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Climate Group members top new Carbon Disclosure Project Index

Date
10 September 2006
Climate Group members top new Carbon Disclosure Project Index

HSBC, BP and Swiss Re, founder members of The Climate Group, are all cited as 'best in class' in the Carbon Disclosure Project's Climate Leadership Index (CLI) released today.

Both HSBC and BP are placed top of their respective sectors and Swiss Re is placed second in the insurance group.

The CLI reveals for investors which high-impact FT500 companies have the most comprehensive climate-change disclosure practices in place, judging by each company's response to a questionnaire sent out at the beginning of February.

On behalf of its 225 signatory investors the Carbon Disclosure Project (CDP), a coalition of global investors with more than $31.5 trillion in assets, requested information on corporate risks and opportunities associated with climate change from more than 2,000 companies globally including the world's 500 largest publicly-owned companies (FT-500).

According to Steve Howard, CEO of The Climate Group: "HSBC, BP and Swiss Re are not only taking the lead in reducing their carbon footprints but also in disclosing the risks and opportunities which carbon poses to their business. Disclosure is critically important in driving the shift to a low carbon future and we fully support the Carbon Disclosure Project in its efforts to encourage investors to put the CDP data to work by factoring it into investment decisions."

Key findings from this year's CDP report are as follows:

. CDP4 generates highest-ever response rate, with 72%, or 360 of the FT500 companies responding, up from 47% of the companies that responded when CDP first surveyed the FT500 in 2003.

. CDP4 sees a dramatic increase in the response rate from US companies, with 58% answering the questions, up from 42% in 2005. But many US companies continue to lag.

. US companies responding for the first time to CDP's request for information include American Express, Boeing, Home Depot, Disney and Wal-Mart.

. US companies appearing in the CDP4's Climate Leadership Index, which identifies best in class responses, include Chevron, Citigroup, Ford, FPL Group, GE and Marsh and McLennan.

. 87% of responding companies indicated climate change represented "commercial risks and/or opportunities".

. Action to reduce emissions trails awareness of the issue. Less than half (48%) of companies that consider climate change to present commercial risks and/or opportunities to their business have implemented a greenhouse gas (GHG) reduction program.

Financial Implications:

. GHG regulation creates winners and losers. The best positioned company in the Innovest GHG regulatory model could have windfall revenues yielding $298 million or 10.6% of 2005 earnings (EBITDA). The worst could lose 25% of its EBITDA due to regulatory compliance costs.

. GHG reduction less costly than expected. At a fixed marginal abatement cost of $25 per tonne, many companies could reduce their "business as usual" 2012 emissions to 10% below 2005 levels for less than 1% of their reported 2005 earnings.

. Clean energy grows up. In North America "clean tech" has become the fifth largest venture capital investment category, trailing only Biotechnology, Software, Medical and Telecommunications. It is estimated that the clean energy market will grow from $39.9 billion currently to $167.2 billion by 2015.

. Investors taking action on climate change. Numerous financial institutions, including AIG, Allianz and Goldman Sachs have released dedicated climate change policies in the past 12 months. Moreover, Citigroup, JP Morgan Chase, Merrill Lynch and Morgan Stanley among others have published equity research reports analysing the financial performance of the carbon markets.

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