Environmental Law

American Companies Lag in Planning Emissions Cuts, Report Says

By Dennis Pfaff and Kevin Livingston, Editors

Big companies in the United States lag far behind others around the globe in trying to reduce the amount of heat-trapping gases they're responsible for spewing into the atmosphere, according to data released by a group that tracks corporate performance in the area.

Two reports, one looking at large companies around the world and the other focusing on American outfits, found similar levels of concern among the corporations. More than 80 percent of the U.S. companies responding to the survey from the Carbon Disclosure Project indicated they perceived some risk from climate change, while overall 74 percent of companies in the global listing expressed similar worries (which varied widely by geography). Corporations also saw opportunities, however, such things as efficient buildings and innovative energy transmission projects. 

At the same time, only about 32 percent of the American companies reported that they had started to establish some kind of target to reduce emissions. On the global charts, more than twice that number -- 74 percent, again -- responded that they had such targets in place.

Citing those figures in its press statement announcing the new reports Monday, the nonprofit disclosure project warned about the about the apparent foot-dragging: 

"This demonstrates that overall many U.S. companies are still lagging behind their global counterparts. The gap between acknowledgment of the risks posed by climate change and positive action designed to reduce emissions needs to be closed." 

But in the same statement Paul Dickinson, the disclosure project's CEO, noted that companies seemed to be increasingly tuned in to the potential impacts on their operations:

“We can see from 2008 responses to CDP a marked increase in levels of
engagement from companies, with more companies reporting than ever before. With increased regulation on the horizon, investors are requiring this information to better understand the creditworthiness of companies in their portfolio and how climate change might affect their profitability.”

The disclosure project, according to its statement, represents 385 global institutional investors with more than $57 trillion in assets under management. It collects climate change data from hundreds of companies and it has assembled what it described as the "largest corporate greenhouse gas emission database in the world." The reports were written by PricewaterhouseCoopers.

Globally, they found that regulatory uncertainty is delaying investment decisions. For some companies, this has translated into a "wait and see" approach.

Despite the suggestion that a relatively small number of U.S. companies is taking steps to reduce emissions, the disclosure project noted more corporations had responded to the survey than in the past, and in more detail. The organization, in its statement and report, suggested companies are anticipating new regulations under the next occupant of the White House and that a price would be placed on carbon through some type of cap-and-trade system.

It also found that a majority of companies responding view climate change as a commercial opportunity, particularly entities involved in construction and building products, as well as manufacturing. Globally, similar trends were seen, with the construction industry looking at opportunities from building energy efficient structures and the technology industry anticipating business from devices to assist in teleconferencing and other products that could help reduce physical travel.  

On the other hand, companies also saw a variety of pitfalls. Manufacturing, for instance, expressed worries over flooding, increasingly intense storms and the spread of disease, while mining companies cited water supply as a critical risk. Utilities expressed concern about a drop in demand for energy as consumers become more aware of greenhouse gas emissions.

Utilities, according to the project's findings, were the most transparent in their reporting. At the other end of the spectrum were Russian companies, none of which responded to the project. Responses among Chinese and Indian companies was also low. The project, without singling out any country or industry, took an obviously dim view of companies that try to stay below the radar:

"Clearly there will be winners and losers in the transition to a low-carbon economy and investors should be concerned about companies who are not able to provide the information they require."    

--Dennis Pfaff of Thelen LLP

Photo of Colorado transmission towers courtesy of U.S. Department of Energy, National Renewable Energy Laboratory, Credit: Warren Gretz

Full post as published by Climate Law Update on September 22, 2008 (boomark / email).