Global environmental disclosure platform CDP has released the results of its annual tracker of how the largest, most environmentally impactful companies are responding to climate change. ***Picking Up the Pace***, the second edition in the annual Tracking Corporate Action on Climate Change series, finds that more companies than ever are embedding low-carbon goals into their long-term business plans and are increasingly aligning with the emission reductions scientists say are required to prevent dangerous climate change.
The analysis of 1,073 companies revealed that 89 percent of respondents have emissions reductions targets this year and 68 percent have set emissions reductions targets to at least 2020. These numbers demonstrate a four and 13 percent increase in the number of corporates mapping out their low-carbon future. What’s more, they signal a narrowing emissions gap. If companies manage to make good on their existing targets, they will be 31 percent of the way to being consistent with keeping global warming below 2°C, a six percent improvement from the 25 percent reported last year.
There has also been significant growth in the number of companies aligning their climate goals with science. Fourteen percent of companies surveyed have committed to the Science Based Targets Initiative, including AkzoNobel, EDP and Unilever. An additional 30 percent — 317 companies — anticipate setting a science-based target within two years.
“Not every business can reduce emissions at the same speed, but we all have to get to the same destination,” said Jeff Seabright, Chief Sustainability Officer at Unilever. “Having a science-based target gives us all a common framework to work towards.”
The transition to a low-carbon economy was identified as a main driver of innovation and 36 percent of companies are now offering low carbon products, such as electric vehicles and zero-energy buildings.
“Two years ago, the Paris Agreement fired the gun in the race to a low-carbon economy. This year, the recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD) accelerated the pace. We can already see corporate winners and losers emerging. Best practice, from the scaling of solar power to the construction of zero-energy buildings, with innovation in processes, products and philosophies, is emerging; and is increasingly led from the boardroom,” said Paul Simpson, CEO of CDP.
Illustrating this point, Picking Up the Pace shows that 98 percent of companies now have Board- or senior management-level responsibility for climate change.
Each of CDP’s questionnaires on climate change, water and forests has an individual methodology that scores businesses across four levels which represent the steps a company moves through as it progresses towards environmental stewardship: disclosure, awareness, management and leadership. Each level is translated into a single letter, ranging from A to F, representing a company’s overall score and ensuring it is on its journey to environmental stewardship. This year, CDP set the bar even higher, raising its A-score threshold and making the top spot more competitive than ever before.
Sustainable Brands member Unilever and beauty giant L’Oréal lead the way with 'A’s across all three categories. Unilever recently scored a third-place spot on Carbon Clear’s Taking Stock of Sustainability index for sustainability reporting and became one of the first members of the EV100, an initiative encouraging global business commitments on electric transport. The company has also committed to setting science-based targets.
“Being a sustainable business goes hand-in-hand with being a successful business, as we drive profitable growth for our brands, save costs, reduce risk and fuel innovation,” said Graeme Pitkethly, CFO at Unilever.
“Transparency and reporting are more important than ever before, not only to ensure trust among employees and consumers, but also for our investors. Unilever is one of the first companies to commit to implementing the recommendations of the Task Force on Climate-Related Financial Disclosures. If markets are to operate efficiently, we must be transparent to help them evaluate companies’ risks and opportunities to make better decisions for the long term.”
L’Oreal has actively been working to tackle deforestation, sourcing 100 percent of its palm oil derivatives from sources certified by the Roundtable on Sustainable Palm Oil. Additionally, the company has developed a Sustainable Product Optimization Tool (SPOT) tool to evaluate the environmental and social performance of all its products. Programs such as these have helped L’Oréal reduce its risks associated with deforestation and allowed it to map its supply chain and trace back 91 percent of raw materials to the refinery level.
Braskem and HP Inc. also ranked high, receiving A’s for their climate and water stewardship performance, while BASF, Danone, Ford and General Motors received top marks in the water category. To mitigate its water impacts and risks, Ford engaged its supply chain to create positive, long-term outcomes. Through initiatives such as its Partnership for a Cleaner Environment (PACE), Ford has worked to incentivize its Tier 1 suppliers to report their water use and adopt water savings initiatives. CISCO, HPE, LG and Nestlé were recognized for their efforts to tackle climate change.