Carbon Disclosure Project Report 2007 Australia & New Zealand

Transcription

1 Carbon Disclosure Project Report 2007 Australia & New Zealand On behalf of 315 investors with assets of USD41 trillion This Report has been prepared by Thrive Sustainability Services for the Investor Group on Climate Change, with the support of Goldman Sachs JBWere and The Climate Institute Joanne Saleeba Andrew Gray Andrew.Gray@gsjbw.com Nicolette Boele nboele@climateinstitute.org.au

2 Carbon Disclosure Project 2007 This report is based on the submissions of ASX100 and NZX50 companies in response to the fifth information request sent by the Carbon Disclosure Project (CDP5) on 1st February This report and publicly available responses from companies can be downloaded without charge from The contents of this report may be used by anyone providing acknowledgment is given. CDP Members 2007 In 2007, CDP launched a membership option for all signatories. CDP membership allows signatories to have a leading role in the development of CDP and gives the ability to perform improved comparative analysis of company responses through the new online database. The following investors are 2007 CDP Members: CARBON DISCLOSURE PROJECT MEMBERS 2007 ABN AMRO Bank N.V. Netherlands ABP Investments Netherlands AIG Investments US ASN Bank Netherlands AXA Group France BlackRock US BNP Paribas Asset Management (BNP PAM) France BP Investment Management Ltd UK Caisse de Dépôts et Placements du Québec Canada Caisse des Dépôts France California Public Employees Retirement System US California State Teachers Retirement System US Calvert Group US Canada Pension Plan Investment Board Canada Catholic Super Australia Ethos Foundation Switzerland Folksam Sweden Generation Investment Management UK Hermes Investment Management UK HSBC Holdings PLC UK KLP Insurance Norway London Pensions Fund Authority UK Morgan Stanley US Morley Fund Management UK National Australia Bank Ltd Australia Neuberger Berman US Newton Investment Management Ltd UK Pictet Asset Management Switzerland Rabobank Netherlands Robeco Netherlands SAM Group Switzerland Schroders UK Signet Capital Management Ltd UK Sompo Japan Insurance Inc. Japan Swiss Reinsurance Company Switzerland The Ethical Funds Company Canada The RBS Group UK Zurich Cantonal Bank Switzerland 2

3 CDP Signatories investors were signatories to the CDP5 information request dated 1st February 2007 including 1 : Aachener Grundvermogen Kapitalanlagegesellschaft mbh Germany Aberdeen Asset Managers UK ABN AMRO Bank N.V. Netherlands ABP Investments Netherlands ABRAPP Associação Brasileira das Entidades Fechadas de Previdência Complementar Brazil Acuity Investment Management Inc Canada Aegon N.V. Netherlands Aeneas Capital Advisors US AIG Investments US Alcyone Finance France Allianz Group Germany AMP Capital Investors Australia AmpegaGerling Investment GmbH Germany ANBID National Association of Brazilian Investment Banks Brazil ASN Bank Netherlands Astra Investimentos Ltd Brazil Australia and New Zealand Banking Group Ltd Australia Australian Ethical Investment Ltd Australia ARIA (Australian Reward Investment Alliance) Australia Aviva PLC UK AXA Group France Baillie Gifford & Co UK Banco Bradesco S.A. Brazil Banco do Brazil Brazil Banco Fonder Sweden Banco Pine S.A. Brazil Bank Sarasin & Co Ltd Switzerland Barclays Group UK 1 Not all 315 signatory investors are listed as some did not wish to be identified publicly. BayernInvest Kapitalanlagegesellschaft mbh Germany BBC Pension Trust Ltd UK Beutel Goodman and Co Ltd Canada BlackRock US BMO Financial Group Canada BNP Paribas Asset Management (BNP PAM) France Boston Common Asset Management LLC US BP Investment Management Ltd UK Brasilprev Seguros e Previdência S.A. Brazil British Coal Staff Superannuation Scheme UK British Columbia Investment Management Corporation (bcimc) Canada BT Financial Group Australia BVI Bundesverband Investment und Asset Management e.v. Germany CAAT Pension Plan Canada Caisse de Dépôts et Placements du Québec Canada Caisse des Dépôts France Caixa Econômica Federal Brazil California Public Employees Retirement System US California State Teachers Retirement System US California State Treasurer US Calvert Group US Canada Pension Plan Investment Board Canada Canadian Friends Service Committee Canada Carlson Investment Management Sweden Carmignac Gestion France Catholic Super Australia CCLA Investment Management Ltd UK Central Finance Board of the Methodist Church UK Ceres US CERES-Fundação de Seguridade Social Brazil Cheyne Capital Management (UK) LLP UK Christian Super Australia CI Mutual Funds Signature Funds Group Canada CIBC Canada Citizens Advisers Inc US ClearBridge Advisers Social Awareness Investment US Close Brothers Group PLC UK Comité syndical national de retraite Bâtirente Canada CommerzbankAG Germany Connecticut Retirement Plans and Trust Funds US Co-operative Insurance Society UK Credit Agricole Asset Management France Credit Suisse Switzerland Daegu Bank South Korea Daiwa Securities Group Inc Japan Deka FundMaster Investmentgesellschaft mbh Germany Deka Investment GmbH Germany DekaBank Deutsche Girozentrale Germany Delta Lloyd Investment Managers GmbH Germany Deutsche Bank Germany Deutsche Postbank Privat Investment Kapitalanlagegesellschaft mbh Germany Development Bank of Japan Japan Development Bank of the Philippines (DBP) Philippines Dexia Asset Management France DnB NOR Norway 3

