Carbon Disclosure Project 2006

Carbon Disclosure Project (CDP)
www.cdproject.net
Paul Dickinson
+44 7 95877 2864
paul@cdproject.net
Innovest Strategic Value Advisors
Matthew Kiernan
+1 905 707 0876 x 204
mkiernan@innovestgroup.com
Carbon Disclosure
Project Report 2006
Global FT500
On behalf of 225 investors with assets of $31 trillion
Report written by
Innovest
Strategic Value Advisors

2
Signatories
CDP Signatories 2006
This report is based on the submissions
from FT500 corporations in response
to the fourth information request sent
by the Carbon Disclosure Project
(CDP4) on 1st February 2006.
This summary report, the full report
and all responses from corporations
are available without charge from
www.cdproject.net
The contents of this report may be used
by anyone providing acknowledgement
is given. 225 investors were signatories
to the CDP4 information request dated
1st February 2006 including:
Aachener Grundvermogen
Kapitalanlagegesellschaft mbH Germany
Aberdeen Asset Managers UK
ABN AMRO Bank N.V. Netherlands
ABP Investments Netherlands
ABRAPP – Associação Brasileira das
Entidades Fechadas de Previdência
Complementar Brazil
Activest Investmentgesellschaft mbH
Germany
Acuity Investment Management Inc
Canada
AIG Global Investment Group U.S.
Allianz Group Germany
AMB Generali Asset Managers
AMP Capital Investors Australia
ANBID – National Association
of Brazilian Investment Banks Brazil
ASN Bank Netherlands
Australia and New Zealand Banking
Group Limited Australia
Australian Ethical Investment Limited
Australia
AXA Group France
Baillie Gifford & Co. UK
Banco do Brazil S.A. Brazil
Banco Fonder Sweden
Bank Sarasin & Co, Ltd Switzerland
BayernInvest Kapitalanlagegesellschaft
mbH Germany
BBC Pension Trust Ltd UK
BMO Financial Group Canada
BNP Paribas Asset Management
(BNP PAM) France
Boston Common Asset
Management, LLC U.S.
BP Investment Management Limited UK
Brasilprev Seguros e Previdência S.A.
Brazil
British Coal Staff Superannuation Scheme
UK
British Columbia Investment Management
Corporation (bcIMC) Canada
BT Financial Group Australia
BVI Bundesverband Investment
und Asset Management e.V.
Germany
Caisse de Dépôts France
Caisse de Dépôts et Placements du
Quebec Canada
Caixa Econômica Federal Brazil
California Public Employees Retirement
System U.S.
California State Teachers
Retirement System U.S.
Calvert Group U.S.
Canada Pension Plan Investment Board
Canada
Carlson Investment Management Sweden
Carmignac Gestion France
Catholic Superannuation Fund (CSF)
Australia
CCLA Investment Management Ltd UK
Central Finance Board of the
Methodist Church UK
Ceres U.S.
Cheyne Capital Management UK
CI Mutual Funds Signature
Funds Group Canada
CIBC Canada
Citizens Advisers Inc U.S.
Close Brothers Group plc UK
Comité syndical national
de retraite Bâtirente Canada
Connecticut Retirement Plans
and Trust Funds U.S.
Co-operative Insurance Society UK
Credit Suisse Group Switzerland
Daiwa Securities Group Inc. Japan
Deka FundMaster Investmentgesellschaft
mbH Germany
Deka Investment GmbH Germany
DekaBank Deutsche Girozentrale
Germany
Delta Lloyd Investment
Managers GmbH Germany
Deutsche Bank Germany
Deutsche Postbank Privat Investment
Development Bank of Japan Japan
Development Bank of the Philippines
(DBP) Philippines
Dexia Asset Management Belgium
DnB NOR Norway
Domini Social Investments LLC U.S.
DWS Investment GmbH Germany
Environment Agency Active
Pension Fund UK
Erste Bank der Oesterreichischen
Sparkassen AG Austria
Ethos Foundation Switzerland
Eureko B.V. Netherlands
F&C Asset Management UK
FAPES – Fundacao de Assistencia e
Previdencia Social do BNDES Brazil
Fédéris Gestion d’Actifs France
First Swedish National Pension Fund
(AP1) Sweden
Five Oceans Asset Management Pty
Limited Australia
Folksam Asset Management Sweden
Fonds de Réserve pour les Retraites –
FRR France
Fortis Investments Belgium
Frankfurter Service
Franklin Templeton Investment Services
Gmbh Germany
Frater Asset Management South Africa
Fukoku Capital Management Inc Japan
FUNCEF Brazil
Fundação Atlântico de Seguridade Social
Brazil
Fundação CESP Brazil
Fundação Forluminas de Seguridade
Social Brazil
Gartmore Investment Management plc UK
Gen Re Capital GmbH Germany
Generation Investment Management UK
Gerling Investment
Goldman Sachs U.S.
Hastings Funds Management Limited
Australia
Helaba Invest Kapitalanlageggesellschaft
mbH Germany
Henderson Global Investors UK
Hermes Investment Management UK
Hospitals of Ontario Pension Plan
(HOOPP) Canada
HSBC Holdings plc UK
Hyundai Marine & Fire Insurance Co, Ltd
South Korea
I.DE.A.M – Integral Dévelopment Asset
Management France
Indexchange Investment AG Germany

