Firmenich's rise and the UK's fall: 5 key trends in CDP's 2019 A-list
CDP has named 140 corporates as leaders in the fight against climate change, water scarcity and deforestation in its new A List rankings for 2019. Here, edie rounds up the key sustainability trends which have shaken up the scores this year.
Founded in 2011, the CDP’s annual A List is considered the gold standard for corporative disclosure on sustainability ambitions and progress, ranking dozens of global businesses across all sectors on their efforts to become transparent in their approach to environmental issues.
The 2018 index, released today (22 January) at the World Economic Forum in Davos, Switzerland, names the likes of Sainsbury’s and Unilever as leaders in the corporate fight against climate change.
The index also gauges corporate progress on water stewardship, with big-name firms like Ford, Gap and L’Oreal leading the way. Businesses included are additionally ranked on their forest protection actions – a metric added to the league table in 2016 - with just six awarded the prestigious “A” grade in this field for 2018.
CDP assesses corporates which voluntarily disclose their carbon, water or forest footprints under its business initiatives before putting the league table together. Factors analysed include the comprehensiveness of their disclosure, their risk management framework and their demonstration of a best practice approach – for example, in setting ambitious or science-based targets.
With all this in mind – and with some of the usual suspects featuring highly in the index – edie has pored through the key facts and stats to pull out five key trends which have shaped this year’s league table.
1) UK businesses take up a smaller proportion of the table
In 2017’s league tables, CDP gave a total of 200 businesses an “A” grade in one or more areas, with 18 (9%) of them being UK-based.
In contrast, the 2018 rankings place just seven UK-based firms on the A List, which includes a total of 141 corporates. This equates to 4.9%.
Capital Counties & Properties failed to achieve an “A” grade for climate action after success in 2017, while Associated British Foods, Burberry, Centrica, GlaxoSmithKline and Mondi dropped off the water A List.
Unilever, the only UK firm to achieve an “A” for forest stewardship in 2017, also lost this accolade for 2018. AstraZeneca, BT, Coca-Cola European Partners (CCEP), Diageo and Sky - all 2017 A Listers - are still undergoing final quality assurance checks.
However, there are two new UK-based additions to the climate ranking – mining and metals giant BHP Billiton and analytics firm RELX Group.
Companies dropping off the list have not necessarily done any worse in their environmental sustainability efforts – they may simply have chosen not to be graded by CDP this year. Similarly, new additions may have asked for a grade in one of the three areas for the first time.
2) New technologies help to drive new additions
In the same year that the rankings were launched, Google piloted Google+ for the first time, positing it as a viable alternative to Facebook; Blackberry was taken to court over its instant messaging model; Samsung launched its first Galaxy tablet and e-books were still considered a niche item.
Therefore, several key technologies which are now being used by numerous big-name businesses to drive sustainability efforts would have either been in their infancy, or not yet have been conceptualised at all.
Among them are Australian IT Firm Telstra, which has been awarded an “A” grade for climate action after creating a cloud-based greenhouse gas calculating tool, and Japanese technology giant Fujitsu, which has begun designing AI-led climate adaptation technologies. One such innovation is an AI-powered big data analytics tool, which aims to help businesses, cities and nations develop precise recovery plans for climate-related disasters.
3) Disclosure grows again, after a brief plateau
Back in 2011, just 210 firms were disclosing information on their climate impact to CDP, which was then known as the Carbon Disclosure Project. Fast-forward to 2016 and this number had increased more than tenfold to reach 2,488 businesses.
But as the number of businesses reporting their impacts on water and forests through CDP continued to climb steadily, climate-related disclosures hit something of a plateau in 2017, when 36 fewer firms disclosed their climate impacts through this platform than in 2016.
In 2018, however, disclosure skyrocketed once more. In total, 7,035 firms are now disclosing some form of environmental information through CDP, with 6,800 having been scored A-D across one or more of the three key areas in the latest ranking. Of this 6,800, just 2% made this year’s A List.
Nonetheless, CDP estimates that less than half (44%) of European corporates are currently tracking how climate challenges will affect their business models in the future or disclosing the full extent of their environmental impacts.
4) Only two companies get straight A’s
Swiss perfume manufacturer Firmenich and French personal care firm L’Oreal are the only companies to have achieved three A’s in this year’s rankings.
Firmenich notably set an approved science-based target of cutting its Scope 1 and Scope 2 emissions by 39% by 2030 approved in November 2018. The aim builds on its 2020 target of reducing its overall carbon footprint by 20% - an ambition which has seen the company pledge to invest 10% of its annual turnover into R&D for low-carbon technologies.
As for water, Firmenich is targeting a 25% reduction in water use at facilities located in water-stressed areas and a 15% improvement in its overall water efficiency rates by 2020. The company recently invested in a large wastewater treatment plant at its factory in China – a move which will enable it to grow its business while reducing unit costs and water use by up to 10%.
Like L’Oreal, Unilever received straight-A’s in last year’s rankings. However, the consumer giant missed out on the accolade this year. It may be the case that the company did not request CDP’s feedback in all three areas this time around.
5) From a growth perspective, A Listers outperform their counterparts
As debates around how best to align sustainability and profitability grow amid rising consumer and investor demands for purpose beyond products, this year’s rankings help to build the business case for adopting a leadership position on environmental issues.
Companies listed on the STOXX Global Climate Change Leaders Index – which is based on the CDP A List – outperformed the global average, growing by an average of 5.4% per annum.
One of the leaders in this field is Unilever, which has consistently seen its ‘Sustainable Living’ brands outperform the rest of its brand portfolio. These brands accounted for a record 70% of Unilever’s turnover growth in 2017 and grew 46% faster than the rest of the business.
“Leadership on environmental issues shown by the A List goes hand in hand with being a successful and profitable business,” CDP’s global director of corporates and supply chains Dexter Galvin said.
“As the recent report from the IPCC showed, the next decade is crucial in our shift to a sustainable economy, and we believe corporates are at the heart of this transition.”