4 Domini Social Investments LLC US DPG Deutsche Performancemessungs- Gesellschaft für Wertpapierportfolio mbh Germany DWS Investment GmbH Germany Environment Agency Active Pension Fund UK Epworth Investment Management UK Erste Bank der Oesterreichischen Sparkassen AG Austria Ethos Foundation Switzerland Eureko B.V. Netherlands Eurizon Capital SGR Italy Evli Asset Management Finland F&C Asset Management UK FAELCE Fundação Coelce de Seguridade Social Brazil FAPES Fundação de Assistencia e Previdencia Social do BNDES Brazil Fédéris Gestion d Actifs France FIPECq Fundação de Previdência Complementar dos Empregados e Servidores Brazil First Affirmative Financial Network LLC US First Swedish National Pension Fund (AP1) Sweden FirstRand Ltd South Africa Five Oceans Asset Management Pty Ltd Australia Folksam Sweden Fondaction Canada Fonds de Réserve pour les Retraites FRR France Fortis Investments Belgium Fourth Swedish National Pension Fund, AP4 Sweden Frankfurt Trust Investment-Gesellschaft mbh Germany Frankfurter Service Kapitalanlage- Gesellschaft mbh Germany Franklin Templeton Investment Services GmbH Germany Frater Asset Management South Africa FUNCEF Brazil Fundação Assistencial e Previdenciária da Extensão Rural no Rio Grande do Sul- FAPERS Brazil Fundação Atlântico de Seguridade Social Brazil Fundação Banrisul de Seguridade Social Brazil Fundação CESP Brazil Fundação Codesc de Seguridade Social Brazil Fundação Copel de Previdência e Assistência Social Brazil Fundação Corsan dos Funcionários da Companhia Riograndense de Saneamento Brazil Fundação Real Grandeza Brazil Fundação Rede Ferroviaria de Seguridade Social Refer Brazil Fundação São Francisco de Seguridade Social Brazil Fundação Vale do Rio Doce de Seguridade Social VALIA Brazil Gartmore Investment Management PLC UK Generation Investment Management UK Genus Capital Management Canada Gjensidige Forsikring Norway Goldman Sachs & Co US Green Century Capital Management US Green Kay Asset Management UK Groupe Investissement Responsable Inc Canada Guardians of New Zealand Superannuation New Zealand Hastings Funds Management Ltd Australia Helaba Invest Kapitalanlageggesellschaft mbh Germany Henderson Global Investors UK Hermes Investment Management UK HESTA Super Fund Australia Hospitals of Ontario Pension Plan (HOOPP) Canada HSBC Holdings PLC UK I.DE.A.M Integral Dévelopment Asset Management France Ilmarinen Mutual Pension Insurance Company Finland Indexchange Investment AG Germany Industry Funds Management Australia ING Investment Management Europe Netherlands Inhance Investment Management Inc Canada Insight Investment Management (Global) Ltd UK Instituto Infraero de Seguridade Social INFRAPREV Brazil Instituto Sebrae De Seguridade Social SEBRAEPREV Brazil Interfaith Center on Corporate Responsibility US Internationale Kapitalanlagegesellschaft mbh Germany Jarislowsky Fraser Ltd Canada Jupiter Asset Management UK KBC Asset Management N.V. Belgium KLP Insurance Norway KPA AB Sweden La Banque Postale AM France LBBW Landesbank Baden- Württemberg Germany Legal & General Group PLC UK Libra Fund US Light Green Advisors LLC US Local Authority Pension Fund Forum UK Local Government Superannuation Scheme Australia Lombard Odier Darier Hentsch & Cie Switzerland London Pensions Fund Authority UK Macif Gestion France Maine State Treasurer US Man Group PLC UK Maryland State Treasurer US 4

