The Carbon Disclosure Project has for years asked the world’s largest companies to discuss the risks and opportunities they face from climate change on behalf of institutional investors.
The nonprofit took its mission a step further this week with a new effort that asks companies to go beyond mere climate change disclosure. As the name suggests, the CDP Carbon Action initiative aims to nudge companies toward making annual emissions reductions and publicly disclosing how they did it.
“An economic revolution is needed to decouple financial growth from growth in emissions,” CDP Executive Chairman Paul Dickinson said in a statement. “Rising oil prices, energy supply risks and brand reputation issues are all making the reduction of carbon a strategic imperative. Carbon Action is about accelerating companies’ mitigation efforts in order to reduce the major long-term threat to the global economy which climate change represents.”
The first Carbon Action request letters are being sent this month to companies listed in the FTSE Global Equity Index Series (the Global 500). The deadline to respond through the existing 2011 CDP information system is May 31. The letters are being sent on behalf of 35 institutional investors with assets totaling $7.6 trillion.
Companies will be asked to reduce their emissions every year, identify and execute emissions reduction projects with good return on investments, and set public emissions reduction goals if they haven’t already done so.
The results will be analyzed and released to investors later this year.
Among the investors signing on to the initiative are the Scottish Widows Investment Partnership (SWIP) and Aviva Investors. In separate case studies, the institional investors detailed the business case for carbon action and why it matters in terms of investment decisions.
“We want to open up a conversation with companies about how they manage energy and other sources of carbon,” said SWIP Head of Sustainability Craig Mckenzie, “and to see if they can significantly reduce their costs.”