Calvert, Ceres, and the Carbon Disclosure Project

In 2006, Calvert, together with our partner Ceres, the largest coalition of investors and environmental and public interest organizations in North America that engages directly with companies on environmental and social issues, extended the Fourth Annual Carbon Disclosure Project (CDP) to companies in the S&P 500 for the first time. The CDP is an effort by major institutional investors (280 global investors with aggregate assets of $41 trillion) to ask the world's largest corporations to disclose investment-relevant information concerning their greenhouse gas emissions. On January 31, 2007 Calvert and Ceres released the ground-breaking report, "Climate Risk Disclosure by the S&P 500", summarizing the survey's findings. 

The survey found that despite growing financial losses in various business sectors from climate change, over half the nation's 500 largest publicly traded companies still do a poor job of disclosing climate change risks to their investors. Moreover, only 47 percent of the companies responded to the survey, and those that did respond failed to provide much of the information investors are seeking. Thirty percent of the responders, in fact, declined to publicly release their responses, calling them "confidential."

Climate change disclosure helps inform investors about a corporation's various strategies to mitigate global warming through greenhouse gas (GHG) emissions reductions, to embrace potential opportunities connected to climate change, and to manage exposure to climate-related risks. Investors are concerned that climate change causes material risks to their portfolios, but companies are not disclosing these risks in SEC filings or voluntary disclosures. However, regardless of the level of their emissions, companies face potential risks from new regulations, physical changes, and other climate-related impacts. Therefore, Calvert and Ceres encourage all companies to disclose their climate risk using the three most common disclosure mechanisms: SEC filings, the CDP survey, and sustainability reporting in accordance with the Global Reporting Initiative.

Other key findings from the Ceres/Calvert report include:

• Poor Greenhouse Gas Emissions Management: Eighty percent of the 228 companies that responded to the survey (182 companies) addressed the need to reduce greenhouse gas emissions, but only a quarter (59 companies) disclosed measurable emissions reductions targets and specific time frames.
  
• Physical Impacts Not on Radar Screen: Nearly 75 percent of the responding companies (171 companies) acknowledged bottom-line risks associated with extreme weather events such as hurricanes, fires, and floods. However, few link more-extreme weather to climate change, and fewer still - only 4 percent - disclosed strategies for mitigating and adapting to the physical impacts from climate change.
  
• There Is Good News: Many companies such as Bank of America and 3M are disclosing the risks and opportunities associated with climate change and have shown leadership qualities in their climate change disclosures.

Momentum for mandatory federal climate legislation is growing, and many states are already taking action to reduce GHG pollutants. Most developed countries have ratified the Kyoto Protocol and are pushing to reduce GHG emissions. All companies-including retailers, banks, oil producers and utilities-will be affected by climate change, and those not already affected by regulation can expect regulatory limits in the future. Understanding how individual companies and industries incorporate these regulations into capital investment decisions and strategic planning is critical to a complete understanding of a company's health and financial value.