 and is now worth an estimated €20bn.
However, the pace of ethically screened investment funds shows signs of slowing in the UK, growing by just 4% over the past three years, according to a report by the not-for-profit investment platform Ethex. That trend is countered, however, by rapid increases in what Ethex terms “positive investment”. The positive investment market comprises £2.1bn saved in credit unions, £862m in ethical banks and building societies, and £249m directly invested in community share offers, charities and positive businesses.
Clean tech in emerging markets
Small and medium-sized enterprises (SMEs) in emerging markets could stand to gain market opportunities worth $1.6tn over the next decade if projected investments in clean technologies come to fruition. China, Latin America and Sub-Saharan Africa are judged to be best set to gain from an expected surge in clean tech investments. The estimated market size for SMEs in these three regions could reach $415bn, $349bn and $235bn, respectively, the World Bank Group estimates. Total global investments in the sector, meanwhile, are expected to exceed $6.4tn. The most promising opportunities are in wastewater treatment, onshore wind, solar panels, electric vehicles and small hydro.
Recent figures from analyst firm Clean Energy Pipeline, meanwhile, put total investment in renewable energy at £40.8bn for the third quarter in 2014. The figure shows an 11% increase on the same three-month period last year. A 15% surge in investment in Asia, up to £9.2bn, partially explains the increase. China clocked solar investments of £3.4bn during the third quarter, followed by Japan at £1.1bn.
Grim outlook for biodiversity
Only 5 out of 56 global diversity targets set by the United Nations in 2010 are likely to be hit by the end of this decade, a new report claims. The Global Biodiversity Outlook 4, published by the UN’s Convention on Biological Diversity, finds government commitments such as halving habitat destruction and deforestation by 2020 are showing “little or no progress”. The report follows another damning report from environment group WWF, which claims that global wildlife has declined by 50% over the past four decades as a result of damaging human activities.
Powering up Africa
More than 620 million sub-Saharan Africans live without any electricity, and average electricity use per capita is less than 50 watts, according to the new Africa Energy Outlook report. Published by the International Energy Agency, the report argues that £280bn in additional investment in the region’s energy matrix could halve blackouts and power homes across all urban areas. Every additional dollar invested in the power sector could translate to $15 in economic gains, the IEA adds. The report estimates that renewable energy could provide almost 45% of sub-Saharan Africa by 2040.
Hilton reduces energy footprint
Hilton Worldwide estimates that it saved $388m last year in energy bills thanks to efficiency measures throughout its worldwide network of 2,380 properties. The hotel chain has reduced its total energy use by 13.6% since 2009, while its carbon output has dropped 20.2% over the same period. Hilton’s average emissions now stand at 24.5 pounds of carbon dioxide per square foot, down from 28.6 pounds per square foot in 2009. The firm’s direct global emissions now measure 516,664 tonnes, while its indirect emissions stand at 1.96m tonnes.
Royal Mail retains CSR focus post-privatisation
Since privatisation last year, Royal Mail has achieved a 5% reduction in its carbon emissions per unit of revenue. The installation of presence-controlled LED lighting in three key mail centres saved 1,870 megawatt hours, while double-decker trailers helped cut 7m miles from delivery operations. Compared with its 2005 baseline, total carbon dioxide emissions at the former public mail operator have reduced by nearly one fifth. Other highlights over the past 12 months include a 6% reduction in water consumption and a £9.4m contribution to charity. Royal Mail employs more than 162,000 people and claims a direct and indirect added value to the UK economy of £10.9bn.
Coca-Cola on course to hit water goals
Coca-Cola “replenished” 108.5bn litres of water last year, equivalent to 68% of its total water consumption. The US drinks company has improved its water efficiency by 8% compared with a 2010 baseline. Coca-Cola says it is on track to meet its 2020 commitment to balance 100% of its water use. Less positive is the company’s performance on climate change. Coca-Cola's 2013/14 Sustainability Report reveals that the firm’s greenhouse gas emissions are 16% higher than in its 2004 baseline. Total emissions have increased 1% since 2012.biodiversity coca-cola CR Cheat Sheet CR disclosure emissions reduction Ethical investment Hilton low-carbon Royal Mail