5 Meag Munich Ergo Kapitalanlagegesellschaft mbh Germany Meeschaert Asset Management France Meiji Yasuda Life Insurance Company Japan Meritas Mutual Funds Canada Metzler Investment GmbH Germany Midas International Asset Management South Korea Mitsubishi UFJ Financial Group (MUFG) Japan Mitsui Sumitomo Insurance Co Ltd Japan Mizuho Financial Group Inc Japan Monte Paschi Asset Management S.G.R S.P.A Italy Morgan Stanley Investment Management US Morley Fund Management UK Münchner Kapitalanlage AG Germany Munich Re Group Germany National Australia Bank Ltd Australia National Bank of Kuwait Kuwait National Pensions Reserve Fund of Ireland Ireland Natixis France Nedbank Group South Africa Needmor Fund US Neuberger Berman US New York City Employees Retirement System US New York City Teachers Retirement System US New York State Common Retirement Fund US Newton Investment Management Ltd UK NFU Mutual Insurance Society UK Nikko Asset Management Co Ltd Japan Norinchukin Zenkyouren Asset Management Co Ltd Japan Northern Trust US Old Mutual PLC UK Ontario Municipal Employees Retirement System (OMERS) Canada Ontario Teachers Pension Plan Canada Opplysningsvesenets fond (The Norwegian Church Endowment) Norway Oregon State Treasurer US Orion Energy Systems Ltd US Pax World Funds US Pension Plan for Clergy and Lay Workers of the Evangelical Lutheran Church in Canada Canada PETROS The Fundação Petrobras de Seguridade Social Brazil PGGM Netherlands Phillips, Hager & North Investment Management Ltd Canada PhiTrust Active Investors France Pictet Asset Management Switzerland Pioneer Investments Kapitalanlagegesellschaft mbh Germany Portfolio 21 and Progressive Investment Management US Portfolio Partners Australia Prado Epargne France PREVI Caixa de Previdência dos Funcionários do Banco do Brasil Brazil Prudential PLC UK PSP Investments Canada Rabobank Netherlands Railpen Investments UK Rathbone Investment Management / Rathbone Greenbank Investments UK Reynders McVeigh Capital Management US RLAM UK Robeco Netherlands Rock Crest Capital LLC US Royal Bank of Canada Canada SAM Group Switzerland Samsung Investment Trust Management Co Ltd South Korea Sanlam Investment Management South Africa Sauren Finanzdienstleistungen GmbH & Co KG Germany Savings & Loans Credit Union (SA) Ltd Australia Schroders UK Scotiabank Canada Scottish Widows Investment Partnership UK SEB Asset Management AG Germany Second Swedish National Pension Fund (AP2) Sweden Seligson & Co Fund Management PLC Finland Service Employees International Union US Seventh Swedish National Pension Fund (AP7) Sweden Shinhan Bank South Korea Shinkin Asset Management Co Ltd Japan Shinsei Bank Japan Siemens Kapitalanlagegesellschaft mbh Germany Sierra Club Mutual Funds US Signal Iduna Gruppe Germany Signet Capital Management Ltd UK SNS Asset Management Netherlands Société Générale France Société Générale Asset Management UK Sompo Japan Insurance Inc Japan Standard Chartered PLC UK Standard Life Investments UK State Street Corporation US State Treasurer of North Carolina US Storebrand Investments Norway Stratus Banco de Negócios Brazil Sumitomo Mitsui Financial Group Japan Sumitomo Trust & Banking Japan Superfund Asset Management GmbH Germany Swedbank Sweden 5

6 Swiss Reinsurance Company Switzerland Swisscanto Switzerland TD Asset Management Inc and TD Asset Management USA Inc Canada Teachers Insurance and Annuity Association College Retirement Equities Fund (TIAA-CREF) US Terra Kapitalforvaltning ASA Norway TfL Pension Fund UK The Bullitt Foundation US The Central Church Fund of Finland Finland The Collins Foundation US The Co-operative Bank UK The Co-operators Group Ltd Canada The Daly Foundation Canada The Dreyfus Corporation US The Ethical Funds Company Canada The Local Government Pensions Institution (LGPI) (keva) Finland The RBS Group UK The Russell Family Foundation US The Shiga Bank Ltd (Japan) Japan The Standard Bank Group Ltd South Africa The Travelers Companies Inc US Union Asset Management Holding Germany Unitarian Universalist Association US United Methodist Church General Board of Pension and Health Benefits US Universal Investment Gesellschaft mbh Germany Universities Superannuation Scheme (USS) UK Vancity Group of Companies Canada Vermont State Treasurer US VicSuper Proprietary Ltd Australia Vital Forsikring ASA Norway Wachovia Corporation US Walden Asset Management, a division of Boston Trust and Investment Management Company US Warburg-Henderson Kapitalanlagegesellschaft mbh Germany West Yorkshire Pension Fund UK WestLB Mellon Asset Management (WMAM) Germany Winslow Management Company US YES BANK Ltd India York University Pension Fund Canada Zurich Cantonal Bank Switzerland The United Church of Canada General Council Canada The Wellcome Trust UK Third Swedish National Pension Fund (AP3) Sweden Threadneedle Asset Management UK Tokio Marine & Nichido Fire Insurance Co Ltd Japan Trillium Asset Management Corporation US Triodos Bank Netherlands Tri-State Coalition for Responsible Investing US UBS AG Switzerland Unibanco Asset Management Brazil UniCredit Group Italy 6

7 Report preparation Contact details: Joanne Saleeba, Director This report is based on submissions from Australian and New Zealand companies (listed on the Standard & Poor s ASX100 and/or New Zealand Stock Exchange NZX50 indices) in response to the Carbon Disclosure Project (CDP) request for information sent by the CDP and Investor Group on Climate Change Australia/New Zealand (IGCC), known as CDP5. This report has been prepared by Thrive Sustainability Services under direction from the CDP5 Australia & New Zealand Steering Committee comprising representatives from IGCC including AMP Capital Investors, EPA Victoria and VicSuper, and project partners Goldman Sachs JBWere and The Climate Institute. Goldman Sachs JBWere has provided analysis for the reporting and has been responsible for the construction and determination of the Climate Disclosure Leadership Index (CDLI) based on data produced by Thrive Sustainability Services. However, to the extent permitted by law, Goldman Sachs JBWere disclaims any responsibility for the contents of this report. Report disclaimer The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. This report and the information contained within should not be considered as investment advice or used for the purpose of making investment decisions. There can be no guarantee that information provided in submissions from Australian and New Zealand companies is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The information herein has been obtained from sources which are believed to be reliable, however no guarantee is made as to their accuracy or completeness. Further, no representation or warranty, express or implied, is made concerning the fairness, accuracy or completeness of the information and opinions contained herein. All opinions expressed herein are based on judgement made at the time of this report being prepared and may be subject to change without notice due to economic, political, industry and firm-specific factors. Thrive Sustainability Services has prepared this report for the IGCC. To the extent permitted by law, Thrive Sustainability Services does not accept or assume responsibility to anyone other than IGCC for this report and the information contained within the report. Issues of independence and potential conflicts of interest In preparing this report care has been taken to ensure independence and manage potential conflicts of interest. Members of the IGCC and the CDP5 Australia & New Zealand Steering Committee that received the CDP5 information request have not been able to contribute to the report in any way that could lead to a conflict of interest and have had no influence over the actual analysis of responses or rating of companies. Copyright Investor Group on Climate Change Australia/New Zealand (IGCC)