3
Signatories
ING Investment Management Europe
Netherlands
Inhance Investment Management Inc
Canada
Insight Investment Management (Global)
Ltd UK
Interfaith Center on Corporate
Responsibility U.S.
Internationale Kapitalanlagegesellschaft
mbH Germany
Ixis Asset Management France
Jupiter Asset Management UK
KLP Insurance Norway
LBBW – Landesbank Baden-Württemberg
Germany
Legal & General Group plc UK
Light Green Advisors, LLC U.S.
Local Authority Pension Fund Forum UK
Lombard Odier Darier Hentsch & Cie
Switzerland
London Pensions Fund Authority UK
Maine State Treasurer U.S.
Maryland State Treasurer U.S.
Meag Munich Ergo
Meeschaert Asset Management France
Meiji Yasuda Life Insurance Company
Japan
Meritas Mutual Funds Canada
Merrill Lynch Investment Managers UK
Mitsubishi UFJ Financial Group
(MUFG) Japan
Mitsui Sumitomo Insurance Co Ltd Japan
Mizuho Financial Group, Inc. Japan
Monte Paschi Asset Management S.G.R.
– S.p.A Italy
Morgan Stanley Investment Management
U.S.
Morley Fund Management UK
Münchner Kapitalanlage AG Germany
Munich Re Germany
Natexis Banques Populaires France
National Australia Bank Limited Australia
Nedbank South Africa
Neuberger Berman U.S.
New York City Employees Retirement
System U.S.
New York City Teachers Retirement
System U.S.
New York State Common Retirement
Fund U.S.
Newton Investment Management Limited
UK
NFU Mutual Insurance Society UK
Nikko Asset Management Co., Ltd. Japan
Ontario Municipal Employees Retirement
System (OMERS) Canada
Ontario Teachers Pension Plan Canada
Oregon State Treasurer U.S.
Pax World Funds U.S.
PETROS – The Fundação Petrobras de
Seguridade Social Brazil
PGGM Netherlands
PhiTrust Finance France
Pictet & Cie (Europe) S.A. Germany
Portfolio Partners Australia
Prado Epargne France
PREVI Caixa de Previdência dos
Funcionários do Banco do Brasil Brazil
Prudential Plc UK
Public Sector Superannuation Scheme
and Commonwealth Superannuation
Scheme Australia
Rabobank Netherlands
Railpen Investments UK
Rathbone Investment Management /
Rathbone Greenbank Investments UK
REAL GRANDEZA Fundação de
Previdência e Assistência Social Brazil
RLAM UK
Robeco Netherlands
Rockefeller & Co Socially Responsive
Group U.S.
SAM Sustainable Asset Management
Switzerland
Sanlam Investment Management
South Africa
Sanpaolo Imi Asset Management Sgr
Italy
Sauren Finanzdienstleistungen Germany
Schroders UK
Scotiabank Canada
Scottish Widows Investment Partnership
UK
Second Swedish National Pension Fund
(AP2) Sweden
Service Employees International Union U.S.
Shinkin Asset Management Co., Ltd Japan
Siemens Kapitalanlagegesellschaft mbH
Germany
SNS Asset Management Netherlands
Social Awareness Investment,
ClearBridge Advisors, a unit of Legg
Mason Inc. U.S.
Société Générale Asset Management UK
Limited UK
Société Générale Group France
Sogeposte France
Sompo Japan Insurance Inc. Japan
Standard Life Investments UK
State Street Global Advisors U.S.
State Treasurer of California U.S.
State Treasurer of North Carolina U.S.
Storebrand Investments Norway
Stratus Banco de Negócios Brazil
Sumitomo Mitsui Financial Group Japan
Superfund Asset Management GmbH
Germany
Swedbank Sweden
Swiss Reinsurance Company Switzerland
TfL Pension Fund UK
The Collins Foundation U.S.
The Co-operative Bank UK
The Dreyfus Corporation U.S.
The Ethical Funds Company Canada
The Royal Bank of Scotland Group UK
The Shiga Bank, Ltd (Japan) Japan
The Wellcome Trust UK
Third Swedish National Pension Fund
(AP3) Sweden
Threadneedle Asset Management UK
Tokio Marine & Nichido Fire Insurance
Co., Ltd. Japan
Trillium Asset Management Corporation
U.S.
Triodos Bank Netherlands
Tri-State Coalition for Responsible
Investing U.S.
UBS AG Switzerland
UBS Global Asset Management
(Deutschland) GmbH Germany
Unibanco Asset Management Brazil
UniCredit Group Italy
Union Investment Germany
United Methodist Church General Board
of Pension and Health Benefits U.S.
Universal-Investment-Gesellschaft mbH
Germany
Universities Superannuation Scheme
(USS) UK
Vancity Group of Companies Canada
Vermont State Treasurer U.S.
VicSuper Proprietary Limited Australia
Walden Asset Management, a division
of Boston Trust and Investment
Management Company U.S.
Warburg-Henderson
WestLB Asset Management (WestAM)
Germany
Zurich Cantonal Bank Switzerland

This year’s CDP attracted the support of 225
investment institutions globally, representing
in excess of $31.5 trillion of assets under
management. This support, in conjunction with
the improved quality and quantity of responses
from the corporations, confirm the private sector
is now engaging on climate change at a
fundamental level. CDP4 illustrates that climate
change and shareholder value are inextricably
linked. The purpose of this CDP report is to
summarize the analysis of responses to the CDP4
questionnaire and to help investors determine
how FT500 companies1
– the 500 largest publicly
traded companies in the world by market
capitalization – are engaging with the climate
change issue and what the likely commercial
implications are.

