|
Corporate Social Responsibility
News
3.21.2006 ET
|
CSR News from:
|
|
|
News Category:
|
|
BP and DuPont Receive Top Scores in First-Ever Ranking of 100 Global Companies on Climate Change Strategies
(CSRwire) BOSTON - After years of inaction, a growing number of leading U.S.
companies are confronting the business challenges from global warming,
recognizing that greenhouse gas limits are inevitable and that they cannot
risk falling behind their international competitors in developing
climate-friendly technologies. Some U.S. companies, such as General
Electric, are catching up and joining DuPont and Alcoa in leading their
industries. But many others are still largely ignoring the climate issue
with 'business as usual' strategies that may be putting their companies
and shareholders at risk.
These are among the key findings of a first-ever report issued today by
the Ceres investor coalition that analyzes how 100 leading companies are
addressing the growing financial risks and opportunities from climate
change--whether from expanding greenhouse gas regulations, direct physical
impacts or surging demand for climate-friendly technologies. Altogether, 76
U.S. companies and 24 non-U.S. companies in 10 business sectors are
profiled in the report.
"More U.S. companies realize that climate change is an enormous business
issue that they need to manage immediately," said Mindy S. Lubber,
president at Ceres, which published the report Corporate Governance and
Climate Change: Making the Connection. "Investor pressure, expanding
greenhouse gas limits and surging global demand for clean-energy products
are compelling U.S. businesses to act, although many others still fail to
recognize the enormity of this issue. Ultimately, management and board
members at all 100 of these companies need to make climate a top
governance priority."
The report uses a "Climate Governance Checklist" to evaluate how major
industrial corporations are addressing climate change in five broad areas:
board oversight, management performance, public disclosure, greenhouse gas
emissions accounting and strategic planning. The report took nine months
to complete and uses data from securities filings, company reports,
company websites, third-party questionnaires and direct company
communications.
Using a 100-point scoring system, the report ranked the largest companies
in the oil/gas, electric power, auto, chemical, industrial equipment,
mining/metals, coal, food products, forest products and air transportation
sectors, with operations in the United States. The scoring system gave most
credit to companies with a sustained commitment to controlling greenhouse
gas emissions, disclosing data and strategies, supporting regulatory
actions, and taking practical, near-term steps to find lasting solutions
to climate change. (Company scores, profiles and the summary report are
available at www.ceres.org)
Among the industry sector leaders and laggards:
Sector: Oil/ Gas, Leader: BP(90 points*),
Laggard: ExxonMobil(35)
Sector: Chemical, Leader: DuPont(85**), Laggard:
PPG(21)
Sector: Metals/Mining, Leader: Alcan(77) & Alcoa(74),
Laggard: Newmont(24)
Sector: Electric Power, Leader: AEP & Cinergy(both73),
Laggard: Sempra Energy(24)
Sector: Auto, Leader: Toyota(65), Laggard:
Nissan(33)
* Top score among the 100 companies **Top score among 76 U.S.
companies
Over two-dozen institutional investors requested the Ceres report,
prepared by the Investor Responsibility Research Center, as part of an
action plan announced at the Institutional Investor Summit on Climate Risk
last May at the United Nations. The investors are part of the Investor
Network on Climate Risk (INCR), an alliance of U.S. institutional
investors coordinated by Ceres that collectively manage about $3 trillion
in assets.
"This report is extremely valuable because it provides investors with an
unprecedented window into how companies most affected by climate risk are
responding at the board level, through CEO leadership, and in strategic
planning," said Connecticut State Treasurer Denise L. Nappier, whose $22
billion investment fund is among 50 institutional investors in
INCR. "While strong climate governance practices are not yet the norm at
U.S. companies, this report plainly illustrates that there are industry
leaders showing the way."
Foreign companies such as BP, Toyota, Alcan, Unilever and Rio Tinto had
the highest scores in five of the nine sectors that included both U.S. and
non-U.S. firms. American companies - DuPont, General Electric,
International Paper and United Parcel Service - led in the other four
sectors. (In the electric power sector, only American companies were
analyzed.)
