Carbon disclosure project (The)

Author: Jonathon Hanks - Incite Sustainability

( Article Type: Explanation )

The Carbon Disclosure Project (CDP) is a UK-based not-for-profit organisation holding the largest database of corporate climate change information in the world. Established in 2000, the CDP, on behalf of 551 institutional investors, challenges the world’s largest companies to measure and report their carbon emissions.

Thousands of organizations from across the world’s major economies measure and disclose their greenhouse gas emissions, water use and climate change strategies through CDP. The mission of the CDP is to accelerate solutions to climate change by putting relevant information at the heart of business, policy and investment decisions. Incite Sustainability, a South African consultancy, brought the Carbon Disclosure Project to South Africa in 2006 in partnership with the National Business Initiative (NBI). It is hoped that the initiative will prompt a timely and sufficient response by South African business to climate change.

How the CDP works The Investor CDP encourages companies to be transparent with their carbon emissions, and to improve their understanding of the strategic risks and opportunities of climate change. In line with what are seen to be key elements of an effective climate change strategy, the CDP focuses on three key areas: management; risks and opportunities; and emissions.
Each year information requests are sent to more than 4,500 of the largest companies globally, as measured by market capitalisation. Responses are analysed and individual reports are produced for each sample. The South African sample includes the top 100 companies on the JSE. CDP then provides this information to its 551 institutional investor signatories, as well as distributing it throughout the global marketplace to increase transparency around climate related investment risk and commercial opportunity, and drive investments towards a low carbon economy. Over 3,000 companies responded to the Investor CDP questionnaire in 2010, including 84% of the Europe 300, 82% of the Global 500; 70% of the S&P 500 and 74% of the South Africa 100 companies

CDP South Africa highlights 

Positive developments:
• South Africa had the joint highest response rate internationally, suggesting that climate change issues are gaining increasing prominence on the corporate agenda in the country.
• The level of disclosure on most issues showed valuable improvement since 2009.
• 94% of responding companies disclosed their GHG emissions.
• There is growing awareness of the risks and opportunities of climate change, although often at a general level.
• There has been a notable increase in the number of companies voluntarily setting (or publicly committing to set) reduction targets.
• There is increased evidence of partnerships and climate governance practices.
• More companies are implementing direct emissions reduction measures, and encouraging signs of companies reducing emissions within their sphere of influence.

Challenges remaining:
• It appears that local companies are insufficiently advanced in their adaptation initiatives.
• South Africa’s industrial GHG emissions continue to be dominated by a few companies.
• Many companies lack specific emission reduction commitments; where companies have adopted climate targets, these targets generally fall short of what is seen to be required by science.
• Despite an increase in reported climate governance measures, there remains significant scope for greater integration of climate changes issues in companies’ core strategy.
• The level of understanding of company-specific risks and opportunities remains very variable both within and between different business sectors, and there is limited evidence of relevant internal management incentives. 

The scale of the challenge
Given the urgency and scale of the climate challenge – including the South African government’s commitment to reduce the country’s greenhouse gas emissions by 34% (below the projected baseline) by 2020 through, for example, the proposed carbon tax – there is a clear need for a greater strategic focus by companies on climate change issues. The CDP is playing a significant role in promoting greater transparency, awareness and a more informed response to climate change, particularly amongst the less visible greenhouse gas emitters in South Africa. It has also catalysed greater engagement between the investment community and business media.
However, if South African businesses are serious about effecting a transition to a post-carbon economy, they will need to become more actively engaged in identifying and capturing all the available emissions reduction opportunities. This will require not just greater technical innovation, but also a profound shift in values. 
 

Further information
In addition to its investor project, the CDP also runs public disclosure, supply chain and water disclosure projects. The CDP Cities project, undertaken for the first time in 2010, gathered data from a group of the largest cities in the world. The CDP Water Disclosure provides water-related data from a subset of the world’s largest 500 companies in the FTSE Global Equity Index Series, focusing on sectors that are water-intensive or particularly exposed to water-related risk. The questionnaire is also sent to a sample of the largest publicly listed water-intensive Australian and South African companies. More information is available from the CDP website: www.cdproject.net.
 For further information about the CDP in South Africa, or to obtain copies of the CDP JSE 100 report, contact the National Business Initiative: www.nbi.org.za or Incite Sustainability: www.incite.co.za.