Companies asked to spill the beans on gas emissions
A lack of meaningful data means even the most well-intentioned investor is faced with difficulties when looking to back companies making every effort to lower their emissions, according to an influential alliance of financiers.
The Carbon Disclosure Project (CDP) has published a report looking at information on carbon emissions from the FTSE350, the biggest 350 companies listed on the London Stock Exchange.
It examines how willing companies were to provide this information, whether they were prepared for it to be released into the public domain and whether the figures could be backed up by hard, quantifiable evidence.
The CDP is an increasingly powerful force in the money markets, boasting a membership that reads like an international who’s who of well-known banks, pension funds and insurers and a total of over $31 trillion in assets.
Several of the CDP’s findings confirm what might be expected – larger companies are more prepared to be open about their emissions than smaller ones and those who have been approached by the CDP in previous years are in a better position to report than those who are contacted for the first time.
But the document also highlights the fact that a surprising number of companies are either unprepared to supply emissions data, or more worrying still, incapable of doing so.
And of those who are prepared to provide potential investors with the information, a startling number – almost a third – specifically asked the figures to remain between themselves and not be publicised.
According to the report, which has the backing of big names such as the HSBC, Deutche Bank and the Banque Nationale de Paris (BNP), ‘all things being equal investors will increasingly express a preference for companies that emit less carbon’ which means controlling greenhouse gases will become an increasingly powerful financial driver.
While many companies are devoting considerable resources to meeting the demands of investors to provide emissions data, the report continues, they are missing an opportunity publishing disclosures that lack sufficient detail to allow them to be compared in any meaningful way with those released by their competition.
“Companies that have successful strategies leading to reductions in carbon emissions…are unable to unequivocally in relation to competitors in the absence of comparable, standardised measures,” it says.
“This absence of comparable statistics also allows companies that choose not to institute policies and strategies to reduce their dependency on carbon emissions to avoid investor criticism.”
Not only that, it goes on, but investors presented with glossy but insubstantial reports run the risk of being mislead.
“Concerned responsible investors are vulnerable to ‘green wash’ when reporting consists of vague qualitative disclosures from equally concerned companies about the issue of climate change,” it says, and: “The absence of reliable data makes it difficult for markets to take account of carbon emissions.”
The full report, and those looking at the broader FTSE500 and Asian markets, can be found on the CDP’s website.
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