5
Executive Summary
The responses from corporations are available
to download at www.cdproject.net
Executive Summary
72% of FT500 Corporations Disclosed to CDP4
Answered Questionnaire 72%
Provided Information 8%
Declined to Participate 9%
No Response 11%
CDP1 CDP2 CDP3 CDP4
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
3,500,000,000
4,000,000,000
TonnesCO2
e(scope1,2and3emissions)
FT500 Response Rates for CDP4
Total Emissions Reported Through CDP
Risks and Opportunities
The primary risks posed by climate
change can be grouped into four
categories:
(i) Physical risks such as asset
damage and project delays resulting
from the increasing number of extreme
weather events;2
(ii) Regulatory risks resulting from
tightening national and international
regulations designed to curtail
greenhouse gas (GHG) emissions;
(iii) Competitive risks generated by
a possible decline in consumer demand
for energy-intensive products and a rise
in costs for energy intensive processes;
(iv) Reputational risks from perceived
“inaction” on climate change.
In addition to these risks, climate change
is creating substantial commercial
opportunities that are increasingly being
sought by investors. Recent and rapid
technological innovation is stimulating
growth in new and existing industries,
and helping to send clearer signals to
the market concerning the long-term
growth potential of “low carbon” products
and services. In 2005, global wind and solar
markets reached $11.8 billion and $11.2
billion – up 47% and 55% respectively
from a year earlier. The market for biofuels
hit $15.7 billion globally, up more than
15% from the previous year.3
This year’s key findings from the CDP4
FT500 responses are as follows:
Disclosure Trends
• CDP4 generates highest-ever
response rate. 72% (360) of the
FT500 answered the CDP questionnaire,
compared to 71% in CDP3, 59%
in CDP2 and 47% in CDP1.
• High-impact sectors lead the way.
Responses were considerably in excess
of the average 72%.4
The highest
response rate was 94% in the Electric
Utilities – International sector.
• Europe continues to have highest
regional response rate. 86% of
European-based firms answered the
CDP4 questionnaire, compared to 66%
of North American based firms. However,
prominent U.S. FT500 companies
American Express, Boeing, Home
Depot and Wal-Mart responded
to the CDP for the first time this year.
• Quality and comparability of responses
are improving. The average quality
and sophistication of responses to the
CDP continues to improve year on year
thereby enhancing the data available
to investors. A growing proportion of
FT500 companies are using the GHG
Protocol to report their emissions.
• Awareness of issue is not only driven
by regulation. 87% of responding
companies indicated climate change
represented “commercial risks and/or
opportunities,” but only 35% agreed that
regulatory responses to climate change
represented a possible financial risk.
As the chart indicates, the disclosure
rate now stands at 72%, up from
71% in CDP3, 59% in CDP2, and
47% in CDP1.
In CDP4 approximately
10% of global GHG emissions
were reported from FT500
corporations.
1 As a result of regional and sectoral expansion the CDP4 information request was sent to over 2,100
companies globally, apart from the section referring to these expansions all of the analysis in this report
is based on the FT500 sample only.
2 “Winning the Battle Against Global Climate Change,” Communication From The European Commission
to the Council, The European Parliament, The European Economic and Social Committee, and the
Committee of the Regions, Com (2005) 35 final, September 2, 2005, pgs. 1-3.
3 Joel Makower, ‘Clean Energy Trends 2006’ Clean Edge, March 2006.
4 For the purposes of this report, we have classified the following industrial clusters as “high impact”:
Automobiles and Auto Components; Banks and Diversified Financials; Chemicals (Diversified and
Specialty); Electric Power – North America; Electric Utilities – International; Industrial Conglomerates
and Industrial Machinery; Insurance; Integrated Oil & Gas and Metals & Mining and Steel.

6
Executive Summary
“As an investor, we must actively
manage the risks and opportunities
related to climate change and
other environmental trends. The
information gathered by the CDP
helps us do this. On the opportunity
side, AIGGIG is allocating new
private equity to GHG mitigating
investments.”
Win Neuger
CEO
• Action to reduce emissions trails
awareness of the issue. Less than
half (48%) of companies that consider
climate change to present commercial
risks and/or opportunities to their
business have implemented a GHG
reduction program.
• Emissions disclosure increases
globally through CDP expansions.
In 2006 CDP wrote to over 2,100
corporations around the world in
partnership with various organizations,
up from the FT500 previously. This led
to 940 responses to CDP in total this
year, up from 350 in 2005.
Financial Implications:
• GHG Regulation creates winners
and losers. The best positioned
company in our GHG regulatory model
could have windfall revenues yielding
$298 million or 10.6% of 2005 Earnings
Before Interest, Tax, Depreciation and
Amortization (EBITDA). The worst could
lose 25% of its EBITDA due to regulatory
compliance costs.
• GHG Reduction less costly than
expected. At a fixed marginal abatement
cost of $25 per tonne, many companies
could reduce their “business as usual”
2012 emissions to 10% below 2005
levels for less than 1% of their reported
2005 earnings.
• 38% (n=129) of responding
companies disclosed their energy
costs in CDP4. These 129 FT500
companies reported spending $116
billion on energy in 2005.
Emissions Trends
• Consistent strong percentage of
companies disclosing emissions.
73% of respondents disclosed their
emissions data (compared to 77%
in CDP3 and 75% in CDP2).
• Emission intensity varies significantly
within and among sectors. Emissions
intensity (emissions per unit of sales)
of industry competitors is often trending
in opposite directions, indicating the
potential for winners and losers.
• 80% of emissions are released by
four sectors. These are Electric Utilities
– International; Electric Power – North
America; Integrated Oil & Gas; and
Metals & Mining and Steel.
• Total emissions reported to CDP4
were 3,343,618,288 tonnes of CO2e.5
This represents approximately 10%
of global GHG emissions,6
up from
2,994,834,887 tonnes in CDP3.7
Total GHG emissions reported to the
CDP increased over 70% from 2001
to 2005 primarily as a result of
improved disclosure.
• Correlation between emission-
intense regions and regulatory
trends. Nearly two-thirds (62%)
of FT500 GHG emissions are being
released in Annex B countries of the
Kyoto Protocol – those most likely
to regulate their emissions.8
The above key findings indicate the
maturation of corporate approaches
to climate change, as well as highlighting
the increasing disparity between winners
and losers, opportunity and risk. These
disparities represent both investment
opportunities and pitfalls.
Climate Change Developments
Once again it has been an
unprecedented year for the macro-
economic “drivers” of climate change
– the “drivers” that will exacerbate
competitive positioning regarding
climate change. This year’s climate
change developments are as follows:
• Clean energy grows up. In North
America, “clean tech” has become
the fifth largest venture capital
investment category, trailing only
Biotechnology, Software, Medical and
Telecommunications.9
It is estimated
that the clean energy market will grow
from $39.9 billion currently to $167.2
billion by 2015.10
• Kyoto strategies under development.
Industrialized countries party to the Kyoto
Protocol are developing implementation
strategies to meet their 2008–2012
reduction obligations.
5 CO2e = carbon dioxide equivalent.
6 Using a 2000 figure for global GHGs of 33,309,000,000 metric tons CO2 equivalent from
http://earthtrends.wri.org/pdf_library/data_tables/cli1_2005.pdf
7 This sum includes Scope 1, Scope 2 and Scope 3 emissions using the WRI/WBCSD GHG Protocol
(see www.ghgprotocol.org for more information).
8 Annex B (countries) are those countries that face mandatory GHG reduction obligations under the Kyoto
Protocol. Two Annex B countries – the United States and Australia — have not ratified the Kyoto
agreement and therefore do not face any emission reduction obligations under Kyoto at this time.
9 See http://cleantech.com/index.cfm?pageSRC=PressRelease
10 Joel Makower, “Clean Energy Trends 2006” Clean Edge, March 2006.

