Businesses’ commitment to reducing greenhouse gas emissions has reached a tipping point, claims a new report, despite a rise in emissions over the past five years and a lack of transparency by some high-profile brands.
Just weeks ahead of a critical UN summit on tackling climate change in Paris, an analysis of data from 2,000 of the world’s largest listed companies has found a rise in action on climate change.
It shows that 44% of the companies have set targets for reducing their greenhouse gas emissions, up from just 27% in 2010.
The data - compiled by the not-for-profit CDP - is based on information voluntarily disclosed by companies including Apple, Google, Samsung and Nestle, but with Facebook the largest and highest profile absentee. Collectively those that did respond represent 55% of the market capitalisation of listed companies globally.
While the majority of the world’s major businesses are pushing global leaders to agree to tougher climate emission reduction targets, they are yet to reduce their own emissions.
On a like-for-like basis, direct emissions from the companies analysed by CDP grew 7% between 2010 and 2015. Indirect emissions, associated with purchased electricity, grew 11%.
Despite the rise, CDP says pledges to reduce emissions will start having an impact soon. “The direction of travel is changing. They [the pledges] will take time to feed through and I would argue that these emission figures would be a lot higher without the commitments,” said CDP co-founder Paul Dickinson.
Business is making a difference
Dickinson said he was “surprised” that Facebook remained one of the very few large companies yet to disclose information on its climate impact, emissions or risks. As well as showing a “worrying lack of transparency”, it was also hindering the progress to a lower carbon economy, he said. Facebook had not responded by the time this article was published.
“It’s a mistake to underestimate the influence business has on government,” said Dickinson. “These pledges and actions by a clear majority of companies engaging will greatly embolden government to move ahead and tax and regulate greenhouse gas emissions.
“There is a stupid little group that lobby against scientists, but the vast majority of companies get it and are doing the right thing. That is why I believe we are at a tipping point.”
As well as targets for reducing emissions, around 50% of companies had goals to reduce emissions per unit of output, up from 20% in 2010. This target is seen as more important by observers, given the host of factors that can affect a company’s total emissions, such as mergers or loss of business.
A surprisingly large number – 435 companies – are already using an internal price on carbon, according to the CDP report, which is compiled on behalf of investors looking to evaluate the exposure and action taken by companies.
The most common projects currently being undertaken by businesses to reduce emissions include improving energy efficiency in buildings; installing or building low carbon energy generators; and changing behaviour, such as introducing cycle to work schemes, recycling programmes and shared transport. More than a third (36%) of reporting companies have switched to renewable energy to reduce their emissions.
Short-termism
Although there has been a rise in corporate reporting on climate change, the majority of businesses were still setting only short-term targets for the next few years. CDP says this caution is likely the result of the uncertain policy environment; many businesses will be awaiting the outcome of the Paris climate talks before committing to longer-term targets.
Many companies still remain sceptical about the outcome from the UN summit in Paris. When asked if their board of directors would support a global climate change agreement to limit warming to below 2C, 805 companies said yes, while 111 said no. But there was a large number of respondent companies (1,075) that stated they had no opinion, and 331 did not answer the question.
This suggests either a lack of clarity around the official board position on the issue, says CDP, or that many companies are not treating the imminent climate talks with the necessary strategic priority.
“It’s difficult for the board of a company to come to a decision, that’s why a lot did not answer. But it [the survey answer] shows that when they do get off the fence, they get off on the right side,” said Dickinson.
