CDP: Companies Managing Climate Change Enjoy 18% Higher Return On Equity

4 10 2014

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In a significant new report, CDP has demonstrated that among S&P 500 Industry Leaders, those corporations who have made significant efforts to reduce their impact on climate change have much improved financial performance and return on equity (ROE) than those companies who are not taking such steps and do not disclose their carbon impact. CDP’s analysis shows that, on climate change management, S&P 500 industry leaders:

  • Generate superior profitability: ROE 18% higher than low scoring peers and 67% higher than non-responders.
  • Have more stability with 50% lower volatility of earnings over the past decade than low scoring peers.
  • Grow dividends to shareholders: 21% stronger than low scoring peers.
  • Exhibit value attributes attractive to equity investors.
The report presents the progress achieved by 70% of S&P 500 companies in integrating climate change risk management into strategic planning, taking action towards emissions reductions and demonstrating a long-term view of how to best manage the assets of shareholders. In the report, Paul Simpson, CEO of CDP says, “There is a palpable sea change in approach by companies driven by a growing recognition that there is a cost associated with the carbon they emit. Measurement, transparency and accountability drives positive change in the world of business and investment.” Here are the CDP leading companies and their corresponding three year return on equity. Screen Shot 2014-10-04 at 1.04.55 PM   In commenting on the report, HP Chairman Meg Whitman said, “By integrating sustainability across the entire value chain, companies can capture return on capital today and build leadership and business value for their future. These investments help companies create a competitive advantage, build stability, and provide assurances to stakeholders that they are well positioned for the challenges of the 21st century.” Read the CDP Climate Action and Profitability Report here

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