Policy Brief

Disclosing carbon emissions

By PAUL DICKINSON – founder and CEO of the Carbon Disclosure Project.

 

The recent financial and economic turmoil has highlighted the importance of full disclosure and risk management. Rarely have we been more aware of how failure to manage risk can have impacts beyond our worst expectations. Many lessons learnt from the challenges in our financial systems are highly relevant to the challenges we face in our climate system.

There has been a transformation in the global approach to climate change in 2009. The Obama administration has introduced a new era in climate change policy in the United States; while China is set to meet ambitious renewable energy and energy efficiency targets, and hosts some of the world’s largest renewable energy companies. Brazil entered the New Year with a new National Plan on Climate Change, and national governments in industrialized countries including Japan and the US are developing new legislation to reduce emissions. The political landscape has changed considerably since the Kyoto Protocol (2005). But there is still a long road ahead before the world develops concrete plans to reduce emissions in line with scientific recommendations of 50- 80% by 2050.

Australia and New Zealand have postponed the development and implementation of their cap and trade schemes as a result of political difficulties. On the other side of the world, all eyes are on the proposed US Waxman-Markey cap and trade scheme bill. In the European Union, governments have committed to 20% reductions by 2020, with a commitment to go further if others do. However, the international community has not yet set global medium-term reduction goals.

An agreement in Copenhagen will be the first vital step to success, but it is just as important to look beyond Copenhagen, and to build the global systems required to combat dangerous climate change.

The Carbon Disclosure Project (CDP) works to collect and distribute high quality information in order to motivate investors, corporations, and governments to take action. The project furthers this mission by harnessing the collective power of the investment community to accelerate unified action on climate change. On behalf of more than 475 institutional investors, holding US$55 trillion in assets under management, the CDP requests some 2,500 companies to report their climate change strategies and greenhouse gas emissions. The information is used by financial decision-makers to identify both climate change risk and opportunity in the companies they invest in, lend to, or insure.

The CDP also extends awareness of an organization’s carbon footprint by moving beyond the measurement of direct greenhouse gas emissions to include climate change risks and opportunities across the supply chain. In many sectors, supply chain emissions from activities such as processing, packaging and transportation often exceed those arising from an individual company’s own operations. More than 55 organizations, including P&G, PepsiCo, and the British government, ask more than 800 suppliers to measure, assess, and report climate change risk and opportunity. Over the last year, there has been a significant increase in the use of CDP data in procurement operations, and companies such as Walmart are now using CDP response as part of their supplier performance assessment.

The new CDP Global 500 Report 2009 analyzes responses from the world’s 500 largest corporations. Fifty-one per cent of the Global 500 companies reported emission reduction targets, up from 41% in 2008. However, only 36% of reported carbon reduction targets stretch beyond 2012. The message is clear: a global agreement in Copenhagen in December 2009 is needed to provide increased certainty for Global 500 companies looking to set medium and long-term emission reduction targets.

December 7th, 2009 at 09:12 0 Comments »

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