S&P 500 Companies Leading on Climate Change Action Have Doubled in Number, According to CDP's Annual Analysis of US Companies Compiled by PwC Superior Environmental Disclosure is Linked to Financial Performance, Says New Study by CDP and SICM

NEW YORK, Sept. 23, 2013 /PRNewswire/ -- Two new studies released at the New York Stock Exchange today by CDP – formerly known as the Carbon Disclosure Project, in conjunction with PwC and Sustainable Insight Capital Management, Inc. (SICM), respectively demonstrate that CDP leaders who incorporate environmental factors into their business strategies are mitigating climate related risks, finding opportunities to strengthen their businesses and delivering higher profitability than their industry peers.

The findings of these two complementary reports add significantly to the body of knowledge on the role of environmental factors in corporate performance.   

CDP's President, North America, Tom Carnac says: "The release of today's report findings show the link between climate change management and superior financial performance is building. These two studies validate that relationship by exhibiting how companies incorporating environmental stewardship into their business model and investment decision making process can gain strength and protect their competitive advantage."

The CDP S&P 500 Climate Change Report, by CDP and PwC, provides an annual update on greenhouse gas emissions data and climate change strategies at America's largest public corporations in response to CDP's disclosure request from 722 investors representing $87 trillion. This year, seventy-seven percent of respondents (258 companies) reported an increase in climate change exposure, up from 61 percent in 2012, with extreme weather topping the list of highest-impact. In response, the report showed:

  • S&P 500 companies investing on average over four percent of annual capital expenditure in emissions reductions, representing $50 billion worth of investments on a range of emissions reduction activities and energy-saving processes. The energy sector leads with a reported $27.3 billion invested, followed by utilities with $13.7 billion invested. Greenhouse gas emissions were reported to have been reduced on aggregate by 6.1%.
  • S&P 500 companies reported $4 billion in monetary savings from their investments in emissions reductions, including product design innovations ($1.2 billion), energy efficiency processes ($991 million), and changes to their transportation fleet and use ($709 million).
  • Twenty companies generated 85 percent ($3.5 billion) of the monetary savings reported by all the respondents and twenty companies accounted for nearly 90 percent of the carbon emissions reductions. The seven companies who overlap both of these lists are Ameren Corporation, AT&T, Dell, Exelon Corporation, Northeast Utilities, Wal-Mart Stores, Inc. and Waste Management.
  • Companies from the S&P 500 on the 2013 Climate Performance Leadership Index (CPLI)[1] more than doubled in number from 2012, demonstrating the significance of incorporating climate change risks and opportunities into their overall business strategy.

PwC SBS partner Doug Kangos added that the results of the 2013 report indicate a turning point in the corporate response to climate change. "The overarching story is business transformation. Leading companies are innovating to create value on many levels while demonstrating increasing sophistication and confidence in addressing the risks and opportunities associated with climate destabilization," Kangos said.

The complementary report covering the Global 500, Linking Climate Engagement to Financial Performance: An Investor's Perspective, released at the same event and co-written by CDP and Sustainable Insight Capital Management, shows that superior transparency on climate engagement is associated with higher financial performance.

The analysis is based on the CDP disclosure scores[2] of 702 companies covered in CDP's Global 500 climate change reports from 2008 to 2012. Using peer to peer comparisons, companies were ranked by industry and split into quintiles by their CDP disclosure score, then examined against various metrics of financial profitability. The analysis shows that industry leaders in the first quintile based on their relative CDP scores, provide a higher return on equity (+5.2%), more stable cash flow generation (+18.1%) and higher dividend growth (+1.6%).

The analysis leverages CDP's unique data set on corporate engagement on climate change to demonstrate that strategic management of climate change risks and opportunities is reflected in the underlying financial performance of companies.  

US S&P 500 companies' CDP disclosure and performance scores are listed in full in the CDP S&P 500 Climate Change report released today.

Kevin Parker, CEO, Sustainable Insight Capital Management says: "We are pleased to partner with CDP, the world's largest repository of corporate climate change data, to explore the relationship between corporate financial performance with respect to one of the most critical sustainability issues of our time - climate change. This analysis, one of the most extensive studies on the link between corporate profitability and climate change engagement to date, shows that industry leaders are not only taking critical steps to establish the requisite governance, management systems and environmental efficiencies to engage on climate, but that they are also generating superior profitability, cash flow stability and dividend growth for investors"

Marc Fox, CDP advisor and co-author of the SICM report, adds, "Our analysis of CDP data in a financial context demonstrates that the top quintile of companies on CDP across global industries deliver higher underlying profitability with more stable cash flow and higher dividend growth than industry peers. We hope this analysis facilitates broader uptake by both investors and corporate investor relations linking engagement on climate change and corporate profitability".

