Linking Climate Engagement to Financial Performance

An Investor's Perspective by Sustainable Insight Capital Management and CDP


Bonn, 1 October 2013 - The publication, released by the Carbon Disclosure Project (CDP) and Sustainable Insight Capital Management, analyzes the CDP disclosure scores of 702 companies covered in CDP’s Global 500 climate change reports from 2008 to 2012. Using peer-to-peer comparisons, companies were ranked by industry and split into quintiles by their CDP disclosure score, then examined against various metrics of financial profitability. The analysis shows that industry leaders in the first quintile based on their relative CDP scores provide a higher return on equity (+5.2 percent), more stable cash flow generation (+18.1 percent) and higher dividend growth (+1.6 percent).

According to Kevin Parker, Sustainable Insight Capital Management's CEO, the analysis is one of the most extensive studies to date linking corporate profitability and climate change engagement. Marc Fox, CDP advisor and co-author of the SICM report, adds that the two organizations hope the study facilitates broader uptake by investors and corporate investor relations linking engagement on climate change and corporate profitability.

The publication was released on September 23 at the New York Stock Exchange, together with the CDP's annual carbon performance and disclosure ratings for the S&P 500. The two complementary reports show that CDP leaders that incorporate environmental factors into their business strategies are mitigating climate related risks, finding opportunities to strengthen their businesses and delivering higher profitability than their industry peers, the authors say.

The whole article can be seen here and the publication can be downloaded here.

Tags: Ecosystem valuation | Finance Industry


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