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Mercer and Carbon Disclosure Project report

CDP investor signatories see climate change as important and company disclosure as valuable

Mercer and the Carbon Disclosure Project (CDP), an independent not-for-profit organisation holding the largest database of corporate climate change information in the world, released a report on 9 March on how climate change and CDP data is being used by investors, and how the CDP can increase the uptake of climate change and CDP data into mainstream investment practices.

Since its formation in 2000, CDP has become the gold standard for carbon disclosure methodology and process, providing critical climate change data to the global market place. More than 1550 major corporations around the globe report their greenhouse gas emissions and the risks and opportunities posed by climate change through CDP.

Key findings from the report included:

  • 77 percent of respondents indicated that they factor climate change information into their investment decisions and asset allocations¹. Of these, more than 80 percent indicated that climate change is a very or somewhat important factor.
  • 69 percent of respondents stated they currently use CDP data in some way, most commonly as a tool for corporate engagement. Indeed, corporate engagement emerged as the leading area in which investors are using CDP data both as a stand alone resource and to back up information from other sources.
  • In contrast, only 11 percent reportedly fully incorporate carbon emissions data into financial analysis.
  • 49 percent of respondents are willing to ask companies to do more than just disclose information on climate change. For example, some respondents indicated they are willing to ask for emissions reductions.

Investors also highlighted barriers to using GHG data including a lack of comparability between responses, incomplete sector coverage and the absence of a unified global reporting and regulatory framework.

Eighty of the CDP's worldwide signatory investors responded to a survey designed and administered by the CDP. Mercer then analyzed the results. Survey participants included asset managers, pension funds, insurers and socially responsible investment funds.

"The survey revealed some interesting steps being taken by very committed investors", said Jane Ambachtsheer, Mercer's Global Head of Responsible Investment. She also noted that, "When interpreting the results, we should bear in mind that respondents to the survey will be, on average, more engaged with the CDP and climate issues than other investors. The leaders are gaining ground over the laggards".

Looking forward, there was general consensus amongst respondents that the materiality of climate change has increased and it will continue to do so. A significant number of respondents revealed that they are still working on how to integrate CDP and other climate data into their existing systems, models and processes. Therefore, there is significant potential for improvement in how investors use carbon emissions data in the future.

"As climate change regulation matures and expands around the globe, members of the investment community will be increasingly compelled to analyze climate risks and opportunities in greater detail," said Danyelle Guyatt, a principal in Mercer's Responsible Investment team. Paul Simpson, Chief Operating Officer of the CDP added, "The CDP is well positioned to continue to promote better disclosure amongst companies of carbon emissions data, by working towards significantly improving the comparability of responses, expanding coverage and involvement in discussions on regulatory changes with policy makers."

¹ With surveys of this type, there is often a bias towards active or involved signatories in those who choose to participate - thus, the level of engagement with the data may be overstated in an overall context.


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