7
Executive Summary
Many strategies entail domestic “cap
and trade” schemes covering high-
impact sectors, putting a market price on
GHG emissions. Widespread uncertainty
about the scope of global GHG
regulation after the Kyoto Protocol
expires in 2012 is causing a considerable
headache for many FT500 companies.
• Carbon markets accelerate. The
amount of carbon traded globally
increased 44-fold between 2004 and
2005, driven mostly by the rapid
expansion of the world’s most important
carbon market (the EU ETS), affecting
6,000 firms globally. In CDP4, 46% of
responding FT500 companies said that
they consider emissions trading to be
relevant to their operations.
• Investors acting on climate change.
Numerous financial institutions,
including AIG, Allianz and Goldman
Sachs have released dedicated climate
change policies in the past 12 months.
Moreover, Citigroup, JP Morgan Chase
and Morgan Stanley among others have
published equity research reports
analyzing the financial performance
of the carbon markets.
• Investor collaboration reaches new
heights. Institutional investor interest
in pushing for company-specific climate
risk disclosure reached record levels
in 2006. All indications are that this
trend will further accelerate in the years
to come. The CDP itself is now supported
by 225 investors with collective assets
under management of $31.5 trillion,
up from 155 investors with $21 trillion
last year, $10 trillion in 2004 and $4.5
trillion in 2003.
• Climate science increasingly
accepted. Recent meta-analysis of
the scientific literature suggests that
the relationship between global warming
and anthropogenic GHG emissions
is nearly universally accepted in the
science community, although accounts
in the popular press portray a much
more equivocal picture.11
• Oil and gas supply and demand
tensions increase. Rising fossil fuel
prices and concerns over energy
security are rapidly changing the rules
of the game for companies operating
in energy-intensive sectors. Discussions
about peak oil and the future of the
oil-economy are further incentivizing
investments in renewable energy.
• Legal. While tobacco-style litigation
remains on the distant horizon, the
growing number of climate change-
related lawsuits in the U.S. is raising the
stakes for shareholders with investments
in high-impact industries. In a landmark
decision, the U.S. Supreme Court agreed
in June 2006 to hear a case arguing that
the U.S. Environmental Protection Agency
(EPA) should regulate CO2 emissions.
• Insurance. After an estimated $65
billion in payouts due to Hurricanes
Katrina, Rita, and Wilma, major FT500
insurers such as Allstate are dropping
policies along the U.S. eastern seaboard.
Premiums are expected to spike in other
states where insurers will continue to offer
policies. A June 2006 report from Lloyd’s
of London12
stated that the financial
and pricing models the global insurance
industry has been using up until now
may not adequately anticipate the pace
of climate change.
Conclusion
In sum, CDP4 finds that the global
investment and corporate communities
have made great strides in their
understanding of climate change
and its competitive and financial
implications, and the measurement
of these implications. However,
awareness and measurement are not
translating into sufficient management
and activity in the context of the
climate change challenge.
For companies, increased activity
means better risk management,
new and re-examined business models
and being more attuned to climate-
driven opportunities. For institutional
investors – the companies’ owners –
it means moving beyond awareness
and disclosure and actually integrating
climate risk research systematically
into their stock selection and portfolio
construction processes and rewarding
outperformers. At present, our very
rough estimate is that less than 0.1%
of invested assets are currently managed
in that fashion. Until and unless this
occurs, awareness and disclosure alone
will not be sufficient to catalyze changes
at a scale and a rate commensurate
with the truly extraordinary nature of the
challenge presented by climate change.
“Climate change and the impact
that it will have on key industries
such as agriculture, tourism, energy,
transport and insurance, is as
important as interest rate risk and
exchange risk. As a major global
investor, we support the CDP
and value the information that it
provides to help us make informed
decisions on the subject.”
Henri de Castries
Chairman of Management Board
and Chief Executive
11 See http://www.cbc.ca/arts/film/inconvenient.html.
12 Lloyd’s, 360 Risk Project: “Climate Change: Adapt or Bust,” June 2006, pg. 4.

8
Contents
1. Background to the CDP 9
2. Climate Leadership Index 2006 (CLI) 13
3. Response Trends 17
Summary of Company Responses
to Questions in CDP4 18
Response Rates to the CDP 20
Key Trends from CDP Geographic
and Sector Expansions 24
4. Summary of Key Findings 29
Financial Exposure to GHG Regulation 30
Emissions Intensity 32
FT500 Emissions by Sector 34
FT500 Emissions Occurring in
Annex B Countries 35
Quality of Emissions Data 37
Key Sector Trends 40
Energy Costs 42
FT500 Involvement with CDM/JI 44
Share Ownership 46
Gaps in Action 48
5. Clean Tech and the FT500 49
6. Conclusion 55
7. Recent Climate Change Developments 57
Main Developments since CDP3 59
Carbon Markets 64
Corporate Positioning 69
Investor Collaboration 71
Carbon Accounting 72
Climate Science 73
Legal Developments 76
8. Peak Oil 78
9. Appendices 83
Appendix I – Sector Analysis 84
Appendix II – Summary of Company
Responses in Remaining Sectors 122
Appendix III – CLI Scoring Guidelines 136
Appendix IV - CDP4 Questionnaire 138
Appendix V – Company Responses 139
Contents

1The Carbon Disclosure Project (CDP)
provides a coordinating secretariat for
institutional investor collaboration on climate
change. CDP’s aim is twofold: to inform investors
of the significant risks and opportunities presented
by climate change; and to inform company
management of the serious concerns of their
shareholders regarding the impact of climate
change on company value.

