Investors are mounting pressure on the world’s largest companies to embrace sustainability management and report on carbon emissions, according to the Carbon Disclosure Project (CDP).
But what is driving this upward trend?
With $87tr under management, an increasing number of institutional investors support CDP’s annual requests of companies’ carbon emissions. There are 2 primary reasons for this growing trend:
1) In the latest CDP survey, 70 percent of firms stated that climate impacts will threaten revenues in the near future. This raises investors’ concerns to the adaptability of companies to operate in a changing world and their ability to mitigate such risks.
2) Addressing carbon emissions is increasingly seen as an investment in long-term shareholder value. Mitigating carbon emissions is linked to lowered energy use in facilities and decreased fuel consumption in corporate vehicles – which reduces operational costs and increases the bottom line.
This upward trend is supported by the findings of our study, ESG in Private Equity 2012, in which increased investor concern about ESG issues are being met with cost savings and eco-efficiency management programs.