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How are European corporates reporting on climate change?

The CDP's 2017 Climate Change Report looks at how Europe's biggest companies are disclosing relevant climate change data – but 26% are still not setting emissions reduction targets.

The CDP (formerly the Carbon Disclosure Project) analysed how 540 European companies disclose relevant climate change data. The majority of those – 94 per cent (508) – have an individual or committee overlooking climate change issues and three-quarters of companies (407) set incentives related to climate change adaptation and mitigation. Many of the companies (78 per cent) have a monetary incentive system linked to environmental performance in place, while others use non-monetary incentives such as employee recognition (18 per cent) or reducing emissions related to employee commuting (used by 4 per cent of companies).

89% say climate change 'integrated into business strategy'

Most of the companies – 89 per cent or 483 – said that climate change is integrated into their business strategy and a similar number have identified climate-related risks for their businesses (such as physical, regulatory or reputational risk). But many of those companies (88 per cent) have also identified climate-related opportunities for their businesses. Just 12 per cent of companies said they have not identified any climate change related risks and opportunities.

This graph shows that most reported risks and opportunities are related to potential changes in regulation. The most commonly cited regulatory risks were regulations around fuel/energy taxes (17 per cent); cap and trade schemes (13 per cent); carbon taxes (11 per cent); and regulatory uncertainty (9 per cent). The report states: “The top three reported regulatory risks all refer to energy and emissions-related taxes. Many companies have also identified the same themes as opportunities.”

The vast majority of companies (92 per cent) were able to provide data on their direct greenhouse gas (GHG) emissions (Scope 1), while 84 per cent disclosed their Scope 2 emissions data. Scope 1 refers to emissions over which a company has direct control, or “emissions from sources that are owned or controlled by the organisation”. Scope 2 refers to “emissions from the consumption of purchased electricity, steam, or other sources of energy (e.g. chilled water) not generated directly by the organisation”. The CDP report found that, when comparing corporate Scope 1 and 2 emissions with the previous year, 54 per cent (290) of responders reported an overall decrease in emissions volume, while 34 per cent (183) of responders reported an overall increase. The report also noted that collecting or estimating Scope 3 data is particularly challenging for most companies. Scope 3 GHG emissions that are not directly owned or controlled by a company, such as employee commuting, business travel, third-party distribution and logistics, and emissions from the use of sold products.

The report also found that, of the 540 companies analysed:

  • 419 disclosed that they have emissions reduction targets in place;
  • 154 said that they have renewable energy consumption and/or production targets;
  • 140 had both emissions reduction and renewable energy targets;
  • 107 did not yet set emissions reduction targets at all.

The report noted: “Based on several years analysis of CDP data, companies that have set emissions reduction targets are much more likely to reduce their emissions.”

This item appears in the following sections:
Sustainable Green Treasury
Sustainable Business Models
Sustainable Investing
Sustainable Risk Management

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