CDP Global 500: 10% of Largest Companies Produce 73% of GHGs

BMW, Daimler, Philips Electronics, Nestlé, financial firm BNY Mellon, Cisco Systems and utility Gas Natural SDG — all with perfect 100 disclosure scores and A performance ratings — top the CDP’s list of the world’s best companies in terms of climate change disclosure and performance.

Honda, Nissan, Volkswagen, Hewlett-Packard and Samsung round out the top 12 companies list (see chart), according to the CDP Global 500 Climate Change Report 2013, released today.

On the other end of the spectrum, 50 of the 500 largest listed companies in the world are responsible for nearly three quarters of the group’s 3.6 billion metric tons of greenhouse gas emissions, the report says.

Sixteen of the 50 highest emitting companies — Walmart, Apache, Chevron, ConocoPhillips, Devon Energy, Exxon Mobil, Occidental Petroleum, FedEx, Air Products & Chemicals, Dow Chemical E.I du Pont de Nemours, Praxair, AT&T, American Electric Power, Duke Energy and Exelon — are US firms.

The carbon emitted by the 50 highest emitting companies, which primarily operate in the energy, materials and utilities sectors, has risen by 1.65 percent to 2.54 billion metric tons over the past four years, the report says.

The report is co-written by CDP, formerly known as the Carbon Disclosure Project, and PricewaterhouseCoopers. The analysis is based on the climate and energy data of 389 companies listed on the FTSE Global 500 Equity Index, collected by CDP at the request of 722 institutional investors representing $87 trillion in invested capital.

For the second year in a row, Apple and Amazon.com are among the companies that did not respond to CDP’s request for emissions. While CDP says the biggest emitters present the greatest opportunity for large-scale change, the report identifies opportunities for all Global 500 companies to help build resilience to climate and policy shocks by significantly reducing the amount of carbon dioxide they produce each year. For example, the emissions from nearly half (47 percent) of the most carbon-intensive activities that companies identify across their value chains are yet to be measured. The lack of detailed reporting and information of GHGs from sources related to company activities (Scope 3 emissions), as opposed to those from sources owned or directly controlled by them, may lead companies to underestimate their full carbon footprint.

Two thirds (72 percent) of the Global 500 measure emissions associated with business travel but this equates to just 0.2 percent of the sample’s reported Scope 3 emissions. Nearly all financial businesses are managing their travel emissions but only 6 percent are reporting the emissions associated with their investments, the sector’s prime source of Scope 3 emissions.

The report says companies that demonstrate a strong commitment to managing their impact on the environment are generating improved financial and environmental results.  Analysis of the corporations leading on climate progress, as based on CDP’s methodology and including BMW, Nestlé and Cisco Systems, suggests that they generate superior stock performance (see Figure 9 and Figure 10, below). Further, the businesses that offer employees monetary incentives related to energy consumption and carbon emissions are 18 percent more successful at accomplishing reductions.

Two leadership indices for the Global 500 are released in the report. The Climate Performance Leadership Index (CPLI) marks companies that are implementing a robust climate strategy and approach to reducing emissions. The Climate Disclosure Leadership Index (CDLI) identifies the most climate transparent companies. The index comprises those that score within the top 10 percent for the quality of the data they disclose. The minimum score to achieve a position on the CDLI has consistently risen and now stands at 97 percent. Both indices are used by investors to inform investment decisions relating to climate risks and opportunities.

Germany, Switzerland and the UK are over represented on the CPLI relative to the geographic composition of the Global 500. Although European companies are more likely to outperform in comparison to their peers in the USA, the number of North American companies achieving a position on the CPLI has more than doubled since 2012. India, Norway, South Africa, South Korea and Sweden are new to the index.

In last year’s Global 500 Report, Bayer, for the second year in a row, ranked no. 1 on the 2012 combined disclosure and performance list, sharing the top billing with Nestlé, a newcomer to the list.