You might ask why these companies bother reporting and reducing their carbon emissions. Here are three good commercial reasons:
1) To please customers: Research shows some consumers are more likely to support companies they see doing things to reduce their environmental impact. Look at these two statistics from a Carbon Trust survey* of 500 UK adults aged between 18 and 25:
57% said they would stop buying a product if its manufacturer refused to commit to measuring and reducing its carbon footprint.
55% said they would be more loyal to a brand if they could see it was taking steps to reduce its carbon footprint.
2) To comply: Large companies are required by law to report their carbon emissions.
In 2013 the UK introduced Mandatory Carbon Reporting. Listed companies must report their carbon emissions alongside their financial accounts, using a robust method like the GHG Protocol Corporate Standard.
In 2017 that becomes standard practice right across the EU. Then some 6000 or so companies (typically listed on an EU stock exchange and having more than 500 employees) will be required to report their non-financial information including carbon emissions in their annual management report.
It’s only natural that given this information has to be publically disclosed, companies with public targets to reduce their emissions will want to report the lowest number possible.
3) To enhance their company’s value: Large investors expect transparency on companies’ environmental performance as much as their financial performance. Such “responsible investors” consider environmental data in their assessment of the long term risks of investing in a particular company. The idea being that if the company is aware of its impact on the environment, it is better placed to manage associated risks (like resource scarcity) and likely to have a sustainable business model over the long term. (Want to know more? Watch this 3 minute video from CDP.)
That’s why many large companies have been reporting this information for years through organisations like the CDP (formerly Carbon Disclosure Project) . To help large institutional investors understand the long term viability of their businesses and attract their investment.
Also, new research from CDP shows that transparency and control of carbon emissions affects corporations’ cost of debt. In summary, carbon savvy corporations pay lower interest rates.