10
Background to the CDP
Having launched in December 2000
at No. 10 Downing Street, London,
CDP has four times invited institutional
investors to collectively sign a single
global request for disclosure of
shareholder value relevant information
regarding greenhouse gas (GHG)
emissions.13
In doing so it has created
four of the largest ever collaborations
of institutional investment capital – $4.5
trillion, $10.2 trillion, $21 trillion,
and now $31.5 trillion of assets
under management.
The information requests have historically
been sent to the 500 largest global
companies (the FT500) but in 2006 CDP
expanded and the information request
was sent to more than 2,100 companies
globally, of which 940 answered the
questions.14
The responses from CDP4
and previous years can be downloaded
from www.cdproject.net.
In summary the project has created:
• The largest registry of corporate
greenhouse gas emissions data
in the world
• A world-leading and up-to-date
information repository for the investment
community, facilitating superior equity
and debt investment decision-making
• Shareholder support for corporations
to measure and manage the climate
change issue
• Investor community leadership
supporting the work of other
stakeholders engaging with
the climate change issue
(e.g. policymakers, consultants
and accountants)
• A process applauded by investors
such as Henri de Castries of AXA
and Sir John Bond of HSBC, business
leaders such as Jeff Immelt, CEO of
GE, and politicians such as Tony Blair.
The CDP3 report was launched
in September 2005 at the global
headquarters of JP Morgan Chase
in New York, where keynote speakers
included UK Secretary of State (now
Foreign Secretary) Margaret Beckett,
alongside New York State Comptroller
Alan Hevesi and Jim Rogers, CEO of
Duke Cinergy. The UK launch at the
London Stock Exchange featured
speeches from Sir Christopher Bland,
Chair of BT Group and Alan Brown,
CIO of Schroders.
In addition, high profile launch events
were held in Amsterdam, Tokyo,
Paris, Hong Kong, Toronto, Melbourne,
Sao Paulo and Frankfurt. The CDP
secretariat is particularly indebted
to the Development Bank of Japan,
who not only hosted a third excellent
launch event in Tokyo, but also for the
third time translated the entire CDP
report into Japanese, and to Fabrica
Ethica who translated the CDP3 report
into Portuguese for the Brazilian market.
We estimate that CDP
signatories now manage an
astonishing 31.5% of total
institutional funds worldwide.15
“Climate change is the greatest
long-term challenge facing the
international community. That might
seem an extreme statement in
a world trying to cope with the
pressing challenges of terrorism,
famine, war and disease;
unfortunately, it’s true.”16
The Rt. Hon.
Margaret Beckett
UK Foreign Secretary,
August 2005
Africa 1%
Asia 7%
Europe 56%
North America 24%
Oceania 5%
South America 7%
CDP4 Signatories by Region
13 See Appendix II for the CDP4 questionnaire.
14 At time of going to press.
15 In our estimation, the asset base available to institutional funds worldwide is approximately
$100 trillion, and signatories to CDP account for about one third of this sum (subject to some
double counting).
16 “A Climate for Change: A Trustee’s Guide to Understanding and Addressing Climate Risk,” IIGCC,
Mercer Investment Consulting and the Carbon Trust, August 2005, pg. 1.

11
In 2006, CDP was sponsored for expansion
in France by AXA and Ademe, in Brazil
by ABN AMRO and ABRAPP, in the U.S.
by Calvert and on a global disclosure
initiative focused upon the electric utility
sector, by CalPERS and CalSTRS. We
thank these leading investors sincerely
for their support. Working with respected
regional partners, CDP has expanded
its target company sample size in Asia,
Australia & New Zealand, Brazil, Canada,
France, Germany, Japan, the UK and
the U.S. See the ‘Key Trends from CDP
Expansions’ section on page 19 and the
inside back page for contact details.
Through these expansions CDP has
increased the number of responses from
350 corporations to 940, including more
than 110 Electric Utilities. The response
rate across the expanded samples was
similar to the 47% of CDP1. The total
number of responses almost tripled, driven
by the dramatic increase in companies
being included in CDP for the first time.
This year’s FT500 report was officially
launched in New York on 18th September
at Merrill Lynch with presentations from
Al Gore, former US Vice President and
Adair Turner, Chair of the Carbon Trust
Investments Clean Energy Fund and a
Director of Standard Chartered Bank.
The reasons for CDP’s success are many.
No longer can fiduciaries claim to be
unaware of what is at stake. Taking climate
risks into account is now becoming part
of smart financial management. Failure
to do so may well be tantamount to an
abdication of fiduciary responsibility and
indication of poor management.
Leading investment consultants,
Mercer, stated in their report, ‘A trustee’s
perspective: addressing climate change
as a fiduciary issue’: “The materiality of
climate change as outlined in this document
clearly shows that climate change risk
could have the potential to impact a Fund’s
investments over the long term. In addition,
we suspect climate change risk is neither
fully known nor understood and that it
is not yet properly managed by the
various groups involved in the ongoing
management of pension scheme assets.
In line with these definitions of fiduciary
responsibility, we suggest that it is
consistent with fiduciary responsibility
to address climate change risk.”17
“Because developing countries
are exempt from the Kyoto-
Protocol target, the efforts such
as your programme (CDP) are the
only avenue for persuading them
to increase their commitment
to climate change.”
Junji Hatano
Chairman,
Mitsubishi Clean Energy
Finance Committee
In February, CDP was named
by the Corporation of London
as the overall winner of the 2006
Liveable City Awards, CDP was
praised for effecting a tangible
impact on global efforts to combat
climate change.
Leading global law firm Freshfields
Bruckhaus Deringer took this analysis
a stage further in their recent report entitled
‘A legal framework for the integration of
environmental, social and governance
(ESG) issues into institutional investment’
by commenting as follows:
“In our view, decision-makers are required
to have regard (at some level) to ESG
considerations in every decision they
make… On that basis, integrating ESG
considerations into an investment analysis
so as to more reliably predict financial
performance is clearly permissible and
is arguably required in all jurisdictions.”
The CDP Secretariat extends sincere
thanks to the signatory investors,
responding corporations and regional
partners for their participation in CDP4.
17 The full report is available from: www.carbontrust.co.uk/Publications/CTC509.pdf

