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climate change action lags behind awareness

October 2006

Nine in ten of the world's major companies now fully accept the commercial risks posed by climate change, but less than half have yet taken any significant action to reduce emissions.

Results from the largest analysis yet of the global business response to climate change show that 87 per cent of the 500 biggest publicly traded companies in the world by market capitalization agree that climate change represents 'commercial risks and opportunities'.

Yet only 48 per cent of those had implemented a programme to reduce their greenhouse gas emissions. This was despite the survey's finding that the cost of greenhouse gas reduction is turning out to be less, at $25 (£13) per tonne, than expected.

The Carbon Disclosure Project, an investor coalition that carried out the survey, calculates that companies can reduce their 'business as usual' emissions in 2012 to ten per cent below 2005 levels for less than one per cent of reported 2005 earnings.

It says 'action to cut emissions trails awareness of the issue' in the business world. It estimates that the best positioned company on climate change could have windfall revenues yielding $298million if greenhouse gas regulations are introduced, while the worst could lose 25 per cent of its annual earnings due to regulatory compliance costs.

'Companies have made great strides in their understanding of climate change and its competitive and financial implications,' said CDP chairman James Cameron. 'But awareness and measurement are not translating into sufficient management and activity.'

The CDP, which represents 225 investment institutions with $31.5trillion of assets, sends out questionnaires each year to the world's biggest companies asking them to provide information on their climate change programmes and emissions. The response to this year's questionnaire - the fourth - was the highest to date, with 360 of the FT500 answering, compared with 235 in the first year. Among the companies to respond for the first time were American Express, Boeing, Home Depot and Wal-Mart.

The CDP wrote to more than 2100 companies, gaining 940 responses, up from 350 in 2005. Using the data, CDP has compiled a Climate Leadership Index of 50 sector leaders on climate change disclosure. HSBC, BP, and Rio Tinto head the index.

see also analysis, page nine

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