CDP launches new focus on energy sector

3rd November 2014

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Peter Howden

The Carbon disclosure project (CDP) is to target oil and gas production companies since so few in the sector have emerged as leaders on climate change action.

The latest CDP list of global leaders on emissions reduction contains only six oil and gas production companies. Of these, only three have set absolute targets for emission reductions. To improve performance, the CDP said it will trial a sector-specific approach from next year.

The pilot project will involve consulting directly with investors and industry representatives to develop guidance to drive consistency of reporting among oil and gas comanies. The CDP will also establish sector-specific scoring to better assess companies’ level of ambition on addressing climate change, and how comprehensive the information they provide publicly.

The CDP is hoping that the work will help the oil and gas sector to produce data that is more meaningful to investors, incentivise transparency and catalyse action.

If the pilot is successful, the CDP hopes to roll it out to other sectors, which will be prioritised according to their dependence and impact on climate change, water and deforestation.

Several sectors, notably IT and finanical seervices, are much better represented on the CDP’s leadership list.

The CDP found that companies in the vanguard of taking action to mitigate climate change generate better returns for shareholders than those that are sluggish in their response. It commissioned investment advisers ECPI to compare the market performance of companies on its leadership list (CPLI) against both a broad market index and a global sustainability index between 2010 and 2014.

The comparator indices were the Bloomberg world index and the Dow Jones sustainability world index (DJSWI). Over the four-year period, the CPLI gained 37.53%, outperforming the Bloomberg world index, which gained 34.24%, and the DJSWI, which increased by 31.38%.

Paul Simpson, chief executive officer at the CDP, said: “The businesses that have made it on to our first global list of climate performance leaders are to be congratulated for their progress; they debunk economic arguments against reducing emissions.”

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