12
Future Plans
CDP is now established as an annual
process and the CDP5 information
request will be sent on 1st February
2007. CDP will focus on improving
the quality and quantity of responses
from corporations and helping to
expand the project in relevant countries
and sectors.
CDP is able to accept disclosure
statements from corporations at any
time. Please contact info@cdproject.net
for more information. These responses
will be made available from the CDP
website www.cdproject.net
CDP would be delighted to explore
future participation with all interested
institutions and we invite organizations
to contact us at info@cdproject.net
The Carbon Disclosure Project is
committed to providing companies
and investors with the best information
available on climate risk. In association
with the UK Met Office we can now
provide any or all of the following bespoke
information for your organization:
• Introduction to the latest climate change
science and what it could mean for
your organization
• A weather sensitivity audit of your
current business and a detailed analysis
of the risks to your organization from
climate change
• Detailed climate modeling and predicted
climate change in a geographic region
you specify, and/or globally
• Changes in climate extremes globally
and weather extremes in specified
geographic regions including changes
in severe storms, temperature extremes,
rainfall/precipitation and sea level
rise patterns.
The output of the research can be
presented to your organization in the
form of a report and/or presentation
to key staff or any other format
you require.
The Met Office Hadley Centre data
combines the very significant resources
of the UK Government National
Meteorological Service with world class
climate prediction using NEC 2-cluster
SX-6 supercomputers to assist you
in managing climate associated risks
and/or opportunities for your business.18
EDF Energy’s CEO Vincent de Rivaz
commented: “The expertise and
rigorous methodology used by the UK’s
weather experts identifies the aspects
of climate change which could have a
real effect on our industry.”
To find out more contact Carbon
Disclosure Project Business Coordinator
Nick Silver on +44 (0) 20 7956 3067 or
email nick@cdproject.net
“Integrating… climate change
into investment analysis is simply
common sense… The carbon
intensity of profits is an approach
that needs to be adopted…
Climate change is a problem
that’s not going to be solved
by politicians… Politicians have
an important role to play; but
the underlying reality is going
to have its effects on the market,
regardless of public opinion and
government action.”
Al Gore
18 JI projects are scheduled to begin in 2008.

2As in the previous two CDP reports
(CDP2 and CDP3), we have again this year
developed an index comprising of the “best
in class” responses to the CDP questionnaire.
We have made improvements to this year’s Climate
Leadership Index (CLI) by focusing exclusively
on company disclosure, reducing the scope
of the index to the 10 highest carbon-impact
clusters19
and by better clarifying the methodology
used to populate the index.20

14
The Climate Leadership Index (CLI)
The CLI reveals for investors which
high-impact FT500 companies have
the most comprehensive climate-change
disclosure practices in place, judging
by each company’s response to the
CDP questionnaire. The CLI comprises
50 companies.21
This year we used a 100 point scale to
grade company responses to the CDP
questionnaire.22
Almost by definition, each of the
companies in the CLI is among the sector
leaders in its responses to the climate
change challenge. Not surprisingly, some
industry sectors have more “best in class”
respondents than others.
Three caveats are, inevitably, in order:
1. The analysis is based on self-
reported, non-verified responses.
2. The choice of 50 as the cut-off
point for inclusion in the CLI was
an arbitrary one. As with any effort
made to “draw the line” at a
particular point, a number of well-
qualified firms have been excluded.23
3. Survey responses to the CDP
are not necessarily an indication
of a company’s carbon disclosure
through traditional corporate
publication channels (e.g. annual
reports, environmental reports and
SEC and other regulatory filings),
nor are they necessarily accurate
accounts of companies’ actual
carbon performance.
Climate Leadership
Index 2006 (CLI)
19 We used a proprietary carbon risk model to analyze the net carbon exposure of all industry sectors
represented in the FT500. On the basis of this analysis, we selected the ten industry clusters with the
highest exposure to carbon risks and opportunities. While the Banks/Diversified Financial and Insurance
clusters have relatively small direct emission levels, these sectors have significant exposure to climate
change-driven credit risk, insurance losses and downstream liability concerns.
20 The methodology used to score company responses to CDP4 can be found in Appendix II.
21 In terms of the number of companies allocated per sector, we began with five companies in each
sector and subsequently adjusted the allocation to take into account a) the representation of the sector
in the FT500; and b) the percentage of companies in each sector that responded to the questionnaire.
22 We have scored the responses of all companies that answered the CDP4 questionnaire; the scores
can be found in Appendices I and II.
23 Superior carbon disclosure is not necessarily an indicator of low risk exposure. Investors are urged
to use performance-based and management-quality carbon research when making determinations
about company or portfolio exposure to carbon risks and opportunities.

15
We consider the companies listed
in this index to have “best in class”
climate-change disclosure 24
relative
to their same-sector FT500 peers.25
BMW will within the next two years
present a vehicle with a hydrogen-
fuel engine to the public.
BMW
“HSBC is working to support
the transition to a low-carbon
economy. As a carbon neutral
company, we are proud to be
investing in renewable energy
technology including wind and
solar power and hope that our
actions will inspire other financial
institutions to do the same.”
Stephen Green
Group Chairman
HSBC Holdings plc
May 2006
Unilever expect to see responding
to climate change as a relatively
stronger driver of new consumer
needs and innovations alongside
the traditional forces for change.
Unilever
24 “Disclosure” refers to the company’s disclosure on the CDP4 questionnaire.
25 Note that Air Products & Chemicals and Alcan, which were companies in last year’s CLI, were not
in the FT500 in CDP4 and were therefore ineligible for inclusion into this year’s CLI. Moreover, two
companies from last year’s CLI – Duke Energy and Norsk Hydro – were classified this year by Innovest
as being in the Multi-Utilities and Unregulated Power sector. Since we have not included this sector
in the CLI, these companies were also ineligible for inclusion.
Innovest
Sector(s)
Companies
Total GHG Emissions
Reported in CDP4**
2005 Sales
(Millions USD)
CLI Score
Automobiles
and Auto
Components
BMW 1,169,786* 55,034 85
Ford Motor 8,400,000* 177,089 80
Renault 753,133 48,761 80
Toyota Motor 6,400,000 173,444 75
DaimlerChrysler 7,800,000 177,365 75
HSBC 663,126 87,594 95
UBS 531,462 76,266 90
Westpac Banking 135,508 14,248 90
Banks (Asia,
Europe, North
America and
UK & Ireland)
and Diversified
Financials
(Asia, Europe
and North
America)
ANZ Banking 166,698 15,885 90
ABN Amro Holding 346,459 54,665 85
Barclays 207,651 46,640 85
Citigroup 1,351,755 119,750 80
Fortis 143,926 104,070 80
HBOS 105,956 72,275 80
ING 322,000 84,245 80
Beverages &
Tobacco, Food
Products and
Food & Drug
Retailing
Unilever 3,373,059 46,565 95
Cadbury Schweppes 1,085,299 11,173 85
Diageo 748,000 12,061 85
Tesco 2,026,037 65,424 85
Bayer 3,900,000 32,300 90
Dow Chemical 32,500,000 46,307 85
Chemicals
(Diversified and
Specialty)
Praxair 13,100,000 7,656 85
BASF 24,785,000 50,421 75
E I du Pont de
Nemours (DuPont) 13,550,000 27,516 70

