The numbers are in: Canada’s Carbon Disclosure Project participation is growing according to 2012 report

Four Chimneys and SmokeBy: Meirav Even-Har, Toronto

This year's Carbon Disclosure Project (CDP) Canada has received the biggest response to date. Then again, each year the number of reporting companies grows as the importance of climate change disclosure becomes more prevalent to business. This October, the CDP Canada 200 Climate Change Report 2012 was released. Written by Accenture Canada, the report is released on behalf of 655 investors representing US$78 trillion in assets. "Canadian companies are tackling the challenge of climate change head-on, and moving toward a model of superior, forward-looking leadership that has a better understanding of their carbon risk profile," said Michael Denham, President and Country Managing Director at Accenture Canada, in a press release.

Each year the Investor CDP Information Request is sent to Canada's 200 largest publicly traded companies on the Toronto Stock Exchange (TSX) by market capitalization. So why does all this matter? In the opening message of the CDP Canada 200 report, Carbon Disclosure Project CEO Paul Simpson notes, "Last year, Intel lost $1 billion in revenue and the Japanese automotive industry lost $450 million of profits as a result of the business interruption floods caused to their Thailand-based suppliers. It is vital that we internalize the costs of future environmental damage into today's decisions by putting an effective price on carbon."

Twenty Companies recognized in Carbon Disclosure Leadership Index

The top 10% of companies by carbon disclosure scores are recognized in the Carbon Disclosure Leadership Index (CDLI). Among the twenty companies named, the Energy sector is leading with 35% of representation, followed by Financials at 20% and tied at 15% are the Industrials and Materials sectors. In the top twenty companies, Barrick, Cenovus, Tim Hortons and Bank of Montreal were named. In a press release Barrick's Vice President of Environment Bill Williams said, "Our approach is to continuously improve our performance and manage the business risks associated with climate change. Our inclusion in this respected index validates our efforts to manage our impacts in a transparent and responsible manner." This is the third consecutive year the company has been named to the CDLI. The full list of CDLI companies can be found in the report (see link below).

Highlights from the Canada 200 Report

1) Companies identify more climate change risks with a direct short-term impact on their business

The largest risk identified by Canadian responding companies was regulatory risk, followed by physical. The uncertainty around new regulations, specifically, carbon and fuel taxes were most frequently reported as a regulatory risk. According to the report, the total number of risks related to climate change has increased by 8%. Physical risks include extreme weather, while damage to reputation was cited in the "other" risks category.

Setting climate change risk into context, Bloomberg Chairman Peter Grauer writes, "Today, environmental data is not yet comprehensively integrated into capital markets information systems, creating classic economic externalities - costs to society at large such as rising sea levels, disruptions to agricultural production and loss of species - that some estimate to be valued at $33 trillion."

How do companies mitigate climate change related regulatory and physical risks? By being proactive. Specifically, through the integration of climate change into corporate strategy, risk management processes, and addressing it at a senior level. In 2012, 77% of respondents reported that climate change is integrated into their business strategy.

2) Companies prioritize climate change on the corporate agenda, finding more value in emissions reduction initiatives and more opportunity to improve profitability

When it comes to the bottom-line, emissions reduction initiatives have been identified as providing positive economic value. The 2012 report notes "A total of 139 reported emissions reductions initiatives have annual monetary savings - up 30% (32) from 2011." In addition, improved profitability is also cited by "appealing to changing consumer demands and by reducing costs."

3) Companies improve transparency on climate change issues, but lag on performance criteria

Voluntary communication with external stakeholders has increased in 2012. According to the report, Canada 200 respondents received an average score of 60 representing an increase of 9% from 2011. There's also been an increase of climate change communications in annual reports and regulatory filings. While the improved communications performance is good news, there is room to do better by including performance criteria. Specifically, "defining emissions reduction targets, verifying and assuring emissions data, and accelerating achievements in emissions reduction."

To read the full report click HERE

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NOTES

Web Wire: Canadian Corporate Climate Change Disclosure Improves, But More Work Needed on Mitigating Emissions, According to CDP and Accenture. October 16, 2012 http://www.webwire.com/ViewPressRel.asp?aId=162782

CDP Canada: CDP Canada 200 Climate Change Report 2012. October 2012 https://www.cdproject.net/CDPResults/CDP-Canada-200-Climate-Change-Repor...

Barrick: Barrick Named Carbon Disclosure Leader in Canada for Third Consecutive Year October 17, 2012 http://www.barrick.com/News/PressReleases/PressReleaseDetails/2012/Barri...

CDP Canada: CDP Canada 200 Climate Change Report 2012. October 2012 https://www.cdproject.net/CDPResults/CDP-Canada-200-Climate-Change-Repor...

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Photo credit: Smoke-Stack by Thaddeus Robertson

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