If a global pandemic and its multifarious impacts caused companies to throttle back or even pause their efforts on sustainability over the last two years, the message coming from the investment and disclosure community is clear: the time to hesitate is over. It’s time to press play.
In December, CDP revealed the environmental performance of 12,000 of the world’s biggest companies. Just 272 made its prestigious A List with only 14 pioneering companies being awarded Triple-A scores for their work across the three fundamental pillars of climate change, forests and water security.
Moving forward, an integrated approach to sound environmental management will become the norm, as CDP noted, “Nature had a clear seat at the table at this year’s COP26 summit, and the Glasgow Pact as well as the IPCC’s Sixth Assessment Report made it clear that environmental issues are interconnected and must be managed together.” Accordingly, CDP has reflected this joined-up approach in its forward-looking strategy which aims to encourage action on more issues including land, oceans, biodiversity, resilience, waste and food. Further, it will be integrating water security into financial institution disclosures from this year in what it says “represents one of the first steps in CDP’s ambition to move towards a more holistic, integrated questionnaire which tracks progress against not just climate, but all environmental metrics of relevance.” The approach is fully aligned with Task Force on Climate-related Financial Disclosures (TCFD) and Taskforce on Nature-related Financial Disclosures (TNFD).
A-list companies are worth US$12 trillion, so we must all recognise and applaud their leadership in terms of performance and their contribution towards encouraging transparency. Many congratulations to the UK’s A-Listers: AstraZeneca, Atlantica Sustainable Infrastructure, BT Group, CNH Industrial, Coca-Cola Europacific Partners, Currys, Diageo, Imperial Brands, J Sainsbury, Landsec, Mondi, National Grid, Severn Trent and Unilever. It’s thrilling to see three of our own customers in this top tier and we are delighted to collaborate with these trailblazers on their continual improvement.
“Companies that publish their environmental data consistently and on an annual basis can protect and improve their reputation, get ahead of regulation, boost their competitive advantage, uncover risks and opportunities, track and benchmark progress and get access to lower costs of capital.” CDP
Their efforts will be rewarded too, because there’s evidence to suggest that companies that score highly on environmental metrics also perform better financially. The Stoxx Global Climate Change Leaders index, which is based on CDP’s A-List, has seen an average annual return 5.8% higher than its reference index over the past eight years.
In contrast, in another report, CDP also called time on the 16,870 companies (worth US$21 trillion) that failed to respond to requests for information from their investors and clients or provide sufficient information in their responses, noting that “these non-disclosing companies are now going against a tide of change”.
“Disclosure is one of the most powerful tools we have in the global climate fight.” Mike Bloomberg
WHAT ABOUT WATER?
Diving into the environmental concern that we at Waterscan are most passionate about, there are some interesting insights arising from CDP’s global disclosure.
The first is that water is clearly rising up the corporate agenda, and fast. Globally, the Water A-List grew from 106 to 118 in 2021 as more companies decided to take a leadership position on protecting this vital resource. Eight UK companies made it onto this Water A-List, including Waterscan customers Coca-Cola Europacific Partners and Sainsbury’s, while Whitbread held boosted their score to an impressive B.
Secondly, it was interesting to see some companies scoring really well on mitigating climate change impacts but unable to replicate this performance for water scarcity (or failing to provide sufficient information to be evaluated). These low (or no) scores do an unnecessary disservice to the companies concerned because there’s plenty of water data available, and plenty of actionable opportunities to boost scores year on year.
Finally, we expect that location will play an increasingly significant role in encouraging commercial operations to do their bit. There are 95 cities around the world that are leading on environmental action. Spanning every continent, these A-List Cities stretch from Canada to Japan; South Africa to New Zealand and 81% of these cities collaborate with businesses.
We can be proud that in 2021, the UK was home to 11 A-List Cities, a significant increase from 4 the previous year. So, companies operating out of Edinburgh, Newcastle, Sunderland, Greater Manchester, Nottingham, Leicester, Bristol, Bournemouth, Reading, Southend-on-Sea or Greater London, beware! Your hometown will now expect more from you to help it retain its exemplary status on environmental action, and that includes water impacts.
If you’re curious about where to make a start, how to get back on track, or how to improve your water benchmarking and disclosures, get in touch. It’s what we do.
BY REBECCA GALE, ACCOUNT DIRECTOR
N.B. The information contained in this entry is provided by the above supplier, and does not necessarily reflect the views and opinions of the publisher
