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Carbon Disclosure on the Rise

Every year, the Carbon Disclosure Project (CDP) – an independent UK based organization boasting the largest database of greenhouse gas (GHG) emissions and energy data – sends a request to companies worldwide for information about their climate change strategies.  Companies respond because CDP represents 475 institutional investors, with a combined $55 trillion under management.  At a recent CDP workshop in New York City, the organization reported that in the last six years, the number of companies responding to their survey rose from 235 to 2,562. They expect this number to increase again in 2010.

A consistent theme of the gathering was the increased interest by investors in environmental & social governance (ESG) data.  Bloomberg, who hosts the data reported by companies to CDP, reported that  400-500 market participants access CDP data through the portal on a regular basis.  Representatives from Bank of America and Goldman Sachs also reported receiving a lot more questions about their CDP data from their investors. Additionally, meeting attendees agreed the recent Securities and Exchange Commission’s interpretation regarding disclosures related to climate change will also likely drive interest in ESG data and the CDP.

While investors are becoming more interested, most panelists agreed that it‘s unlikely their interest will turn to action until there is a price on carbon. There are ongoing challenges in GHG emissions reporting, caused by a lack of standards and general uncertainty about future regulations. For now, however, it behooves a company to jump into the process and start collecting the information so they are well positioned if and when reporting and carbon management becomes mandatory.

What’s next?  Panelists and participants – both in formal presentation and throughout the meeting hallways – cited water as the next big risk and opportunity for companies.

In addition to discussing the nuts and bolts of the CDP survey, the workshop featured advice to companies on changes to the 2010 survey instrument and best practices for responding.  For more information on the CDP survey and how your company can prepare its response, please contact adavison@voxglobal.com

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