16
Our current estimate indicates
that FPL Group may exceed
our WWF PowerSwitch! goal
by achieving an estimated
25% efficiency improvement.
FPL
RWE will be the first company
to plan to have a CO2-free power
plant with a gross capacity of about
450 MW up and running on a
commercial scale including CO2
storage and transport by 2014.
RWE
BP believes there are sufficient
new technologies and sound
commercial opportunities within
reach to build a significant and
sustainable business in alternative
and renewable energy.
BP
FPL Group 66,989,986 11,846 85
Innovest
Sector(s)
Companies
Total GHG Emissions
Reported in CDP4**
2005 Sales
(Millions USD)
CLI Score
Electric Power –
North America
Entergy Corp 33,200,000 10,106 80
Exelon 13,607,771 15,357 75
American Electric
Power 146,509,428 12,111 70
RWE 151,233,000 n/a 95
CLP Holdings 41,478,000 4,976 90
Electric Utilities
– International Kansai Electric Power 51,650,190 24,434 90
Iberdrola 22,664,394 13,846 85
Scottish Power 15,448,000 12,941 85
Industrial
Conglomerates
& Industrial
Machinery
Siemens 2,699,000 90,960 90
General Electric 12,420,000 148,019 75
Allianz 694,000 109,930 90
Swiss Re 504,947 26,559 90
Marsh & McLennan 192,354 11,652 85
Munich Re 30,857* 55,847 85
BP 91,900,000 249,465 95
Repsol YPF 27,580,000 n/a 85
Integrated Oil
& Gas
Suncor Energy 10,756,000* 8,605 85
Total 70,300,000 144,638 85
Royal Dutch / Shell 105,000,000 290,393 85
Chevron 59,700,000 184,922 85
Rio Tinto 27,400,000 18,019 95
BHP Billiton 52,112,190 28,513 90
Metals &
Mining and
Steel
Anglo American 32,400,000 27,866 85
Nippon Steel 61,000,000* 31,688 85
Posco 62,800,000 26,019 85
* Indicates data are for 2004. Unless otherwise mentioned, data are for 2005
** Includes Scope 1, 2 and 3 emissions under the GHG Protocol where disclosed
Companies in red are new to the CLI in CDP4
Insurance
(Asia, Europe,
North America
and UK &
Ireland)

3In this section we summarize how FT500
companies interpreted each of the ten
questions in this year’s questionnaire. We also
review the overall company response rate to
CDP4, response rates organized by sector
and geographic region and the response rate
in each of the regional CDP initiatives.

18
Response Trends
(i) Summary of Company Responses
to Questions in CDP4
This year we offer a summary breakdown
of how FT500 companies responded
to each of the 10 questions in the CDP4
information request. As in previous CDP
iterations, companies interpreted the
questions in this year’s information
request in a variety of different ways.
Question # 1. General. 87% of
responding FT500 companies indicated
that climate change represents commercial
risks and/or challenges to their business.
This compares to 92% in CDP3 and 85%
in CDP2. We found that most companies
interpreted this question very broadly and
pointed to such issues as rising energy
costs and possible shifts in consumer
demand as examples of commercial risks.
Companies highlighted opportunities
driven by regulation such as the expansion
of carbon finance services for financial
services firms and investments in dedicated
carbon or clean tech funds as well as
CDM projects.
Question # 2. Regulation. We found
that fewer companies considered
climate change to represent a source
of regulatory risk compared to broader
commercial risks. Of responding FT500
companies, only 36% indicated that
climate change represented a source
of regulatory risk. However, as with other
questions, we found significant divergence
across sectors. For example, 100% of
responding companies in the Construction
Materials and Building Products sectors
said that climate change presented
regulatory risks to their business. At the
other end of the spectrum, 0% of
responding companies in the Banks –
Europe and Electrical Equipment sectors
found climate change to represent a
source of regulatory risk. As expected,
these findings are generally consistent
with the current sectoral scope of global
GHG regulation. Broadly speaking, we
consider this question to be of far greater
significance in evaluating companies’
net carbon risk than Question # 1.
Question # 3. Physical Risks.
While a high proportion of companies
acknowledged that weather-related risks
could threaten parts of their operations,
roughly 45% of responding companies
in CDP4 specifically acknowledged the
potential risk climate change represents
in terms of increased frequency and
intensity of extreme weather events.
Again, we found significant divergence
across sectors with this question. For
example, of the 16 companies in the
Integrated Oil & Gas sector that
responded to CDP4, 14 (88%) said that
climate change represented a physical
threat to their operations. By contrast,
and as largely expected, none of the five
companies in the Broadcasting and
Cable TV sector that answered this year’s
questionnaire considered climate change
to represent a physical risk.
Question # 4. Innovation. While 60%
of the companies that completed the
CDP4 questionnaire reported that they
had developed products or services
in response to climate change, most
companies interpreted this question
very broadly and pointed to internal
improvements in energy efficiency
as examples of innovation.
87% of responding FT500
companies indicated that
climate change represents
commercial risks and/or
challenges to their business.
100% of responding companies
in the Construction Materials
and Building Products sectors
said that climate change presented
regulatory risks to their business.
Response Trends

