Carbon Action paves the way for investor-led climate actionCDP
The latest Carbon Action research released by CDP shows more and more companies are taking a stand against climate change. CDP’s investor-led Carbon Action brings together an influential group of 329 investors now with US$25 trillion in assets – up from US$6.7 trillion and 35 investors at launch in 2011.
Through to 2016 the group has asked companies, through CDP, to help tackle climate change in three ways: i) make emissions reductions; ii) publicly disclose emissions reduction targets; and iii) invest in emissions reduction projects with a positive return.
This year Carbon Action showed the highest response rate, with 63% of the 1,305 companies targeted this year responding to CDP. Crucially, 522 million tonnes of CO2e was saved due to projects implemented in 2015.
Carbon Action assesses companies in energy intensive sectors including oil & gas, electric utilities, materials, mining & metals, transportation and consumer staples. This year the sample and the methodology has changed and now incorporates Scope 3 emissions as a factor in determining the sample of 1,305 companies, leading to the inclusion of influential media companies and financial institutions.
The research shows climate action makes business sense: based on information disclosed to CDP, carbon reducing projects, on average, have a 3-year return on investment and for every US$5 invested in such projects, one tonne of CO2e is saved.
Companies are also showing greater commitments to tackling climate change: 12% have signed up to at least one of the nine corporate climate action initiatives run by the We Mean Business coalition. In addition, 15 companies within the Carbon Action sample have had their science-based-targets approved by the Science Based Targets Initiative.
There are regional variations, including a higher European response rate as companies are more likely to respond to CDP with a 79% response rate overall. Companies’ forward-looking targets also look positive – on average 85% of constituents in all sectors have emissions reduction targets. An exception is the energy sector with only 66% of companies setting targets.
Carbon Action is set to continue as a benchmark for industrial-scale investor collaboration with companies to drive forward climate action in the coming years as the world adapts to a below 2-degree scenario.
For 2017 the focus will evolve to include: highlighting the new strategic context provided by the Paris Agreement and the Taskforce on Climate-related Financial Disclosure; and requesting that companies sign up to the We Mean Business coalition’s agreed priority initiatives (including Science-Based targets for relevant sectors); while continuing to encourage emissions reductions, including via projects with positive returns.
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