8 Harnessing a response from capital markets is an integral part of combating climate change. Through the Carbon Disclosure Project, capital markets are able to access information for quantification and valuation of climate change issues, which is a pre-condition of an effective response. Andrew Gray, Executive Director Head of ESG Research, Goldman Sachs JBWere 8

9 Message from the Australia & New Zealand Partners Investor Group on Climate Change (IGCC) As investors in most of the major economies, industries and companies in the world, institutional investors view climate change as a significant investment risk. Companies in Australia and New Zealand are particularly exposed to the physical effects of climate change and regulatory uncertainty in the markets. The response rate for CDP5 indicates that companies in Australia and New Zealand are beginning to address climate change as a material risk, and are planning for the upsides and downsides that it presents. This is a promising sign as the world enters into a low carbon future, however we still have a long way to go to make the deep cuts in carbon emissions required to avoid catastrophic climate change impacts. Bob Welsh Chair Goldman Sachs JBWere Goldman Sachs JBWere is proud to continue its support of the participation of Australasian companies in the second annual Carbon Disclosure Project (CDP). In 2007, the CDP has again partnered with the Investor Group for Climate Change (IGCC) to invite responses from the ASX100 and NZX50 listed companies to the global survey. Climate change and the actions organisations are taking to respond to this have emerged as genuine shareholder value issues in the minds of investors and corporations alike and has become a significant issue for the entire global community. Goldman Sachs JBWere sees this project as an important step towards creating the information flows necessary to allow the assessment of environmental, social and governance considerations in mainstream Australian equity research. Goldman Sachs JBWere has supported the Australia/New Zealand CDP in response to the continuing interest our clients have shown in the mainstreaming of sustainability analysis and because we believe encouraging information flows on the topic is a fundamental step to enable investors to better consider the issue. We would like to thank those organisations who have taken the time to respond to this survey. Craig Drummond Chief Executive Officer The Climate Institute Capital restructuring by directing flows from high emitting capital to low emitting capital is a key factor in our success in reversing rising greenhouse emissions and making the switch to clean energy. Investors are one of the most important drivers of this change and the Carbon Disclosure Project helps to give investors the information they need to reflect this future in present day thinking and decision making. The CDP provides the investor community with the ability to pick in the words of the Stern Report the likely winners and losers. The winners will be those companies preparing now for emissions trading and other legislative responses to climate change, and the losers will be those companies in denial. The CDP very much represents the winners who volunteered details on their carbon exposure and are quite rightly proud of their strategies to prepare for a low emissions economy. The Climate Institute strongly believes in the CDP as a pivotal reporting framework for greenhouse gas emissions and for the solutions companies put in place to reduce them while making the switch to a global clean energy economy. John Connor Chief Executive Officer Thank you! IGCC, Goldman Sachs JBWere and The Climate Institute recognise the time and effort involved in responding to the CDP questionnaire and would like to thank all the companies that have responded this year. This information is vital for investors to understand how climate change, and the government and community response to climate change, will impact the companies in which they invest. It will provide investors with important information on how companies are managing and mitigating the risks and generating opportunities associated with climate change. We would particularly like to thank those companies that have allowed their responses to be available publicly. CDP responses that are publicly available can be can be downloaded at We strongly encourage ASX100 and NZX50 companies that have not submitted a response to the CDP5 request to do so. We would also encourage other listed companies, of any size, to volunteer a response to the CDP questionnaire. We look forward to receiving many more responses in future years. 9

10 Of greatest significance is how climate change impacts our ability to meet the expectations of our external stakeholders. By engaging with external stakeholders including customers and investors through the Carbon Disclosure Project, Telstra is better able to meet these expectations Turlough Guerin, Group Manager Environment, Telstra 10

11 The responses from corporations are available to download at 2 Executive Summary As climate change develops into a material financial impact for companies, investors are beginning to integrate analysis of it alongside other financial considerations in investment decision making. To do so, investors require access to investment relevant, accurate, consistent and comparable information on climate change from companies. The Carbon Disclosure Project (CDP) provides a global framework and mechanism through which investors can obtain this information from companies. Many Australian and New Zealand companies responded to the investment community request, disclosing a range of information on climate change, including the risks and opportunities for their business, their greenhouse gas emissions profile and their emissions management and reduction strategies. CDP5 Response Rate The number of Australian and New Zealand companies responding to CDP5 increased by 19% from last year, from 64 to 76. However, the percentage of companies completing the CDP5 questionnaire (50% for Australia and New Zealand combined) was still below the global response rate of 59%. The number was lower than expected given that this is the second year that Australian and New Zealand companies have been included in the CDP and also given: mounting regulatory response to climate change by governments, and particularly the imminent introduction of emissions trading; the release of the IPCC Working Group Reports providing greater certainty about the cause of climate change (human induced) and the potential future impacts; shifting consumer demand resulting from increased awareness of climate change; and growing interest from the investment community evidenced by the increased number of investors and assets represented by CDP5 signatories and IGCC members. The response rate differed significantly across different categories within the Australian and New Zealand sample. The percentage of ASX100 companies that responded to the CDP5 information request (64% by number) was considerably higher than the 38% of NZX50 companies that responded. By market capitalistion this represents 71% of the ASX100. This solid response rate for Australian companies allows for meaningful conclusions to be drawn from the survey. However, there is a noticeable size bias with 74% (by number) of ASX50 companies responding versus only 54% for Mid Cap companies. The CDP response rate has improved from last year but is still below what may be expected given the impending regulatory changes in both Australia and New Zealand. The Australian company response rate of 64% by number and 71% by market capitalistion allows meaningful conclusions to be drawn from the survey. However, there is a noticeable size bias; 74% of ASX50 companies responded verses only 54% for Mid Cap companies. 2 A complete list of Australian and New Zealand companies that received the CDP5 information request is provided in Appendix C. Where companies did not restrict their response from being made public, they are available for viewing or downloading at 11

