By James Murray, Source: BusinessGreen

Climate change remains a top priority for senior executives at many of the world’s largest businesses, as growing numbers attempt to develop strategies for managing direct climate change impacts.

That is the conclusion of the latest Global 500 report from the Carbon Disclosure Project (CDP), which reveals that 81 per cent of companies responding to the NGOs survey have now identified physical risks to their organisation arising from climate change, while over a third see these risks as a “real and present danger”, up from just 10 per cent in 2010.

The report also revealed 96 per cent of responding companies now have a board level executive with specific responsibility for climate change strategy, up from 93 per cent last year, while the number of firms integrating climate change into their over-arching business strategies rose from 68 per cent to 78 per cent.

The CDP, which acts on behalf of 655 institutional investors representing $78tn (£48tn) of assets, surveys the Global 500 companies each year on their carbon emissions and their climate change strategies.

Just over 400 companies responded to the requests for information this year, representing 81 per cent of companies on the Global 500.

Speaking to BusinessGreen, CDP chief executive Paul Simpson said the level of response to the organisation’s inquiries had not improved since last year, suggesting that the high-profile survey had now reached “that high-profile group who probably won’t report publicly now until legislation compels them to do so”.

Notable absentees from the list of companies that refused to disclose information on their climate change performance included Apple, Berkshire Hathaway, Royal Bank of Canada, Caterpillar and Amazon.com.

In contrast, the report revealed that those companies that have disclosed information on their carbon output have cut emissions by contributing 13.8 per cent, from 3.6 billion metric tons in 2009 to 3.1 billion metric tons in 2012.

Simpson said businesses were also developing increasingly sophisticated climate change strategies, often in response to the growing physical risks they face as a result of extreme weather events, such as the record heatwaves and droughts experienced in the US and Russia and the recent floods in the UK and Thailand.

“Companies are seeing more impacts to their supply chains and operations due to extreme weather events and that is keeping climate change near the top of many businesses’ lists of priorities,” he said. “There is no evidence it is falling down the agenda, despite the tough economic backdrop in many countries.”

However, the report warns that despite encouraging progress from many firms the emission reduction targets that have been adopted by the Global 500 would only deliver average year-on-year savings of one per cent, well short of the four per cent a year governments said were required at last year’s Durban climate change summit.

“Even with progress year on year, the reality is the level of corporate and national ambition on emissions reduction is nowhere near what is required,” said Malcolm Preston, global lead for sustainability and climate change at PwC, which helped compile the report for the CDP.

“The new ‘normal’ for businesses is a period of high uncertainty, subdued growth and volatile commodity prices. If the regulatory certainty that tips significant long-term investment decisions doesn’t come soon, businesses’ ability to plan and act, particularly around energy, supply chain and risk could be anything but ‘normal’.”

Simpson warned businesses would have to face major changes in their operating environment regardless of how industrialised economies respond to rising climate change threats.

“At some point there is going to be a crunch,” he said. “Either governments are not going to meet the targets agreed at Durban and climate change impacts are going to be even more serious than expected, or they are going to try and meet those targets and are going to put a lot more pressure on businesses to deliver deeper cuts in emissions.”

The report identified a small number of firms as “carbon disclosure leaders” and “climate performance leaders” who received plaudits for their levels of transparency and the effectiveness of their emission reduction programmes.

Joint top of the list was chemicals giant Bayer and food conglomerate Nestle, followed by German-based multinationals BASF and BMW, Gas Natural SDG from Spain, and Diageo from the UK.