Carbon standards climb following intervention from church investors

Oct 23, 2013
<p>UK&rsquo;s &lsquo;laggard&rsquo; companies improve carbon disclosure under pressure from religious investment group</p>

Almost three quarters of UK firms that were lagging behind peers in the disclosure and management of carbon emissions have upped their game after being contacted by the Church Investors Group (CIG), which has assets of £12 bn ($19 bn).

Using the Carbon Disclosure Project’s (CDP) annual rankings, CIG approached 53 UK firms over their poor scores. According to the CDP’s FTSE 350 Climate Change Report, 72 percent of those companies have now improved their CDP score.

‘Members of [CIG] take seriously our responsibility for promoting good stewardship of our planet and are committed to using our influential position as shareholders to persuade companies to consider their environmental impact,’ says Bill Seddon, vice chairman of CIG, which has 46 members, in a press statement. ‘[The latest] CDP report highlights the key role that the engagement work of church investors plays in promoting long-term thinking by the companies we invest in, as we encourage the transition to a low-carbon economy.’

In fact, Dr James Corah, secretary to the church investment group, explains that in a bid to assess the effectiveness of engagement, CIG engaged with only half of the companies identified as ‘laggards’ in 2012. ‘We’ve been commissioning academics to test whether engagement is making a difference,’ he explains. ‘So there’s a group that is of exactly the same standard that we’ve not approached at all. The ones we’ve talked to have gone up more than the ones we haven’t.’

Topping the CDP’s overall ratings are Diageo, British Land and GlaxoSmithKline, each with a score of 98/A. Across the FTSE 100, the average score is 81/B, according to the CDP report, dropping to an average of 60/C among FTSE 250 companies.

‘A comparison between FTSE 100 and FTSE 250 companies shows these samples are very different in both the quality of their response and the amount of emissions they produce,’ states the report. ‘FTSE 100 companies show a much more sophisticated response to the threats and opportunities of climate change than FTSE 250 companies. In addition, FTSE 250 companies report emitting just one tenth the emissions of the FTSE 100 companies.’

Last year a new ‘Aiming for A’ initiative was introduced, backed by a coalition including the £115 bn Local Authority Pension Fund Forum, and the largest members of CIG. Aiming for A is designed to encourage 10 major UK-listed utilities and extractives firms to strive for inclusion in the CDP’s Climate Performance Leadership Index.

‘Congratulations to Anglo American (A) and BG Group (A). We’d also like to thank BHP Billiton (C), BP (C), Centrica (B), GlencoreXstrata (C), National Grid (B), Rio Tinto (B), Shell (B), and SSE (B) for their ongoing constructive engagement with us,’ write the report’s authors.

Corah says that of the 10 firms targeted by Aiming for A, one company – BHP Billiton – in fact took a step back, though Corah stresses the resources firm is ‘quite horrified’ by this and will be committing itself to future improvements following its AGM on October 24.

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