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Top 40 companies join carbon disclosure project

Posted by Laura Grant on November 26, 2007
Posted in Business

Seventy-four percent of the JSE’s Top 40 listed companies this year participated for the first time in the Carbon Disclosure Project (CDP), an initiative to collect information on how companies around the world are responding to climate change. The CDP annually collects climate change-related information on behalf of investment institutions that manage assets totalling $41-trillion.

However, only half of the JSE respondents disclosed information on their greenhouse gas emissions, according to the CDP’s South Africa Report 2007, released at the JSE on Thursday.

A few large players dominate South Africa’s carbon emissions, with three companies – Sasol, BHP Billiton and Anglo American – contributing 83 percent of the emissions disclosed to the CDP, the report said. Eskom, which is not a listed company, but which nevertheless chose voluntarily to participate in the project, “has emissions that are 2.8 times higher than the highest FTSE/JSE Top 40 emitter”.

The report found that very few of the companies responding to the CDP “explicitly acknowledged” the implications of climate change for South Africa’s traditional competitive advantage: cheap electricity generated from burning emissions-intensive coal.

The minister of enironmental affairs and tourism, Marthinus Van Schalkwyk, said in a speech at the report’s launch that “in the emerging business environment, our industry will need to build its competitiveness on climate-friendly technology, not cheap electricity.

“Companies whose core business lies in emissions-intensive sectors would do well to think about investment in greater energy efficiency and new technology development, and in some instances even diversifying their activities,” he said.

The report noted that there was very little focus on renewable energy, either as an opportunity or as a means of mitigating climate risks.

The report said that “while most of the company disclosures show a good level of understanding and awareness on climate change impacts, this is rarely translated into action”. Only eight companies had disclosed clear, company-wide emissions management targets and only a third of the responding companies reported that they incorporated climate change into investment decisions, the report said.

In addition, only 25 percent of the responding companies disclosed awareness about the likelihood of South Africa taking on future climate change caps.

In his speech Van Schalkwyk said that there was now “enormous public and ever increasing political pressure” for at least the major greenhouse gas emitters in the developing world – in particular South Africa, China, India and Brazil – to take on legally binding commitments after 2012.

Since February 2005, developed countries that have ratified the Kyoto Protocol, the UN’s main plan to curb global warming, have been subject to legally binding targets to limit or reduce their greenhouse gas emissions. All developing countries have been except from legally binding commitments. This is one of the reasons the United States, the world’s biggest emitter of greenhouses gases, has given for its refusal to ratify the Kyoto agreement.

On December 10 in Bali, 10 000 delegates from 180 countries will meet to discuss a successor to Kyoto when its terms expire at the end of 2012. Van Schalkwyk, said that “it can be expected that after 2012 South Africa will have greater commitments and responsibilities”.

He also said: “Business can assume that the government will increasingly assess, monitor and regulate greenhouse gas emissions. Industries that previously emitted freely will soon have to come to grips with a carbon-constrained world. They can assume that there will in future be a much stricter regulatory framework, a hefty price on carbon, and that the cost of emissions will continue to increase for decades into the future.”

Climate change can no longer be viewed as an environmental issue only, its potential effects on businesses and economies are increasingly clear.

The CDP, Van Schalkwyk said, was as an important initiative that was central to creating awareness among business. “It is only when companies know their carbon footprint that they can properly plan to mitigate. But reporting on carbon emissions is also an indicator of good corporate governance, of accountability, and of taking co-ownership for the future.”

Sources
Minister’s speech on DEAT website
CDP Report available from National Business Initiative website:

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