12 97% of responding companies recognise that climate change represented a risk or opportunity for them. The response rate was also significantly higher for companies with greater exposure to climate change risk through emissions intensity, exposure to physical impacts or vulnerability to supply chain exposure. Two-thirds of companies with greater exposure to climate change risk responded to CDP5 compared to less than one-third (27%) of companies with less exposure. In addition, companies with greater exposure provided a greater level of detail in their response to individual questions. Analysis of Response In general, there was a marked increase in the number of responding companies that demonstrated some awareness or understanding of climate change risks and opportunities and had developed strategies, programs or governance structures to address climate change, that is, the number of companies that demonstrated no awareness and understanding declined significantly from CDP4 (2006). However, those companies that in CDP4 demonstrated some awareness or understanding of climate change risks and opportunities and had developed strategies, programs or governance structures to address climate change, did not significantly progress their responses in terms of detail and articulation of financial implications. Responses were more detailed for companies with greater exposure to climate change risks. The level of detail varied depending on the type of climate change risk to which the company was exposed (ie whether a company was primarily exposed due to emissions intensity or whether a company was primarily exposed due to physical impacts or vulnerable to impacts on their supply chain). Whether emissions intensive companies or companies exposed to other climate change risks provided a higher level of response depended on the particular CDP5 question. Analysis of responses by industry sector was not undertaken due to the lack of depth in the sample of responding companies. In future years, as the number of responding companies increases, sector analysis will provide additional insights for investors. Risks and Opportunities A very high proportion of Australian and New Zealand companies that responded to CDP5 identified risks and opportunities associated with climate change that would impact their businesses. While many companies gave detailed accounts of regulatory and physical risks associated with climate change and were able to identify a range of opportunities, very few clearly articulated the financial implications specific to their businesses. The percentage of Australian and New Zealand companies that recognised risks and opportunities associated with climate change was higher than for companies in other CDP5 geographical and sector listings. Interestingly, more Australian and New Zealand companies identified risks compared to opportunities (97% and 89% respectively). This differed from the majority of other CDP5 listings where a greater number of companies identified opportunities compared to risks. Emissions Reduction Programs and Targets The majority of companies across the ASX100 (93%) and NZX50 (67%) described emissions reduction programs including some targets and timeframes and indicating a degree of implementation of the programs. While many companies described their reduction programs and their achievement of emissions reductions, only 36% of Australian and New Zealand companies had established quantitative emissions reduction targets across their business. This experience was not unique to Australian and New Zealand companies and the global average for the establishment of quantitative emissions reduction targets was 42%. 12

13 Greenhouse Gas Emissions Disclosure The level of disclosure of greenhouse gas emissions data by Australian and New Zealand companies highlighted this as a key area that requires improvement. The number of Australian and New Zealand companies that provided a level of emissions data so as to be valuable to investors was low on a global scale with only Asian, Indian and South African companies providing a lower level of data to investors. Notwithstanding, the number of Australian and New Zealand companies that provided a sufficient level of emissions data increased (to 60%) from 50% in CDP4. However, only 10% of companies provided a comprehensive emissions profile that had been externally verified. Given the near term impacts of emissions trading it was also concerning that the majority of companies indicated they did not systematically consider future emissions or the potential costs associated with future emissions in investment planning. Emissions Trading Given the imminent introduction of emissions trading, in New Zealand in 2008 and in Australia by 2012, it was not surprising that emissions trading was a prominent feature in the response of many Australian and New Zealand companies, although the message for investors is not entirely clear. A high proportion of companies identified emissions trading as a key regulatory risk (49%) largely due to the potential for increased costs, however, the experience of the majority of companies actually participating in emissions trading was positive, with many describing a range of opportunities associated with emissions trading. Interestingly, the number of Australian and New Zealand companies with an emissions trading strategy was above that of other CDP5 geographical and sector listings. Emissions trading will impose a cost on greenhouse gas emissions. Chart 1 shows the cost to companies for their carbon emissions at a carbon price of $10 per tonne. The $10 per tonne price is not intended to imply an expectation of a price at that level, but to allow readers to easily extrapolate to a higher or lower price. In fact, it is possible that a carbon price could trade around $20 $30 per tonne. The chart shows that, at higher carbon prices, a number of companies could face material costs from emissions trading (depending on details of scheme design) and it is therefore an issue of importance for investors. (Note that the chart is not an exhaustive list as only companies electing to make their CDP responses publicly available are shown). The number of Australian and New Zealand companies that provided a sufficient level of emissions data, so as to be valuable to investors in their analysis was low on a global scale with only Asian, Indian and South African companies providing a lower level of data to investors. While many responding companies identified that emissions trading has the potential to increase costs, those currently participating in schemes are identifying positive benefits and opportunities. 13

