May 11 2007
US and UK companies need to face up to the realities of climate change and the risks that it poses to their long term interests, Environment and Climate Change Minister Ian Pearson will say later today.
Mr Pearson, addressing a meeting of US businesses in New York, will say that a business’s vulnerability to the threats of climate change is of increasing concern to investors and shareholders. Companies need to respond to this to stay ahead of the game.
Mr Pearson said:
“In the future I expect a company’s carbon statement to be as prominent as its financial statement. That’s because investors are increasingly demanding reliable information about a company’s global carbon footprint, as well what it’s doing to reduce its CO2 emissions. Proper financial reporting is a no-brainer. Carbon reporting must be the same.
“Climate change already poses risks to businesses – and these will only increase in the future. Climate change can affect a corporation’s profitability and investors are right to be asking searching questions about how businesses are facing up to the realities, as well as the business opportunities of climate change. This is not a box-ticking exercise. ‘Green wash’ is of no use to institutional investors when making financial decisions.”
Mr Pearson will this evening announce Defra’s support for the Carbon Disclosure Project (CDP), who will work as Secretariat to the Climate Disclosure Standards Board to agree and advocate a generally accepted international framework for carbon reporting by corporations. CDP already acts on behalf of institutional investors to request information from corporations about their greenhouse gas emissions and plans to manage those emissions.
Mr Pearson added:
“Investors want hard facts and data on a company’s global carbon emissions which includes their operations overseas. That’s why we’re supporting the CDP to work towards a single international carbon reporting standard – one that helps, and doesn’t hinder businesses and investors.
“We are already seeing many hundreds of leading businesses, some of these in the US, take action to measure, manage and disclose their emissions and this is very positive. However, given the scale of the climate change challenge we need more action and those businesses who have not yet engaged need to do so urgently. A logical way to begin is by responding to the Carbon Disclosure Project.
“Companies that adopt a head in the sand strategy are neither going to win over institutional investors, nor reduce carbon emissions. Despite the different approaches of the US and UK Governments to tackle climate change, businesses on both sides of the Atlantic need to engage with this issue and shape a future carbon footprint reporting requirement that will become the common carbon language for companies and investors all over the globe. Climate change knows no borders, as a company’s emissions in Africa may soon reflect on a company’s profitability in the US.”
Carbon Disclosure Project Chief Executive Officer, Paul Dickinson said:
“The UK Environment Department’s leadership is helping to facilitate and advance the global debate about best practice on accounting for greenhouse gas emissions and climate risks and opportunities. Working with the support of Defra, we are confident that we can build on the strong foundations already laid for climate reporting to accelerate the provision of information which will in turn be used to elicit a rational response to climate change. We believe that this important work in defining a globally agreed reporting standard for greenhouse gas emissions will assist in the efficient development of a global cap and trade scheme.
"For five years CDP has been pleased to be able to serve the world’s largest coalition of investors by collecting data and information for them on the risks and opportunities resulting from climate change. Our website is the world’s largest registry of corporation’s greenhouse gas emissions and corporations’ strategies on climate change. We are working hard to expand the quality and quantity on this information."