Business cannot ignore climate change – Minister
Companies' carbon statements will become as important as their financial reports, according to the UK's Minister for the Environment and Climate Change.
Speaking to an audience of business leaders in New York, Ian Pearson said that the private sector was facing increasing risks from climate change and that there is a growing expectation among shareholders and investors for thorough environmental reporting and action to reduce corporate impact.
Companies must respond by going beyond the outdated greenwash, he said, and make real rather than cosmetic changes.
“In the future I expect a company’s carbon statement to be as prominent as its financial statement,” said the Minister.
“That’s because investors are increasingly demanding reliable information about a company’s global carbon footprint, as well what it’s doing to reduce its CO2 emissions. Proper financial reporting is a no-brainer. Carbon reporting must be the same.
“Climate change already poses risks to businesses – and these will only increase in the future. Climate change can affect a corporation’s profitability and investors are right to be asking searching questions about how businesses are facing up to the realities, as well as the business opportunities of climate change.”
“This is not a box-ticking exercise. Greenwash is of no use to institutional investors when making financial decisions.”
Mr Pearson also announced Defra’s support for the Carbon Disclosure Project (CDP), which acts on behalf of institutional investors to request information from corporations about their greenhouse gas emissions and plans to manage those emissions (see related story).
“Investors want hard facts and data on a company’s global carbon emissions which includes their operations overseas,” said the Minister.
“That’s why we’re supporting the CDP to work towards a single international carbon reporting standard – one that helps, and doesn’t hinder businesses and investors.
“We are already seeing many hundreds of leading businesses, some of these in the US, take action to measure, manage and disclose their emissions and this is very positive.
“However, given the scale of the climate change challenge we need more action and those businesses who have not yet engaged need to do so urgently. A logical way to begin is by responding to the Carbon Disclosure Project.
“Companies that adopt a head in the sand strategy are neither going to win over institutional investors, nor reduce carbon emissions.
“Despite the different approaches of the US and UK Governments to tackle climate change, businesses on both sides of the Atlantic need to engage with this issue and shape a future carbon footprint reporting requirement that will become the common carbon language for companies and investors all over the globe.
“Climate change knows no borders, as a company’s emissions in Africa may soon reflect on a company’s profitability in the US.”