14 Chart 1: Cost of emissions at $10 per tonne as a percentage of company EBITDA* BlueScope Steel OneSteel Alumina Qantas Airways Orica Boral Paperlinx Origin Energy Newcrest Mining Contact Energy Caltex Australia BHP Billiton Leighton Holdings Rio Tinto AGL Energy# Fletcher Building Amcor Wesfarmers Woolworths Sims Group Oxiana Goodman Fielder Lion Nathan Foster s Group The GPT Group DB RREEF Trust Investa Property Group Transurban Group Mirvac Group Coca-Cola Amatil Telstra Corporation Stockland Insurance Australia Group* Lend Lease Corporation Cochlear Australia & New Zealand Banking Group* National Australia Bank* Westpac Banking Corporation* AMP* Qbe Insurance Group* 0% 5% 10% 15% Percentage of company EBITDA * Earnings Before Interest, Taxes, Depreciation and Amortization. Net profit before tax figure used for companies indicated. # AGL Energy estimate based on emissions pre demerger of the group s energy assets. 14

15 Goldman Sachs JBWere Climate Disclosure Leadership Index The following companies have been selected in the Goldman Sachs JBWere Climate Disclosure Leadership Index for the second year running. AGL Energy Australia & New Zealand Banking Group BHP Billiton Boral Goodman Fielder Insurance Australia Group Investa Property Group Mirvac Group National Australia Bank Origin Energy Rio Tinto Telstra Corporation The Warehouse Group Transurban Group Westpac Banking Corporation A range of companies from sectors as diverse as insurance, beverages, telecommunications and property improved their disclosure over the past year to be selected for the Goldman Sachs JBWere Climate Disclosure Leadership Index for the first time in CDP5. AMP Coca-Cola Amatil Cochlear DB RREEF Trust Foster s Group Lend Lease Corporation Perpetual Santos Telecom Corporation Of New Zealand Woodside Petroleum The companies selected for the Goldman Sachs JBWere Climate Disclosure Leadership Index have demonstrated leadership in disclosure to the investment community, via CDP, across a range of investment relevant climate change issues. Overall, Australian and New Zealand responses to CDP5 indicate that many companies are embracing the challenges presented by climate change that they understand and are mitigating the risks and are actively pursuing opportunities. However, as interest continues to grow in the climate change issue, for CDP6 and beyond, investors will be expecting a greater response rate across the ASX100 and NZX50 companies and that responding companies will continue to evolve their climate changes disclosures The Goldman Sachs JBWere Climate Disclosure Leadership Index constituent companies demonstrated leadership in disclosure across a range of investment relevant climate change issues. Overall, Australian and New Zealand responses indicate that many companies are embracing the challenge and pursuing opportunities presented by climate change. There is still progress to be made by Australian and New Zealand companies in terms of the overall response rate and continued development in climate change disclosure. 15

16 Table of Contents 16

17 Contents Message from the Australia & New Zealand Partners 9 Executive Summary 11 Contents 17 1: Overview Carbon Disclosure Project (CDP) CDP Australia & New Zealand 23 2: Response to CDP Global Response & Key Trends ASX100 & NZX50 Response 30 3: Goldman Sachs JBWere Climate Disclosure Leadership Index 35 4: Analysis of ASX100 & NZX50 Responses Commercial Risks Opportunities Strategy, Planning & Governance Emissions Reduction Greenhouse Gas Emissions Summary of Analysis Understanding vis-à-vis Action 68 5: Focus on Emissions Trading Emissions Trading Strategy Impact of a Cost on Carbon Impact on Energy Costs Impact on Profitability 77 Conclusion 79 Appendices 80 Appendix A CDP5 Geographical & Sector Expansions 81 Appendix B CDP5 Questionnaire 82 Appendix C Company Listing & Breakdown for Analysis 85 Appendix D Climate Change Risk Review 91 Quotes used in this report Throughout this report quotes have been taken from company responses to illustrate points made in the report. Unless otherwise indicated, the selection of quotes bears no correlation with the quality of individual responses. 17

18 CDP provides a coordinating secretariat and innovative forum for investor and corporate collaboration on climate change. Based on answers to its questionnaire, CDP provides the investment community with information about companies greenhouse gas emissions and climate change management strategies. Through CDP s database, this information is available in a comparable format that adds value for investors and a wide range of stakeholders. 18