Bruce Kahn, Ph.D., Portfolio Manager, Sustainable Insight Capital Management and co-author of the report says, "Our collaboration with CDP provides further evidence of the link between climate change engagement and financial performance, another critical source of information for us when making investment decisions."

The US top fourteen companies on disclosure and performance in 2013

Company Name

Sector

Disclosure Score

Performance Band

BNY Mellon

Financial Services

100

A

Cisco Systems, Inc.

Information Technology

100

A

Entergy Corporation

Utilities

100

A

Autodesk, Inc.

Information Technology

99

A

Northrop Grumman Corp

Industrials

99

A

NYSE Euronext

Financial Services

99

A

Hewlett-Packard

Information Technology

99

A

Bank of America

Financial Services

98

A

Best Buy Co., Inc.

Consumer Discretionary

98

A

Ecolab Inc.

Materials

98

A

Exelon Corporation

Utilities

98

A

Goldman Sachs Group Inc.

Financial Services

98

A

Raytheon Company

Industrials

98

A

Spectra Energy Corp

Energy

98

A

Emissions data on S&P companies responding to CDP can be found in the appendix of the S&P 500 report at https://www.cdproject.net/CDPResults/CDP-SP500-climate-report-2013.pdf. Individual public company responses to CDP can be downloaded at https://www.cdproject.net/en-US/Results/Pages/responses.aspx.

Today's event marking the release of CDP's two reports: the S&P 500 Climate Change Report, Investment, transformation and leadership  and Linking Climate Engagement to Financial Performance: An Investor's Perspective takes place at the  New York Stock Exchange from 6pm8pm.  All attendees must pre-register due to security at NYSE.  To register, journalists should contact: events-northamerica@cdp.net or call  212.378.2086. ###

Note to Editors
About CDP
CDP is an international, not-for-profit organization providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information.  CDP works with market forces, including 722 institutional investors with assets of US$87 trillion, to motivate companies to disclose their impacts on the environment and natural resources and take action to reduce them.  CDP now holds the largest collection globally of primary climate change, water and forest risk commodities information and puts these insights at the heart of strategic business, investment and policy decisions.  Please visit www.cdp.net or follow us @CDP to find out more.

About PwC
PwC firms help organizations and individuals create the value they're looking for. We're a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com. © 2012 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.  PwC's Sustainable Business Solutions practice provides practical strategies to help businesses address strategic, compliance, operational, reputational and financial sustainability-related issues. Our global network of firms has more than 700 assurance, advisory, and tax professionals who are dedicated to providing sustainability and climate change business advice. Leveraging our deep industry knowledge, we help clients achieve sustainability goals, capitalize on efficiencies, mitigate risks, and find solutions that can lead to long-term profitability. To learn more, visit www.pwc.com/us/sustainability.

About Sustainable Insight Capital Management
Sustainable Insight Capital Management (SICM) is an investment management firm that combines a disciplined alpha-generating process with environmental, social and governance (ESG) principles. Founded by a recognized management team in the sustainable and climate change space, SICM is striving to create the leading sustainable asset management platform.

SICM believes that today's most forward-thinking companies are responding to challenges and opportunities created by population growth, natural resource scarcity, climate change, urbanization and globalization. SICM's research suggests that markets are inefficient and not accurately pricing securities to reflect these macro trends.

Sustainable investing involves identifying the most enlightened managed companies that promote corporate environmental stewardship, waste reduction, consumer protection, human rights, and diversity.  Leaders who manage these sustainability risks have historically demonstrated superior performance, stable cash flow and higher dividend growth over time. 
Please see www.sicm.com for more information.

The above research materials are for informational purposes only.  They are not an offer or solicitation for any security or investment product managed by SICM and should not be construed as investment advice.  Investment strategies implemented by SICM on behalf of its clients may or may not trade or hold positions in the securities referred to above. Further, investment accounts managed by SICM may or may not employ strategies based on or related to the above research.


[1] The Climate Performance Leadership Index (CPLI) marks companies that are implementing a robust climate strategy and approach to reducing emissions.

[2] The Climate Disclosure Leadership Index (CDLI) identifies companies that are the most climate transparent. The index comprises those that score within the top ten percent for the quality of the data they disclose.

SOURCE PwC US



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