The report's overall results are encouraging. In 2003, Ceres released a
report on 20 companies showing that major U.S. businesses were doing
little to address climate challenge. By contrast, this report shows that
leading companies in many key industries are now tackling the issue at the
highest level, with boards conducting strategic assessments and management
setting performance goals for reducing greenhouse gas emissions and
developing new climate-friendly products.
DuPont, the leading scorer among U.S. firms has reduced its GHG emissions
72 percent since 1990 and developed forward-thinking commercial products
such as energy-efficient building materials, components for solar, wind
and fuel cell systems and next-generation refrigerants with low global
warming potential.
The report also shows, however, that dozens of U.S. businesses in various
climate vulnerable sectors - including leading electric power and oil
companies - are still largely dismissing the issue or failing to
articulate clear strategies to meet the challenge. Low climate governance
scores also were prevalent among entire sectors, including: coal
companies, which are especially vulnerable to greenhouse gas regulations;
food and forest product companies, which are vulnerable to natural
resource impacts from climate change; and airlines, one of the fastest
growing sources of CO2 emissions.
"I commend the companies that have willingly accepted the risks and
opportunities that climate change presents. America must be a leader in
climate friendly technologies," said California State Treasurer Phil
Angelides, a co-founder of INCR and board member at two of the nation's
largest public pension funds, CalPERS and CalSTRS, which collectively
manage more than $300 billion in assets. "These findings - that a growing
number of leading U.S. businesses are focusing on global warming - should
be a wake up call to investors: we need to continue to press
poor-performing companies to clean up their act."
Douglas Cogan, principal author of today's report and the 2003 report,
says he sees important progress by U.S. companies that are beginning to
build climate change into their governance practices and strategic
planning. In the past two years, Cogan cited such as examples as:
General Electric's launch of 'ecoimagination', a plan to double
investments in climate-friendly technologies and reach $20 billion in
annual sales by 2010.
Ford Motor's announcement that it will boost production of hybrid
vehicles tenfold by 2010.
Chevron's decision to add renewable technologies into its energy
portfolio and set targets to cut its greenhouse gas emissions.
American Electric Power's decision to build the nation's first
commercial-scale coal gasification power plant, a "clean coal" technology
that is says is the "right investment" given foreseeable greenhouse gas
regulations in the U.S.
These companies join others, like DuPont and Alcoa that have had
climate change governance strategies in place for more than a decade.
Lubber, of Ceres, also cited BP, the top-scoring company overall, which
has set long-term greenhouse gas reduction targets and is planning to
invest $8 billion in solar, wind, hydrogen and other clean-energy
technologies in the next decade. "BP understands and is promoting the fact
that all companies must work to reduce their carbon footprint, starting
with fossil fuels," she said.
Still, Cogan acknowledges that the challenge ahead for all companies,
including BP and other leaders, is enormous, given that greenhouse gas
emissions must be reduced substantially below current levels to stop
rising global temperatures. Businesses that are most successful in
implementing climate change strategies, Cogan said, will be those that
look beyond short-term thinking and the gridlock that currently grips
Washington on this issue.
"Typically, CEOs and boards look out only three to five years when making
investment decisions - about as long as they serve in their leadership
roles," Cogan said. "But the assets they put into place last much longer.
Building a new conventional coal plant or a new engine factory for SUVs
might make sense under 'business as usual' thinking, but what will happen
to these facilities in five or 10 years, when they're still not fully
depreciated but facing carbon emission constraints?"
Investors offered specific recommendations for how board members, company
executives, investors and Wall Street analysts should use the report:
Board members should raise the report's findings with
management and set guidance to improve company practices.
Company executives should benchmark their performance against
their industry peers, and take steps outlined in the report to manage
climate risks and opportunities and improve their governance scores.
Investors should go through a similar benchmarking
exercise--especially in high-risk sectors such as electric power, oil/gas,
coal and the auto industry--and urge companies to raise their performance
level.
Wall Street analysts should use the information as a basis for
rewarding companies that are responding to these challenges, and assigning
greater risk to those that are not.
|
|
