New research by the Carbon Disclosure Project (CDP) with responses from 80 of CDP’s signatory investors across the globe revealed that three-quarters factor climate change information into their investment decisions and asset allocations.
Of these, more than 80% consider climate change to be important relative to other issues impacting their portfolio. Interestingly, some of the institutions surveyed revealed a willingness to go beyond requesting disclosure on climate change, such as asking companies to reduce their greenhouse gas emissions.
The research results* were released today as CDP announced the issue of its 2009 annual information request for climate change data to 3700 listed companies. The CDP request is made on behalf of institutional investors (signatory investors) with a combined $55 trillion of assets under management. The number of investors that signed the annual information request rose by almost a quarter to a record 475, compared with 385 in 2008, reflecting the rising importance of climate change within investment institutions.
Mercer, a leading global provider of consulting and investment services, analysed the survey results and compiled the report which summarises the ways in which CDP data is being used by investors. It includes responses from asset managers, pension funds, insurers and socially responsible investment funds including Allianz, AXA Group, BlackRock, Goldman Sachs, Hermes Investment Management and Swiss Re.
Other findings from the research include:
- Four-fifths of respondents find CDP data useful and valuable
- Carbon risk and potential legislation are the primary motivators for utilising CDP data
- CDP is the leading source of climate change information among respondents
- Corporate engagement emerged as the principal area in which investors are currently using CDP data, both as a stand alone resource and to back up information from other sources, however a number of investors also commented that systematically incorporating CDP data into financial analysis is in progress and a key goal.
Marc Fox, Vice President of GS SUSTAIN Research at Goldman, Sachs & Co, comments on the use of CDP data: "Climate change strategy, energy efficiency and carbon emissions are increasingly important aspects of companies' ability to uphold competitive advantage across global industries. We incorporate company responses to the Carbon Disclosure Project within our GS SUSTAIN Research methodology."
CDP’s Chief Operating Officer, Paul Simpson, comments: “Following clear indications, from the new US administration and other governments, we can expect to see a marked increase in climate change regulation globally. This will increase the materiality of climate change for investors and drive up costs for companies unable to manage their greenhouse gas inventories and our research shows that investors are already including climate change related issues into their investment decisions. In addition, a near 25% increase in signatories is a clear signal that institutional investors require listed companies to report to CDP as climate change related information becomes increasingly important to investment decisions.”
A total of 90 new investors joined CDP this year, including BBVA, National Bank of Canada, Hyundai Marine and Fire, Impax Group plc and Nordea Investment Management.
CDP’s information request focuses on the following areas that may affect the value of a company:
- Comprehensive corporate greenhouse gas emissions data
- Emissions reduction targets and use of energy
- Risks and opportunities applicable to companies in relation to climate change
- Management strategies to address climate change – including emissions trading
Companies have been asked to respond to CDP’s information request within four months. Individual corporate responses, plus analysis of the data, will be announced in a global launch this September, followed by a series of regional launches through to December and made available free of charge on CDP’s website at http://www.cdproject.net.
About the Research
The investor research was conducted at the end of 2008 with responses from 87 individuals at 80 of CDP’s signatory investors. A signatory investor is an institutional investor that has signed the information request sent out by CDP. The research was sponsored by HM Consulate General and Calvert Group.
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