Dirty little secrets
Despite a worldwide trend for transparency on carbon footprints, New Zealand companies are slow to show their hands.
Just 22 of the top 50 New Zealand listed companies revealed their contribution to climate change to the Carbon Disclosure Project this year. That compares with 73 per cent of the ASX top 100 and more than 90 per cent of the largest firms in the European Union.
“It’s hard to see why New Zealand companies think they are exempt,” says Paul Dickinson, the project’s executive chairman.
The former corporate communications specialist set up the project nine years ago because of his concern about climate change.
“I thought climate change created risks and opportunities for investors, but in 2001 there wasn’t an efficient system for them to gather information,” Dickinson says.
“We started with a small group of funds who had US$4 trillion under management. We now have 551 investors with US$71 trillion in investments. “That’s a lot of financial authority. When a corporation reports to us, it reports to more than 500 investors at the same time.” The not-for-profit trust makes its data freely available through its website and via information providers like Bloomberg. It’s funded by payments from some of the investors, such as the Norwegian government’s sovereign wealth fund, and through consultancy. Dickinson says while some individual executives may deny global warming, corporations aren’t anti-science.
“The corporation is a collective intelligence. It is far less random than citizens.” There is money to be made from the information collected, both by companies and by investors.
“One consultant told us a $100 billion food company estimated it spent $1 billion on energy. He suggested its supply chain consumed another $20 billion. That’s an indication of how much money there is in the energy discussion,” Dickinson says. “People are talking about a new energy measurement, the negawatt – a watt avoided.” He says there will be winners and losers for investors. “Rail, insulation, video conferencing as a substitute for business travel could be good investments.”
He says governments feel they have a responsibility to support industries that keep their country wealthy, but those industries will not necessarily be ones dependent on fossil fuels.
Companies fear customers will shift against companies and products seen to be damaging the environment.
“There’s a democracy in how people invest and spend their money. When you shop, you vote,” Dickinson says.
The 2011 CDP Australia and New Zealand Report detected a two-speed response to climate change, with the financials sector including banking and real estate integrating climate change into strategy and business planning, but other sectors lagging behind. Despite noise in the media, only four per cent of companies considered carbon pricing as a serious business risk, with more firms concerned at the risk of extreme weather events. Nathan Fabian, the Sydney-based chief executive of the Investor Group on Climate Change, says as well as providing investors with information they can’t get anywhere else, CDP also gives guidance on what companies can do to reduce emissions.
“Investors across the economy want to see companies that can reduce emissions early at a relatively low cost. If companies wait and have to do it urgently or make deep cuts, there will be higher costs,” he says.
“That’s a lot of financial authority. When a corporation reports to us, it reports to more than 500 investors at the same time.”