GLOBAL – Large companies are not doing enough to reduce their carbon emissions, according to the CDP Global 500 Climate Change Report 2013.
The carbon emitted by the 50 highest-emitting companies in the world, which primarily operate in the energy, materials and utilities sectors, has risen by 1.65% to 2.54bn metric tonnes over the past four years – an equivalent of adding more than 8.5m pickup trucks to the streets or electricity supply to 6m homes for a year.
Those 50 firms are responsible for 73% of the overall 3.6bn metric tonnes of greenhouse gas (GHG) emissions of the world's 500 largest companies.
The report also shows that the five highest-emitting companies from each sector have seen their emissions increase by an average of 2.3% since 2009.
CDP chief executive Paul Simpson said: "It is imperative big emitters improve their performance in this regard and governments provide more incentives to make this happen.
"The corporate world is an aggregator of both risks and opportunities from this challenge, so this report is written for businesses, investors and policymakers that want a clear understanding of how the world's largest listed companies can transform themselves to protect our natural capital."
The report revealed that the emissions from 47% of the most carbon-intensive activities that companies identify across their value chains have yet to be measured.
The lack of detailed reporting and information of GHGs from sources related to company activities (Scope 3 emissions), as opposed to those from sources owned or directly controlled by them, may lead companies to underestimate their full carbon impact.
For example, two-thirds of the Global 500 measure emissions associated with business travel, but this equates to just 0.2% of the sample's reported Scope 3 emissions.
Nearly all financial businesses are managing their travel emissions but less then one-tenth (6%) are reporting the emissions associated with their investments, the sector's prime source of Scope 3 emissions.
The study identifies opportunities for all FTSE Global 500 companies to help build resilience to climate and policy shocks by significantly reducing the amount of carbon dioxide they produce each year.
It also found that financial incentives are driving emissions reductions.
Companies that demonstrate a strong commitment to managing their impact on the environment are generating improved financial and environmental results.
Analysis of the corporations leading on climate progress such as BMW, Nestlé and Cisco Systems, suggests they generate superior stock performance, CDP said.
Further, the businesses that offer employees monetary incentives related to energy consumption and carbon emissions are 18% more successful at accomplishing reductions.
Malcolm Preston, global lead on sustainability and climate change at PwC, said: "The report underlines how customers, suppliers, employees, governments and society in general are becoming more demanding of business.
"It raises questions for some organisations about whether they are focused on sustaining growth in the long term or just doing enough to recover growth until the next issue arises.
"With the initial Intergovernmental Panel on Climate Change (IPCC) report only weeks away, corporate emissions are still rising. Either business action increases, or the risk is regulation overtakes them."
The report, entitled 'Sector insights: What is driving climate change action in the world's largest companies', can be found here.