New Delhi, 9 December 2020: Four Indian companies namely Hindustan Zinc Limited, IndusInd Bank, Mahindra & Mahindra and Tech Mahindra have been named among the 300+ global companies on this year’s A List by environmental non-profit CDP. This is a major increase on last year, despite the unprecedented challenges posed by COVID-19. CDP is an international non-profit that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests.
The A List showcases the companies leading on environmental transparency and action, based on their annual disclosure through CDP’s climate change, forests and water security questionnaires. Thousands of companies disclose through CDP at the request of investors and corporate buyers.
Globally, CDP has seen a major increase (45% up on last year) in the number of companies achieving an A score, with increases across all three themes that CDP assesses. Along with the high levels of disclosure, this shows growing environmental awareness among the business world in 2020.
For climate scores this is largely because more companies are choosing to be transparent by disclosing data - in itself an important step, driven by increased market pressure for transparency. The growth in companies scoring an A for tackling deforestation and water security points to increased action in these areas, as the higher levels of disclosure does not fully account for the increase. Forests is particularly notable as the number of companies on the A List doubled from a low base (16 compared to 8 last year).
The A List comes just ahead of the five-year anniversary of the Paris Agreement, with world governments expected to deliver updates on their national climate plans to build momentum ahead of COP26. In November, the UK Government was the first G20 government to announce mandatory disclosure, sending a powerful signal to the market and other governments that they should follow the UK’s approach.
"Besides the A-Listers, another 11 companies including JSW Steel, Godrej Consumer Products, and TATASteel received A- rating, which puts them in the ‘Leadership Band’. This highlights companies leading on environmental transparency and action, based on their annual disclosure through CDP," said Damandeep Singh, CDP India Director,noting that the performance of Indian companies in addressing climate change "has shown a marked improvement holding out hope for the future."
Globally, the number of companies achieving a triple A across climate, forests and water, the highest rating CDP provides, has also grown to 10, up from 6 last year, the previous record. Symrise AG, Mondi Plc, Fuji Oil Holdings and KAO Corporation are among the new triple A Listers.
Dexter Galvin, Global Director of Corporations & Supply Chains at CDP, said:"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. CDP data shows growing environmental awareness among the business world in 2020, which is hugely positive considering the unprecedented challenges business and society have faced this year.We have the wind in our sails. Now, 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 race is on."
The A List companies hail from around the globe, with most coming from Europe (132), Asia (100) and North America (61). The top countries for A List headquarters are Japan (66), US (58), UK (21), Germany(19) and France (18). Last year Japan overtook the US and Asia overtook North America for the first time, with this solidifying further this year.
Katarina Ageborg, Chief Sustainability Officer at AstraZeneca, commented: "Environmental crises impact the health of communities around the world every day, so as a healthcare company the challenges brought about by the pandemic have increased, not reduced, the urgency of our environmental action. Recognition on the CDP A List for climate and water for the fifth consecutive year is testament to our continued efforts to address the connection between the health of the planet and healthy people."
Around half of the A List (over 150 companies) are either new or returning, demonstrating that concrete environmental action continues apace this year despite 2020’s economic challenges.
While there has been a big increase in the A List this year, it still only represents a minority of companies. Most(74%) of companies scored by CDP achieved D-C scores, meaning they are only just starting their environmental journey and becoming aware of how environmental issues impact their business.Even more concerning, 3,700+ companies failed to disclose any data when requested by investors or customers, and over three times this many received an F for at least one theme. These companies are expected to face increasing pressure to demonstrate they are taking environmental risks seriously.
The market demand for corporate environmental transparency is louder than ever: 515 investors with US$106 trillion in assets, and 150+ large purchasers with US$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.
Leading environmental action is correlated with financial success. The A List companies are combined worth almost US$15 trillion in market cap. Further, data from STOXX has shown that the A List has outperformed its reference index by an average of 5.3% per annum over a 7-year period.
Therese Niklasson, Global Head of ESG at Ninety One said: "As supporters of the CDP since 2010, we share their goal to make environmental reporting and risk management a business norm, and to drive disclosure, insight and action towards a sustainable economy. We have worked hard at integrating CDP data into our internal carbon profiling tools to interrogate a more holistic understanding of climate risks and look forward to engaging with several more portfolio companies to encourage them to report and improve standards. CDP has without a doubt been instrumental in driving this critical disclosure effort for the benefit of the industry and ultimately society."
Samuel Mary, Vice President, ESG Research Analyst at PIMCO added: "PIMCO supports the development of enhanced corporate disclosure regarding strategies to advance the Paris Agreement and the Sustainable Development Goals (SDGs), notably ambitious targets linked to climate action, water, biodiversity and forests. We thus see CDP as a key source of data and insights on how corporates respond to these trends and the potential implications of climate change and nature-related risks and opportunities for fixed income investors."
The companies are scored based on CDP’s transparent scoring methodology covering: comprehensive disclosure of environmental impacts, risks, opportunities, governance and actions; awareness of environmental risks and how they relate to their business; demonstrating management of these environmental risks and evidence of best practice associated with environmental leadership.
