| What has 10 years achieved? by CDP
Special thanks to Hong Kong Exchanges and Clearing for hosting the event at the Exchange Auditorium and sponsoring the carbon offsets for the event as well as speakers from HKEx, Carbon Disclosure Project (CDP), Goldman Sachs (Asia), Cathay Pacific Airways, and South Pole Carbon Asset Management. We also kindly thank all the organizations that sponsored ASrIA's work on CDP this year. The list of sponsors is below.
Asian corporations with strong governance mechanisms to support sustainability have been able to achieve significant results not only in reducing greenhouse gas emissions but also in identifying related business opportunities. These are among the findings of the Carbon Disclosure Project (CDP) 2010 Asia ex-Japan Report released by the Association for Sustainable and Responsible Investment in Asia (ASrIA), in partnership with CDP.
ASrIA's annual launch of the CDP Asia ex-Japan report since 2005 has become one of the leading business and investment events on climate change in Hong Kong. For the 2010 report, 635 leading Asian companies were invited to participate in a survey concerning their policies and actions on climate change and carbon emissions.
The response this year has been significant for Asia ex-Japan. There is an overall increase in the number of companies responding, up to 190 across the whole region, primarily led by Korea, which has the highest number of responses at 88. Overall though, it is a year of consolidation and differentiation, as responding companies across the region significantly increased the quantity and quality of data, widening the leadership gap between them and non-responding companies. The lack of agreement on policy direction from Copenhagen also provides a defining theme for this year, with more emphasis on bottom-up policy development at the national level. Whilst a number of countries across the region are beginning to talk more actively about their range of policy initiatives, roadmaps still remain uncertain.
For investors, four key themes emerged from ASrIA’s analysis of the 2010 responses.
Regulatory roadmaps emerging as a key issue post- Copenhagen
Developments in the regulatory environment continue as a key issue this year. With the failure to gain a final agreement at Copenhagen, there has been a more bottom-up approach to regulation, with countries continuing to set their own emissions reduction targets and exploring a mix of regulatory, voluntary and incentive oriented policies. Many of the reporting companies explain in detail how they are preparing for policies to come into force over the coming two to three years; however, there is a sense that some of the urgency has come from the regulatory roadmaps in countries such as Korea and Taiwan which have been leading in this respect. Ensuring that these roadmaps remain in place and that effective regulatory frameworks are developed is therefore critical to maintain momentum in the overall shift to lower-carbon economies across the region.
Increased emphasis on senior executive oversight
There is a significant increase this year in the number of companies with senior executive or board-level oversight of carbon management issues. However, a gap remains between companies which claim to have director or senior management oversight vs. companies that include climate change-related metrics in compensation packages. Another indicator of higher level engagement is the increasing focus by companies on new business opportunities, which provides increased evidence of strategic thinking, rather than simply technical management. Furthermore, higher level engagement also translates into more confidence about transparency in disclosure, as evidenced by the quality of the responses and the quality of CSR reporting. There are a number of indicators therefore that investors can draw on to assess the quality and commitment of senior management leadership on climate change-related issues.
Realising new opportunities in clean technology and resource efficiency
This year saw a significant increase in the number of companies reporting on growing investments in products and services that improve resource efficiency or which could provide a strategic advantage in the shift towards a low-carbon economy. Clean technology continues to gain in prominence among respondents, both from the perspective of applying technology solutions to reduce operational carbon intensity, and from the angle of commercialising products that enable such a transition. There is also a continued interest in carbon trading, with a total of 61 companies across the whole Asia ex-Japan sample claiming to be participating in, or expecting to participate in, carbon trading.
Korea leads again, but there is overall consolidation rather than growth in response rates this year
The number of Korean companies included in CDP’s information request this year doubled, and there is significant growth in the number of Korean companies that respond across several sectors. This probably reflects the fact that there has been significant engagement between different sectors and the government on standards and regulatory developments in Korea over the past several years. Elsewhere across the region it is notable that companies which are already engaged with the process continue to invest in and develop strategies related to climate change whilst other companies continue to lag. Among companies responding to the CDP 2010 information request, there is an overall increase in companies providing emissions data, information on opportunities associated with climate change, and discussion of strategic initiatives. Companies providing publicly available responses also increased. We can therefore see a significant gap developing between leaders and laggards across the region.
CDP 2010 Asia ex-Japan metrics
ASrIA kindly thanks all the organizations that sponsored ASrIA's work on CDP this year:
Australian Ethical Investment |
F&C Asset Management |
SAM Group |
Bank of America Merrill Lynch |
Hong Kong Exchanges and Clearing Ltd |
Sindicatum Carbon Capital |
BMT Asia Pacific |
International Finance Corporation |
Sigrid Rausing Trust |
Bloomberg |
Item Industries |
Standard Chartered |
British High Commission Singapore |
Lloyd George Management |
SustainAsia |
City Developments Limited |
New Forests Asia |
UBS |
Climate Asia |
PricewaterhouseCoopers |
WSP Environment & Energy |
Download the CDP 2010 Asia ex-Japan Report at: http://www.asria.org/publications |
