Companies lag in climate change disclosure

The Carbon Disclosure Project (CDP), the Sustainable Business Council and Deloitte launched on February 14, the ‘CDP Australia and New Zealand Climate Change Report,’ which analyses how NZX 50 and ASX 200 businesses are tackling climate change.

This CDP report, written by Deloitte on behalf of 655 institutional investors representing US$78 trillion in assets, provides an annual update on greenhouse gas emissions data and climate change strategies at the largest listed companies in New Zealand and Australia.

Poor performance

A key finding is that New Zealand companies are falling behind and need to improve their climate change disclosure if they are to satisfy their investors and customers.

The average carbon disclosure score for NZX 50 companies fell from 49 in 2011 to 47 last year, below the average scores of their international peers in countries like Australia (ASX 200 – 65), UK (FTSE 350 – 66), and the USA (S&P 500 – 70).

Disclosure scores below 50 are considered low quality, while score of 50-70 are mid-range and 70+ high quality.

The maximum possible carbon disclosure score is 100.

On a global scale, more than 4000 companies disclosed climate change information through CDP in 2012.

This included over 80% of the 500 largest listed companies in the world, and over 2000 suppliers.

Credible ranking

According to a recent ‘GlobeScan’ and ‘SustainAbility’ Survey of 850 sustainability professionals in 70 countries, CDP is considered the most credible corporate sustainability ranking.

The report also recognises five NZX 50 companies on the CDP NZX 50 Carbon Disclosure Leadership Index for the high quality of their carbon disclosure.

These are ANZ Banking Corporation, Telstra Corporation, Westpac Banking Corporation, Fletcher Building and AMP.

Air New Zealand, Telstra and Sky Network TV significantly increased their carbon disclosure scores in 2012.

Westpac scores

Westpac was also recognised for its high carbon performance, and is the only company included on both the CDP NZX 50 Carbon Performance Leadership Index and the CDP NZX 50 Carbon Disclosure Leadership Index.

Penny Nelson, Executive Director of the Sustainability Business Council (SBC), said that it was heartening to see Westpac recognised for its high quality carbon disclosure and performance.

“Westpac is the only NZX 50 company recognised on both the CDP NZX 50 Carbon Disclosure Leadership Index and the CDP NZX 50 Carbon Performance Leadership Index, setting an example to other New Zealand companies. SBC and the Carbon Disclosure Project would be happy to work with any companies wanting to improve their carbon disclosure and performance and raise their international competitiveness,” she said.

An increasing number of NZX 50 and ASX 200 companies are also identifying and considering climate change risks and opportunities from reputation and changing consumer behaviour, areas often considered less tangible.

About 37% of ASX200 and NZX50 companies report reputational risks, an increase from 34% in 2011.

Action call

SBC Chair Brett Tomkins said that it was a call to action to New Zealand as a contributor to global supply chains.

“New Zealand is well behind the rest of the world, with overall low quality climate change reporting. This should be a wakeup call for business,” Mr Tomkins said.

Australia and New Zealand Director of Carbon Disclosure Project James Day said, “Many NZX 50 companies do not appear to be realising all the business benefits that good environmental disclosure can deliver through CDP.

“This is surprising, as many New Zealand companies have good climate change and sustainability stories that can be backed up by credible, independently verified data. For instance, more New Zealand utilities could be disclosing their carbon efficient electricity generation to their investors through CDP, as low carbon electricity grid is not widely known about outside the country.”

Source: BusinessNZ, Wellington

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