Some interesting insights came to light in the 2014 version of the annual CDP S&P 500 Climate Change Report. Overall the report suggests that companies in the S&P 500 are actively managing and planning for climate-change and the companies that do so are more profitable. The report indicates that for companies that are addressing climate change the return on equity was 18 percent higher than their peers and 67 percent higher than companies who do not disclose on climate change. The dividend yield for shareholders was 21 percent stronger then low ranking peers.
Further their results indicate that such efforts make them more stable with 50 percent lower volatility earnings over the past decade than low ranking peers.
As explained in the report, “Investors should take note that the debate has squarely moved from the moral to the material and should reward climate leaders with higher valuation multiples.”
In addition to making some global observations, the report ranks
companies based on their climate related disclosures to investors. Two
indices are included in this report. the Climate Disclosure Leadership Index (CDLI) — a measure of a company’s transparency — and the Climate Performance Leadership Index (CPLI), a measure based on the transparency of the company’s actions to address climate change.
Bank of America, Cisco, General Motors and HP are among the eight leading S&P 500 companies in carbon-reduction efforts and disclosure. These companies along with Autodesk, BNY Mellon, Pepco Holdings and Spectra Energy, all earned an A grade for their actions to reduce climate change and the highest possible disclosure score, 100 out of 100 points.
To access the full report click here (PDF)
© 2014, Richard Matthews. All rights reserved.
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