agneyaCDP - Taking Centre StageClimate change mitigation and resource conservation are fast becoming priorities in most businessoperations. Once seen as nice-to-do activities there has been a major shift in understanding of thetrue implications of climate change and natural resource depletion and the need for such mitigationstrategies. Organizations across the world are becoming aware of the fast changing regulations,growing consumer awareness, increasing energy prices and the resource shortages that canput major dents on business performance.In the face of such developments, building investor confidence has become increasingly important.Many investors now evaluate companies on environmental performance before making investmentdecisions. In a study published by MIT Sloan School of Management1 there was clear indication thatshareholders are sensitive to environmental footprints of companies. According to the study,companies with responsible behaviour towards environment witnessed significant positiveperformance of their stock prices while those without environmental considerations, displayedregular and even lower performance on stock prices. Organizations worldwide are aware ofsuch implications and are beginning to redesign and reorganize their businesses to addressrisks due to climate change and resource depletion.Over the years, several platforms have opened for organizations to report and disclose theirperformance data internationally. Organizations such are CDP, GHG Protocol and Global ReportingInitiative (GRI), provide standardized reporting platforms that have wide acceptability byinvestors and other stakeholders worldwide. Other international organizations such as InternationalStandards Organization (ISO), LEEDS, etc., provide the means for organizations to improveand certify their environment management systems as per internationally accepted norms.1 “Corporate Social Responsibility and Shareholder Value: The Environmental Consciousness of Investors”, C. Flammer, MIT Sloan School of Management, 2011
agneyaAbout CDPCDP, formerly known as Carbon Disclosure Project, is an international, not-for-profit organizationproviding the only global system for companies and cities to measure, disclose, manage and share vitalenvironmental information. A record of 722 investors, signatories to CDP, with US$87 trillion in assets –around a third of the world’s invested capital, have asked more than 5000 organizations worldwideto disclose their environmental performance through CDP. In 2012, more than 80% of the largest listedcompanies around the world used CDP system for climate accountability. Overall, more than 4000companies worldwide used CDP system as a tool for accounting their climate performance.The growing number of investors CDP Signatoriesthat are signatories to CDP indicates 800 100 87the growing importance given to 700 Number of investors Investors Assets (in US$ Trillion) 78 71natural resource management and 600 64 500 57 55climate change by investor groups. 400 41The recent expansion of CDP to 31 300 722include water and forest in its 200 21 475 534 551 655 10 315 385scope further testifies to the 4.5 100 225 35 95 155importance given to crucial naturalresources. 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (as on Feb)CDP IndiaCDP programme in India is relatively No. of Respondentsnew. Started in 2007, CDP has 57 51 51 53asked on behalf of investors, the 44top 200 companies by market 37capitalization to disclose their climateperformance through the CDP system.Over the years, the country haswitnessed an increase in the numberof responses. From a low 35 2007 2008 2009 2010 2011 2012respondents in 2007 there are now No. of respondents Linear (No. of respondents)53 respondents disclosingperformance data to CDP.
agneyaAccording to the CDP India 200 Climate Change Report, 95% of the respondents in India agreethat there are risks and opportunities associated with climate change especially regulatory riskand resource cost. Another 81% believed that there is physical threat from climate change that couldaffect business operations. Respondents also identified changing consumer behaviour as anotherrisk that needs to be address. Overall, these results indicate that most companies in India that havemeasured environmental performance have realized that the threat climate change poses is significantlyrelevant.Leadership IndexCDP ranks companies based upon their overall performance and disclosure. Responding companiesare ranked in two categories – Climate Disclosure Leadership Index (CDLI) and Climate PerformanceLeadership Index (CPLI). The first category ranks companies based on their disclosure levels while thesecond category ranks them based on their overall improvement since the last disclosure. In both cases,companies are ranked globally as well as country wise.Performance of Indian Companies
agneyaAll AboardWhile still at a nascent stage in India, the steady rise in participation in CDP disclosure by leadingcompanies is an encouraging sign. As the CDP framework becomes more integrated with globalbusinesses, and pressure from investors mounts, we will see more companies joining CDP thusincreasing the wealth of climate performance data available to potential investors.Roadmap to Success - GVK Power & Infrastructure Case StudyBetween 2011 and 2012, GVK Power & Infrastructure Limited and Wipro were the only two companiesto demonstrate positive improvements in their ranks at CDP India’s CDLI. While Wipro climbed a singleplace to reach top spot at the Index, GVK Power & Infrastructure Limited climbed an impressive sixplaces to reach second.Most of the activities that led to high ranking of GVK power & Infrastructure Limited at CDLI, includingthe filing of CDP, were conceptualized, designed and implemented by Agneya. Achieving such highstandards of performance required clear foresight, strong action plan and top notch execution.Several activities were at involved between the two CDP filings as shown below.CDP 2011 CDP 2012 – –