19 CDP s mission is to facilitate a dialogue between investors and corporations, supported by high quality information from which a rational response to climate change will emerge. 1: Overview This chapter provides the overview of the Carbon Disclosure Project (CDP) globally as well as the expansion of the CDP to Australian and New Zealand companies through the partnership between CDP and the Investor Group on Climate Change Australia/New Zealand Carbon Disclosure Project (CDP) In February 2007, the CDP issued its fifth information request on behalf of 315 institutional investors with assets of USD41 trillion under management. The request was sent to 2,400 of the largest quoted companies in the world by market capitalisation for disclosure of investment-relevant information concerning the risks and opportunities facing these companies due to climate change. These companies included the largest listed companies in Asia, Australia, Brazil, Canada, France, Germany, India, Italy, Japan, New Zealand, Scandinavia, South Africa, Switzerland, UK, US, and the Electric Utilities and Transport sectors. The letter sent to Australian and New Zealand companies was done so in partnership with the Investor Group on Climate Change Australia/New Zealand (see Section 1.2). As in previous years the request focused on the issues CDP identified in conjunction with many signatory investors, corporations and other experts as being most pertinent to the impact of climate change on company value. These issues include regulatory risk/opportunity (eg limits on emissions), physical risk/opportunity (eg changes in weather impacting operations), consumer sentiment risk/opportunity, total company wide global greenhouse gas emissions and steps taken to manage and reduce emissions. USD41 trillion of assets under management represents more than one third of total global invested assets and is a marked increase from the USD4.5 trillion that was represented in the first CDP request in A total of 1,300 corporations answered the fifth CDP request in 2007, evidencing a significant increase in support for CDP s work from the 235 corporations that answered the first request in Since being launched at No.10 Downing Street in 2000, CDP has become the global standard mechanism by which companies report their greenhouse gas emissions to investors. Its process has been applauded by Al Gore (former US Vice President and Nobel Peace Prize recipient), Sir John Bond (then Chairman HSBC), Jeff Immelt (CEO General Electric), Angela Merkel (German Chancellor) and Tony Blair (former UK Prime Minister) among others. CDP is proud to have assisted the pioneering efforts of global investors in creating this comprehensive and international system of disclosure. CDP data has also enabled stakeholders such as policymakers, service providers and non-government organisations to accelerate their own initiatives. Last year CDP reports were produced in English, French, German, Japanese and Portuguese and launched at a series of high profile events in the main capital markets around the world. Chart 2: CDP5 Signatories by Region Africa 2% Asia 7% Europe 49% North America 28% Oceania 5% South America 9% The aim of CDP is to gradually improve information on CO2 emissions and climate strategies as well as to initiate long-term plans for the future. I wish the Carbon Disclosure Project success with its further efforts both in Germany and worldwide. Angela Merkel German Chancellor 19

20 The first step towards managing carbon emissions is to measure them because in business, what gets measured gets managed. The Carbon Disclosure Project has played a crucial role in encouraging companies to take the first steps in that measurement and management path. If more businesses progress further down that measurement and management path, within the context of public policy which spurs on the business leaders and drags up the business laggards, then we will be able and at surprisingly small economic cost to offset the dangers which climate change poses to our world. Lord Adair Turner Standard Chartered PLC (UK) CDP now hosts the largest registry of corporate greenhouse gas data in the world and this information along with reports analysing it can be downloaded free of charge at The CDP Secretariat extends sincere thanks to the signatory investors, responding corporations and regional partners for their participation in CDP New CDP Initiatives in 2007 In addition to the expansion of its existing activity in 2007, CDP is delighted to have evolved its service offering in a number of exciting directions. Improved database CDP is launching a user-friendly interface to its comprehensive database of responses. This will enable users to easily and quickly perform comparative analysis by sorting company information by sector, geography, emissions and the CDP questions. CDP Membership CDP is now providing a premium service for those signatory investors who have become CDP members. This service provides members with enhanced recognition and access to the entire functionality of the database. Supply Chain Initiative In 2007, CDP was delighted to enter into partnership with Wal-Mart to send the CDP information request to a subset of their suppliers. This contract represents the start of an exciting development for CDP as it begins to mirror its activity linking shareholders and corporations, this time linking corporations and suppliers. The Wal-Mart work is now being developed for broader reach and impact with the launch of the Supply Chain Leadership Collaboration Project (SCLC Project) aimed at working with key sector leaders including retail brands, aviation, automotive and government among others. This work will help identify and reduce emissions within their supply chains The CDP Secretariat expresses sincere thanks to Wal-Mart for its leadership in developing this new system for corporate disclosure of emissions from supply chains. Climate Disclosure Standards Board (CDSB) CDP became a member of the CDSB consortium convened by the World Economic Forum in January 2007 and has been funded by the UK Department for Environment to provide the Secretariat to CDSB, supporting its activities focused upon climate change reporting standards Going Forward CDP s primary goal is to continue to improve the quality and quantity of responses for its core disclosure activity and in doing so better inform the decision-making of investors and corporations regarding the implications of climate change. CDP will also continue to respond to stakeholder requests to expand and, in addition to the new initiatives for 2007, develop further projects including: expansion of the CDP process into further geographies and sectors; expansion of the CDP process into private equity and private companies; workshops for corporations and investors; further development of the CDP database; and assisting pension funds to develop mandates incorporating climate change criteria. CDP would be delighted to hear from parties interested in participating or partnering with CDP and invites them to approach CDP through info@cdproject.net 20

21 It s not surprising that investors are worried and that they are supporting the Carbon Disclosure Project. In BT we share their concern and we have good business reasons for doing so. We have a huge investment in the UK telecommunications infrastructure and that will be increasingly at risk the Carbon Disclosure Project does us all a great service in bringing these matters to the attention of the investment and business communities. It is an important catalyst for change change without which the world will be a very dangerous place. Sir Christopher Bland Chairman BT Group (UK) the members of the Carbon Disclosure Project have recognised that the cost benefit analysis points to it being in the interest of business to take action. The growth of the Carbon Disclosure Project itself shows that investors are increasingly aware of the impact climate change will have on shareholder value... this is a project that has considerable momentum and that in itself is significant. Rt Hon Margaret Beckett MP then Secretary of State for Environment, Food & Rural Affairs (UK) CDP works to improve the information flow, seeks to improve City engagement, to improve understanding and ultimately to improve economic performance and it tackles it at the highest level with a cross border span, with force and with directness. CDP represents a very positive aspect of shareholder engagement and if there are more shareholders ready to sign up that can only be, from my perspective, a very good thing. Derek Higgs author Higgs Report on Corporate Governance (UK) Initiatives such as the Carbon Disclosure Project (CDP) can play a meaningful role in our shared endeavours to reduce greenhouse gas emissions. The project shows that both companies and investors have key roles to play. It is very positive and inspiring that the capital markets are considering climate related aspects more and more in their investment decisions. It proves that the climate challenge is not only a matter of technology it is also an important economic issue. As Deputy Prime Minister and Minister of Enterprise and Energy it is especially encouraging to see that companies go ahead without state intervention. Maud Olofsson Deputy Prime Minister (Sweden) It has been a really interesting experience to watch the development of the Carbon Disclosure Project and I congratulate those who have worked so hard. It s extremely significant because there is a major shift in awareness of the climate crisis and the need to integrate the behaviour of companies public and private towards the climate crisis, both its risks and its opportunities in the investment market place and in the business market place generally. Al Gore Former Vice President of the United States (US) CDP s reporting mechanism offers a trusted solution for consistent and transparent reporting of our energy and carbon numbers, as well as a way to share our reduction strategies with our shareholders and other companies. News Corp. is still at the very beginning of our energy and climate change work and we re delighted to have access to the wealth of information that CDP provides for us to learn from. News Corporation 21

