Carbon Disclosure Project calls on Global 500 to deliver Carbon Action

The world's largest 500 firms can expect to receive requests from investors in the coming days for detailed climate change action plans, after the Carbon Disclosure Project (CDP) launched a new initiative designed to accelerate emission reductions from multinationals.

The investor-backed group, which annually requests emissions data from listed companies around the world, today launched a new Carbon Action initiative that will ask all Global 500 companies to provide information on how they are attempting to reduce greenhouse gas emissions.

The initiative has secured the support of 34 investors with a total of $7.6tn in assets under management, including Aviva Investors, CCLA Investment Management and Scottish Widows Investment Partnership.

The Carbon Action scheme calls on organisations to deliver year-on-year cuts in emissions, identify and implement initiatives that "have a satisfactory positive return on investment", and set a public emissions reduction target.

Speaking to BusinessGreen, Joanna Lee, chief partnerships officer at the CDP, said that the initiative was being led by investors who "increasingly see the importance from an investment perspective of taking action to cut emissions".

"Around 70 per cent of firms in the Global 500 now have some form of emissions target, but there is much less information on the projects they are taking to reduce emissions," she said.

"The conversations we have had with companies suggest that they are seeing significant benefits from the actions they are taking, but there are still plenty of firms not doing the 'low hanging fruit' projects that deliver emission and cost savings."

Lee said that it was up to individual companies to determine what represents a "satisfactory" return on investment for emission reduction projects, but stressed that the aim of the initiative was to highlight those energy efficiency projects that can deliver rapid rates of return.

"We want to push the relatively easy energy efficiency projects that have been shown to deliver a return on investment in one to three years," she said. "They are a no-brainer, but there are still firms that are not making those investments."

The CDP will report on the response to the scheme later in the year and provide best practice information on businesses that are proving most effective at curbing emissions.

Lee added that firms could provide information on their carbon action plans through the annual carbon footprint information requests issued by the CDP, in order to reduce any administrative duplication.

Steve Waygood, head of sustainability, research and engagement at Aviva Investors, welcomed the new initiative, arguing that it will make it easier for investors to assess how businesses are responding to climate risks.

"Eighteen months ago Aviva chairman Lord Sharman called for the CDP to go beyond disclosure and challenge companies to take action that mitigates their climate change emissions," he said in a statement.

"We believe that the external costs of greenhouse gas emissions will become internalised into company cash flows and profitability. We encourage companies to consider what action they can take now to reduce emissions."

Waygood's comments were echoed by Craig Mackenzie, head of sustainability at Scottish Widows Investment Partnership, who insisted that there was no reason for listed companies to avoid responding to the requests for action.

"This initiative focuses on cases where companies do not need to make a choice between emissions reductions or higher financial returns," he said. "In the face of rising energy costs, reducing a company's emissions often means higher profits. Efficient management of energy offers a huge win-win: lower carbon emissions, higher returns for shareholders."