Investors prepared to interrogate businesses on resource efficiency

Speaking at the Sustainable Brands Conference in London yesterday, the CDP’s co-chief operating officer, Way, said those companies that are not incorporating sustainability into their strategies are likely to see investors move to those who do.

“We are working with 92 institutional investors, who are prepared to ask companies and highlight sectors to prove that they have carbon reduction targets, that they have made year on year reductions and they are investing in carbon emission and energy efficient activities,” she said.

Way warned that investors are now prepared to take this data to engage directly with the management of a company and discuss future expectations.

“Investors understand that sustainability is paying back to business and they know that if companies are not investing in this their operating costs are actually higher than they should be”.

According to Way, if a company is not investing in sustainable operations then shareholders could be wasting their money as the business is unlikely to make a profit.

“Companies should be thinking about this even if energy is not a big percentage of their operating costs”.

Earlier this year, research published by the CDP found that while some companies are demonstrating an awareness of the strategic opportunities associated with acting on climate change, few are setting the necessary targets required to ensure their long-term resilience.

However, following increasing incidents of extreme weather events which disrupted business operations and supply chains around the world, climate change has climbed the boardroom agenda.

“With the hottest US summer on record, fires in Russia and flooding in the UK, Japan and Thailand, among other events, 81% of reporting companies now identify physical risk from climate change”, it added.

The CDP said that companies are more likely to be successful at raising investment for emissions reduction activities with a long-term payback of three years or more, when they recognize that their climate change strategy gives them a competitive advantage.

Leigh Stringer