Major global brands including BT Group, Danone, Microsoft and Sony have been named among 179 companies on a prestigious ‘A-list’ for their leadership on corporate transparency and action on climate change, released today by global non-profit climate research provider CDP.
Designed to harness the competitive spirit of business to raise ambition and spur action on tackling climate change, CDP scores thousands of companies which disclose environmental data through its platform each year at the request of their corporate customers and investors.
Data from STOXX has shown that the A-list has outperformed its global benchmark by an average of 5.5% per annum over a seven-year period, indicating transparency and leading action on climate change are correlated with financial success.
Out of over 8,000 companies scored on their 2019 disclosures, just the top 2% made the A-list this year, including AstraZeneca, BT Group, CVS Health, Danone, H&M, Klabin, The LEGO Group, L’Oreal, Microsoft, Nestle, Ørsted, Sainsburys, Samsung Engineering, Sony, Unilever and Walmart.
The A-list companies are considered leaders because of their transparent and comprehensive disclosure of climate data, thorough awareness of climate risks, demonstration of strong governance and management of those risks, and demonstration of market-leading best practices. Examples of best practice could include setting science-based targets, shifting to renewable energy, investing in low-carbon product innovation, using internal carbon pricing or incentivizing suppliers to reduce their emissions.
The companies on the A-list hail from 22 countries. The countries with the headquarters of the most A-list companies are Japan (38), the U.S. (35) and France (22). Regionally, Europe hosts the most A List companies by far, with nearly half of the global total (85 companies), followed by Asia (51) and North America (36). Only four companies headquartered in Oceana are on the list (all in Australia), and two in Latin America (Brazil) and one in Africa (South Africa).
Dexter Galvin, Global Director of Corporations and Supply Chains at CDP, said: “Congratulations to the companies on the A-list for blazing a trail for others to follow. Other companies should look to these leaders for inspiration and learn from them. The latest science says we need global emissions to urgently peak and start declining by 7.6% a year to avoid the worst impacts of the climate crisis. It’s clear that global business has a critical role to play in this existential challenge. Companies can and should become part of the solution rather than part of the problem. This also unlocks opportunities for fast-moving companies to get ahead, with the STOXX Climate Leaders Index showing that those on the CDP A List outperform their peers on the stock market by 5.5% per annum. Leading on climate action is good business in today’s economy – it will be essential business in tomorrow’s economy”.
CDP data shows investors and purchasers are calling for transparency and action from companies on how they are responding to climate change. In 2019, 525+ investors with US$96 trillion in assets and 125 major purchasers with US$3.6 trillion in procurement spend requested companies to disclose through CDP and 8,400 companies responded – a 20% increase on the previous year.
Gilles Cutaya, Deputy CEO at French investment managers CPR Asset Management, commented: “At CPR Asset Management, we’re convinced that investing in climate leaders today is set to bring long-term value to our clients. We need to know how exposed a company is to environmental risks and their long-term strategy for the low carbon transition, in order to identify future market leaders. Thanks to their unique and longstanding leadership in the climate field, the highly respected CDP ratings are at the heart of our investment process.”
Examples of leadership and innovation from the climate A List companies include:
- Japanese technology company Fujitsu Limited is working on developing quantum computers, which consume 1/500 of the electricity that average super computers use;
- Sony Corporation is making its new gaming consoles more energy efficient – with the new PS4 being 28% more energy efficient than the previous model;
- The LEGO Group is increasing its use of recycled materials and plant-based plastics, aiming to use sustainable materials for all packaging by 2025 and all products by 2030;
- Danone forged a partnership with LOOP Industries, which developed a way to produce FDA-approved virgin-quality plastic food packaging made from recycled plastic waste;
- Walmart is engaging with its suppliers to cut their emissions through its flagship Project Gigaton, which aims to avoid one billion metric tons of greenhouse gas emissions from its value chain by 2030;
- American hardware company Stanley Black and Decker is creating efficient off-grid water pumps in India as an alternative to diesel-powered pumps.
Further reading: Rising to the challenges of climate change investing