Global 500 report
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Business resilience in an uncertain, resource-constrained world
How are the world’s largest companies managing climate change amid uncertainty?
Governments have reiterated their ambition to tackle climate change but, in 2012, their focus is on economic growth. Business faces a period of high uncertainty, subdued growth, and volatile commodity prices. In this context, companies are increasingly challenged by their shareholders to demonstrate long-term resilience.
This year over 400 of the Global 500 – the largest companies in the world by market capitalization based on the FTSE Global Equity Index -- responded to the CDP questionnaire. Their responses provide valuable insight into how companies are operating in an uncertain world. The report, based on analysis of the responses, investigates whether companies are strategically focusing on climate change and its long-term impacts.
The main findings of the report are:
- Despite the economic downturn, climate change is still on the board’s agenda – 96% of companies have board or executive level oversight of the issue.
- Companies continue to invest in emissions reductions, but these are typically short term, cost cutting measures such as energy or resource efficiency, rather than long term capital investments in low carbon technology.
- Although 82% of companies have set targets to reduce emissions, these are not nearly ambitious enough to achieve governments’ goals to limit warming to 2°C. Based on current projections, countries need to reduce emissions by 4% per year post 2020. The average of the longer-term absolute targets outlined by CDP respondents is only around a 1% reduction per year.
- Recent extreme weather and natural events have tested companies’ business resilience and increased their level of understanding of the timeframes of the physical risks of climate change they identify.