Environmental transparency is making headway as there is increasing demand from big investors for corporations to disclose their impact and mitigating actions

File photo of a steel factory shopfloor in India. Environmental disclosures is making increasing financial sense for corporations (Photo by Alamy)

File photo of a steel factory shopfloor in India. Environmental disclosures is making increasing financial sense for corporations (Photo by Alamy)

There has been an annual rise of 46% in the number of companies disclosing their environmental impacts and the action they are taking to reduce it, according to the latest analysis by CDP, earlier known as the Carbon Disclosure Project.

Four Indian companies among the 313 surveyed — Hindustan Zinc, IndusInd Bank, Mahindra & Mahindra and Tech Mahindra — have been named on CDP’s A List this year for environmental transparency and action, a 45% increase on 2019, the environmental disclosure platform said.

The companies on the A List for environmental action grew to 313 this year. The list comprises firms who received CDP’s top score for environmental disclosures and policies on climate change, forest conservation and water use.

More than 9,600 companies disclosed the impact and actions in 2020, a 70% increase since the Paris Agreement was signed in 2015 and 14% up on last year, CDP said. However, out of the 5,800 companies scored by CDP on their disclosures, just the top 5% made the A List.

“This week marks exactly five years since global leaders shook hands on the Paris Agreement. It’s encouraging that 70% more companies are now reporting on their environmental action than in 2015, and that, this year, over 300 have reached the A List,” Dexter Galvin, global director of corporations and supply chains at CDP, said in a statement. “We need these pioneers to inspire the sluggish majority of corporates if the private sector is to take a leadership role when climate targets ratchet up at COP26 next year.”

The 2015 Paris climate pact aims to keep global warming “well within” 2 degrees Celsius and pursue efforts to limit the temperature increase to 1.5 degrees. COP26, short for the UN climate summit at Glasgow in the UK that has been postponed to November 2021 due to the Covid-19 pandemic, is expected to review climate targets committed to by national governments in 2015.

Of the A list companies, worth a combined USD 15 trillion in market capitalisation, cap most come from Europe (132), Asia (100) and North America (61).

Indian scenario

Besides the four India A listers, another 11 local companies, which include JSW Steel, Godrej Consumer Products and Tata Steel, received A minus rating, which puts them in CDP’s leadership band.

The performance of Indian companies in addressing climate change “has shown a marked improvement, holding out hope for the future,” said Damandeep Singh, CDP’s India director.

Source: CDP

Source: CDP

Globally, the number of companies achieving a triple A across climate, forests and water, the highest rating CDP provides, has grown to 10, up from six last year, the previous record.

The expansion of the list comes towards the end of a year when climate risk has taken prominence in financial markets, Bloomberg reported. In April, an analysis by Morningstar showed sustainable funds were relatively well-placed to endure the coronavirus crisis, it said.

The market demand for corporate environmental transparency has become louder. As many as 515 investors with USD 106 trillion in assets, and more than 150 large purchasers with USD 4 trillion in buying power requested thousands of companies to disclose through CDP in 2020. They use CDP data, including scores, to inform their investment and procurement strategies, CDP said.

There are 270 companies in CDP’s 2020 climate change A list, compared with 16 in the forests A list and 106 companies in the water security A list.

The number of companies which disclosed data to CDP rose by 14% in 2020 compared with last year, the disclosure platform said.

 

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