Emissions disclosure as a business virtue

Times of India , Sunday, January 03, 2010
Correspondent : LESLIE KAUFMAN , NYT News Service

In contrast to the US, European Union already regulates CO2 emissions from their most energy-intensive industries through a cap-and-trade scheme that air used to keep the computers cool was seeping through floor openings. Mindful of the company's drive to slash electricity consumption by 25 per cent, they tucked insulation into holes there and at five similar sites. The resulting savings are projected at $55,000, or some 685,000 kilowatt hours of electricity a year.

Yet Boeing's goal is not just to save money. The hope is to keep pace with other companies that have joined in a vast global experiment in tracking the carbon dioxide emissions generated by industries.

Boeing and other enterprises are voluntarily submitting detailed reports on how much they emit, largely through fossil fuel consumption, to a central clearing house. The information flows to the Carbon Disclosure Project, a nonprofit organisation based in London that sifts through the numbers and generates snapshots by industry sectors in different nations.

By giving enterprises a road map for measuring their emissions and pointing out how they compare with their peers, experts say, the voluntary project is persuading companies to change their energy practices well before many governments step in to regulate emissions.

Until broad regulation is at hand, many investors and company executives say, voluntary reporting programmes like the Carbon Disclosure Project may be the best way to leverage market forces for change. They say the project sends a message that a company that moves to curb emissions now is girded for the future and therefore worthy of investment.

"With the regulatory framework changing, how companies handle carbon is a core risk factor," said Jack Ehnes, chief executive of Calstrs , the California teachers' pension fund. "Smart companies will take CDP information and realign their strategies."

Mary Armstrong, Boeing's vice-president for environment, health and safety, traces her company's energy focus back to 2007, when she first saw the forms that companies fill out for the disclosure project. "The questions take you through and say, 'Do you have environmental performance targets?' We didn't , but now we do," she said. The companies' individual responses are posted at the project's web site.

In contrast to the US, European Union countries already regulate carbon dioxide emissions from their most energy-intensive industries through a cap-and-trade programme, and Japan polices energy consumption itself.

Paul Dickinson, the founder and chief executive of the Carbon Disclosure Project, is quick to acknowledge that his group is no substitute for muscular government regulation. But he argues that the voluntary project offers a frictionless path toward reining in emissions, even in relatively unregulated markets like China's and India's .

In the US, where almost only the companies in the Standard & Poor's 500-stock index were solicited by the disclosure project, some 330 filled out forms this year. Some firms do not answer all of the questions. But the most detailed reports specify not only how much energy a company consumes, and how, but also ticks off ways in which it might be vulnerable to climate change - flooded stores, for example.

Industry is a broad and varied category, of course, covering everything from cement and chemical makers, which emit an enormous amount of carbon dioxide, to data-driven businesses like financial services, which emit little by comparison. The disclosure project has response rates of at least 60 per cent for most industry sectors in the US. But it has even higher rates for utilities, which are highly regulated, and materials companies, which include cement and chemical makers. It has received responses from energy titans like Chevron and chemical companies like DuPont.

To drum up better reporting, the project has enlisted major investors like Calstrs, the nation's second-largest pension programme, and Bank of America Merrill Lynch to co-sign letters from the project encouraging companies to take part. Dickinson said the project writes letters on behalf of 475 investor groups representing $55 trillion in funds worldwide.

Furthermore, in September, the Environmental Protection Agency announced it could require the nation's biggest power plants and industrial operations to report greenhouse gas emissions as early as 2011. The US Chamber of Commerce and the National Association of Manufacturers have firmly opposed such regulation, saying that it would be legally and technically burdensome, drive up fuel costs by promoting renewable sources and send job overseas.

But nations that have already pressed ahead with regulations are prodding the United States to match their efforts. The European Union has been monitoring and limiting carbon dioxide emissions from its most energyintensive sectors since 2005 through a capand-trade programme.

Since 2003 Japan has required companies of any size to report energy consumption to the government and what they are doing to reduce use. Dickinson argues that disclosure could prove a means of currying investor favour in international markets as the global awareness of industry's role in climate change deepens. "I have real confidence that the corporations of the world are going to outperform government in terms of dealing with climate change," he said. "In fact, they are already."

The disclosure project and the advent of general accounting principles enable investors to compare financial performance and move dollars accordingly. "It is very difficult to translate carbon-related risk into standardised disclosure, so it is a fantastic contribution," he said.

Rob Bernard, chief environmental strategist for Microsoft, is helping the project make its data more accessible to the public, says the impact of the reports is growing. "With each year, we can compare performance on greenhouse gas information with new levels of granularity," he said. "Now we just have to hope that more people read it and care."

 
SOURCE : http://timesofindia.indiatimes.com/home/environment/global-warming/Emissions-disclosure-as-a-business-virtue-/articleshow/5405313.cms
 


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