22 The Investor Group on Climate Change Australia/ New Zealand (IGCC) represents investors with total funds under management of over AUD375 billion and others in the investment community interested in the impact of climate change on investments. IGCC Funding Partner 22

23 Participation in the CDP has emerged as a global standard for corporate disclosure of climate risk. Greg Paramor, Managing Director, Mirvac 1.2. CDP Australia & New Zealand Partnership Between CDP and IGCC One of the key barriers to Australian and New Zealand investors incorporating climate change considerations into their investment analysis and decision making is the lack of relevant and detailed information and data from investee companies. Investors seek to make accurate and appropriate investment decisions based on their risk-return profile. To do so, investors need access to a range of information on the various factors, including climate change, that impact the risks and returns of the companies and assets in which they invest. Bob Welsh, CEO, VicSuper and Chair, Investor Group on Climate Change Australia/New Zealand. For this reason the Investor Group on Climate Change Australia/New Zealand (IGCC) once again partnered with the CDP to expand the CDP5 information request to include the largest Australian and New Zealand companies. While a small number of Australian and New Zealand companies are included in the CDP request to FT500 listed companies, this expansion seeks to obtain investment relevant information on climate change from across the ASX100 and NZX50. As at 30 August 2007, IGCC members include: AMP Capital Investors ARIA (Australian Reward Investment Alliance) Babcock & Brown Environmental Investments BT Financial Group Catholic Super Cleantech Ventures Colonial First State Global Asset Management Eureka Funds Management Five Oceans Asset Management Goldman Sachs JBWere The GPT Group HESTA Super Fund Industry Funds Management Mercer Investment Consulting Portfolio Partners Rei Super Statewide Superannuation Starfish Ventures Suncorp Investment Management VicSuper Vision Super Funding partner: Environment Protection Authority, Victoria The IGCC represents investors with total funds under management of over AUD375 billion and others in the investment community interested in the impact of climate change on investments. 23

24 For the second year, Goldman Sachs JBWere supported the IGCC to include Australian and New Zealand companies in the CDP. Goldman Sachs JBWere recognise the importance of raising awareness of climate change and the associated investment considerations, and strongly encourages the participation of Australian and New Zealand companies in the CDP. The Climate Institute strongly believes that the reporting of greenhouse gas emissions and associated company strategies is pivotal in driving investment into tomorrow s businesses and for helping all stakeholder communities deal with climate change Support from Goldman Sachs JBWere and The Climate Institute As part of raising awareness of the potential risks and opportunities associated with climate change in investment decision making, Goldman Sachs JBWere have for the second year sponsored the CDP5 expansion to Australia and New Zealand as well as developed the Climate Disclosure Leadership Index (CDLI). The Goldman Sachs JBWere CDLI highlights those companies that are at the forefront of their industry sector in engaging with the investment community, via CPD, on climate change and disclosing their greenhouse gas emissions and climate change strategy. This year, The Climate Institute also sponsored the expansion of CDP5 to Australian and New Zealand companies. Established in late 2005, The Climate Institute has a five-year goal of raising public awareness and debate about the dangers to Australia of global warming and to motivate the country to take positive action. The Climate Institute is a non-partisan, independent group that works with community, business and government to drive innovative and effective climate change solutions. The Climate Institute believes that investors are one of the most important drivers of change in both high and low emission industries. To ensure that this process is carried out efficiently, The Climate Institute recognises the valuable role of the CDP in providing the investor community with key information on what potential carbon risks exist within a business and how those companies are managing them. Engaging the investment community in this way also prepares the business community for the inevitable integrated emission trading schemes and mandatory reporting mechanisms that will be implemented over the next decade Australian and New Zealand Signatories to CDP5 In addition to the investors who, as a member of IGCC support CDP, a number of Australian and New Zealand investors directly support the CDP by becoming signatories. This year the number of Australian and New Zealand signatories to CDP5 increased by 55% and represent assets under management of over AUD345 billion. Chart 3: Number of Australian and New Zealand signatories to CDP CDP4 CDP5 The Australian and New Zealand signatories to CDP5 are listed below. AMP Capital Investors ARIA (Australian Reward Investment Alliance) Australia and New Zealand Banking Group Australian Ethical Investment BT Financial Group Catholic Super Christian Super Five Oceans Asset Management Guardians of New Zealand Superannuation Hastings Funds Management HESTA Super Fund Industry Funds Management Local Government Superannuation Scheme National Australia Bank Portfolio Partners Savings & Loans Credit Union VicSuper 24