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Investors with $41 trillion push US firms on emissions

A group representing more than one third of the world’s invested assets said Monday in New York that an increasing number of companies regard climate change as both a risk and opportunity, though US corporations lag behind their European counterparts in grappling with carbon emissions.

The Carbon Disclosure Project, backed by 315 companies such as ABN AMRO and the London Pensions Fund Authority with a combined $41 trillion in financial muscle, timed the release of its fifth annual report with planned discussions on climate change later Monday among world leaders gathered at the United Nations.
Former US president Bill Clinton is to be the keynote presenter, and a major announcement of a new emissions-control program by the world’s largest retailer, Wal-Mart, was expected at the 12:45 GMT formal presentation of the report. The Carbon Disclosure Project concentrates the collective influence of investors who want companies to take seriously the issues of climate change and escalating energy costs and to “redefine the very basis of competitive advantage and financial performance.” The project’s top priority is to get companies to measure their own carbon footprints. “In business, what gets measured gets managed,” Lord Adair Turner of Standard Chartered PLC of Britain said in the report.

The project this year sent questionnaires to 2,400 of the world's largest companies according to their market capitalization, asking how much progress each has made in managing downside risks of climate change and whether they have seized competitive opportunities posed by the risks. While the responses were analyzed in the report, the project’s major measure of success was how many companies even responded. This year, 1,300 companies, or 54%, responded, including firms in developing countries, a figure that is difficult to compare to past surveys because the project has expanded its geographic reach. The report notes that among companies listed in London’s FT500, North American-based firms still lag behind their European counterparts, with 74% responding compared to 86% for European-based firms.

The North American response rate in this group improved from 66% the previous year. But the region’s response rate for only companies in New York’s S&P 500 was just 56%. Still, it was an improvement over the 47% response by S&P 500 companies in 2006. About 240 North American companies are listed on both the S&P 500 and the FT500. Chinese firms had the worst response rate, with none of the seven companies returning questionnaires. China recently pulled ahead of the US as the world’s largest emitter of the greenhouse gasses blamed for global warming, the report noted. Brazil’s response was among the highest single-country rates in the report, with 81% of 60 companies returning the questionnaire.

Paul Dickinson, who heads the Carbon Disclosure Project, said that individual investors could get detailed company portraits at www.cdproject.net. He said that by coordinating the report’s release with Monday’s UN political gathering, the group hoped to focus intense attention on the issue. “Investors want to learn how to make money from (climate change), corporations want to learn how to make money from it, and they want the governments to regulate (emissions),” Dickinson said in an interview with Deutsche Presse-Agentur dpa. He compared the current status of corporate development on climate change to the early days of the internet, with “Microsofts and Googles to be found,” who will figure out how to profit from reduced carbon emissions. Monday’s report represents an escalating wave of concern among investors about global warming. This year’s round of scientific reports coordinated by the UN revealed the most dire warnings to date of risks to people and economies.

Earlier this year, the smaller US-based Investor Network on Climate Risk flexed $4 trillion of combined assets to push a reluctant US White House and Congress to adopt national standards. Currently, a handful of individual US states, impatient with foot- dragging in Washington, have passed a patchwork of greenhouse gas regulations, creating a nightmare in the US market for profitable development of new products to limit emissions. (m&c.com)