Attempts to reduce Greenhouse Gas (GHG) emissions via international agreements such as the Kyoto Protocol have proved problematic. Individual governments have been reluctant to develop hard limits on emissions, often based on the fear that economic growth will be stunted, and that big companies would relocate to nations with laxer regulatory regimes.
The Carbon Disclosure Project (CDP) attempts to side step these national interests by focusing on individual companies rather than on nations. CDP collates information from thousands of the top performing companies worldwide, and presents this information to institutional investors to inform decisions based on climate strategies, carbon emissions, energy usage and reduction.
CDP has been collating climate change information from companies since 2003; South African companies have been participating since 2007. Each year the top 100 JSE listed companies have been reporting voluntarily not only on their emissions but on their reduction activities and strategic imperatives associated with climate change including a detailed breakdown of associated risks and opportunities and ways of managing these.
Over the years, CDP has shifted focus from disclosure towards performance, and we can anticipate that this trend will continue even more so in 2015.
According to CDP, it appears that South African companies are not only measuring their performance, but have also begun the phase of taking practical steps to implement reduction solutions in order to improve their CDP disclosure.
Companies now need to put energy into developing intelligent environmental sustainability policies, strategies, targets and action plans in order to maintain a results-driven momentum within their sustainability initiatives. We anticipate on-going performance success from a number of the forward-thinking companies that we are currently guiding along this monitoring and performance management path.
South African companies have consistently been raising the bar in terms of CDP reporting, and this was shown again in the recently released eighth consecutive annual report for the South African business sector (CDP South Africa 100 Climate Change Report 2014).
We would like to congratulate all companies that managed to submit a voluntary response, including the 15 companies that responded without an invitation.
GCX Africa have been assisting companies on CDP for over 5 years and are proud to have assisted 12 of the top 100 listed JSE respondents (and an additional 3 voluntary respondents) in submitting a response and providing verification services to some other respondents. Our strategic services and practical solutions that we now offer companies to reduce emissions are further enhancing the performance of many of our clients.
From our perspective, it is clear that the companies that we are assisting have been making marked improvements in their submissions. If you are interested to find out how we can help you with your CDP submission, please get in touch with us soonest. The deadline for submissions to CDP are 30 June 2015.
Key Findings from CDP 2014
1. South African companies have continued to improve their disclosure and standards are now generally high. This is an important indicator of progress, as disclosure is a critical first step in driving performance.
2. Companies demonstrate the attention they are giving climate change by increasingly recognising climate change as a significant and near-term issue. While most companies see the issue as a risk, some companies see important opportunities.
3. There have been improvements in climate change performance, with nine companies making the Global Climate Performance Leadership Index.
4. Despite the improvements in performance, there is a gap between the recognition of risk (or opportunity) and the management actions that companies are taking. In some key areas, South African companies are lagging behind the Global 500 performance.
5. While more companies are voluntarily establishing reduction targets, the scale and ambition of most companies’ emission reduction targets does not yet match the scale of the challenge or the contribution promised by South Africa.
6. Although there has been a small reduction in total reported emissions, this reduction appears to reflect methodological and sampling issues rather than a significant change in underlying performance.
7. While the proposed carbon tax is reported as a significant risk by many companies, there are substantial differences in the perceived magnitude of the impact and the required management response.
8. Too few companies seem to appreciate the climate change risks or emissions levels in their value chain, even though some companies are providing more accurate reporting.
Tips to enhance your CDP 2015 reporting achievements
CDP scoring will be shifting to place more weight on performance. Take note of these tips from GCX Africa on submitting and achieving in CDP 2014:
· Prepare for response early: set up your response plan or arrange for assistance in advance
· Review other companies’ responses
· Ensure processes and data management systems are in place
· Consider verification for strong disclosure (also, points are awarded for verifying Scope 1 and 2 separately from Scope 3)
· Ensure that you are including material Scope 3 emissions in your disclosure.
· Set realistic but ambitious targets (absolute and/or intensity-based)
· Make sure you are able to track performance, to take advantage of disclosing achievements
· Stay up-to-date with any initiatives that you have implemented
· Ensure that you are able to measure the effect of those initiatives to disclose and improve performance
· Ensure that your climate strategy is integrated into your business strategy
Written by Ohad Shachar
To find more information about the Carbon Disclosure Project visit their website, or download the CDP South Africa 100 Climate Change Report 2015.