19
Response Trends
Question # 5. Responsibility. This
year we raised the bar in assessing
responses to this question by focusing
on those companies that had allocated
board-level or upper management
responsibility for climate change-related
matters. Our intention was to distinguish
those firms that have assigned a relatively
high level of responsibility to their climate
change file from those that have set up
low-level or internally isolated management
teams. 56% of responding companies
this year indicated that they had assigned
board-level or upper management
responsibility for climate change. In
CDP3, 86% of responding companies
said that they had set up some form
of climate change management.
Question # 6. Emissions. Of this year’s
FT500 constituents, slightly under half
(48%) provided emissions data (n=246).
This compares with 54% in CDP3 and
46% in CDP2. However, of the FT500
companies that responded to CDP4, 73%
disclosed their emissions data, which
is broadly in line with the percentages
observed in previous iterations of the
CDP. The lack of 100% emissions
disclosure is likely a function of many
different factors, including the absence
of adequate GHG measurement systems
and protocols in the management
framework of some companies (particularly
those operating in low-impact sectors)
and the absence of emissions disclosure
regulation. The data may also indicate
that, given the growing financial importance
of GHG emissions management in certain
industrial sectors, firms may be less
willing to publicly disclose details of their
GHG emissions profile particularly when
it is incomplete or unverified. We found
an increase this year in the number of
companies using the GHG Protocol to
report their emissions. The standardization
that is emerging on this front will allow
for improved comparative analysis
going forward.
Question # 7. Products & Services.
As we found in last year’s report, most
FT500 companies have not yet
implemented systems to track emissions
associated with their supply chain. In
CDP4, just 16% of responding companies
disclosed these emissions (totaling
29,446,573 tonnes). This finding is
consistent with broader reporting trends
since the disclosure of Scope 3 emissions
under the GHG Protocol is still considered
voluntary. Despite this, for some sectors
such as automobiles, emissions from
products may be where the largest
risk/opportunity lies.
Question # 8. Emissions Reduction.
While this question asked companies
to disclose how much investment they
had committed to emissions reduction
efforts as well as the expected profits
of these programs, we found that most
companies did not provide these financial
particulars, possibly for commercial
confidentiality reasons. Insofar as
emission reduction programs with
formalized targets are concerned,
42% of responding FT500 companies
indicated that they had set up such
a program. This compares to 45%
in CDP3 and 43% in CDP2.
Question # 9. Emissions Trading.
Despite the increase in availability of EU
ETS data over the past year, we found
that most companies were guarded in
their approach to this question. For
example, only a fraction of the companies
with operations covered by the EU ETS
disclosed their anticipated exposure in
this scheme. This is clearly a result of the
high financial sensitivity of this information.
However, the percentage of FT500
companies that are looking at emissions
trading as a component in their climate
change strategy seems to be increasing.
Overall, 46% of responding companies
in CDP4 said that emissions trading was
relevant to their operations. This compares
to 35% in CDP3 and 31% in CDP2.
We found an increase this
year in the number of companies
using the GHG Protocol to report
their emissions.
56% of responding companies
this year indicated that they had
assigned board-level or upper
management responsibility for
climate change.

20
Response Trends
Question # 10. Energy Costs. Of
responding FT500 companies, 38%
(n=129) disclosed their energy costs.
However, as with other questions, the
percentage of companies that provided
this information fluctuated significantly
across sectors. In the Metals & Mining
sector – where energy costs can often
represent up to 30% of operating costs –
75% of responding companies provided
this information. In the Electric Power –
North America sector, the percentage
was 67%. Since rising energy costs are
likely the most direct and immediate
investment risk that climate change and
regulatory responses to climate change
will create in the near term, we consider
this question to be of particular relevance
for CDP signatories.
(ii) Response Rates to the CDP
Of the 500 companies that were sent
questionnaires as part of this year’s CDP,
360, or 72%, responded with answers.26
This percentage is up marginally from
CDP3 (71%) and significantly higher
than CDP2 (59%) and CDP1 (47%).
While it is impossible to determine
with any certainty which factors are
most important in driving company
participation in the CDP, these findings
suggest that the response rate to the
CDP may have reached a threshold.
This predictable slowing of the growth
in the CDP response rate is likely
attributable to a number of different
factors, including the lower than average
response rate from new constituents in
the FT500 index and a growing proportion
of emerging markets-based firms
populating the index.27
In addition a small
minority of firms are persistently ignoring
the CDP information request.
Nevertheless, a response rate of
72% is still a remarkable achievement
and clearly underscores the growing
discourse over climate change in
corporate and investor circles that
CDP has led over the past four years.
Answered Questionnaire 72%
Provided Information 8%
Declined to Participate 9%
No Response 11%
FT500 Response Rates for CDP4
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CDP1 CDP2 CDP3 CDP4
Answered Questionnaire Provided Information Declined to Participate No Response
FT500 Response Rates CDP1 – CDP4
26 At 31st July 2006 a total of 348 companies had answered the questionnaire; an additional 11 companies
redirected their response to a parent company within the FT500.
27 As discussed later, response rates to the CDP tend to be relatively low in emerging markets.

21
Response Trends
Sector Response Rates to CDP2 – CDP4
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
CDP2 CDP3 CDP4
Steel
Advertising
Aerospace & Defense
Air Freight & Couriers
Automobiles
Auto Components
Banks – Asia
Banks – Europe
Banks – N. America
Banks – UK & Ireland
Beverages & Tobacco
Biotechnology
Broadcasting & Cable TV
Building Products
Chemicals
Commercial Services and Supplies
Communications Equipment
Computers and Peripherals
Construction & Engineering
Construction & Farm Machinery & Heavy Trucks
Construction Materials
Diversified Financials
Electric Utilities
Electrical Equipment
Electronic Equipment and Instruments
Energy Equipment and Services
Food and Drug Retailing
Food Products
Gas Utilities
Healthcare Equipment and Supplies
Healthcare Providers and Services
Hotels, Restaurant and Leisure
Household and Personal Products
Household Durables
Industrial Conglomerates
Industrial Machinery
Insurance – Asia
Insurance – Europe
Insurance – N. America
Insurance – UK & Ireland
Integrated Oil and Gas
Telecommunications
Internet Software and Services
IT Consulting and Services
Leisure Equipment & Products
Metals and Mining
Movies and Entertainment
Multiline Retail
Multi-Utilities and Unregulated Power
Oil & Gas Exploration & Production
Oil & Gas Refining & Marketing
Paper and Forest Products
Pharmaceuticals
Publishing
Real Estate Investment Trusts
Real Estate Management & Development
Semiconductor Equipment & Products
Software
Specialty Retail
Surface Transport
Textiles, Apparel & Luxury Goods
Trading Companies & Distributors

22
Response Trends
While the overall response rate to the
global CDP4 report was 72%, we found
considerable divergence in the response
rate across individual sectors. The graph
opposite shows the percentage of each
industry sector that responded to the CDP2,
CDP3 and CDP4 information requests.
One of the main findings from this
analysis is that the response rate in most
high-impact sectors – precisely those
sectors where the disclosure of carbon-
related information is most important for
investors – is consistently higher than the
overall response rate. Leading the way,
94% of companies in the Electric Utilities
– International sector (17 out of 18)
answered the CDP questionnaire this
year, compared to 72% for the FT500
index as a whole. In CDP3, these
percentages were 94 and 71 respectively,
and in CDP2 they were 82 and 59.
These data show that response rates
from the Electric Utilities – International
sector – perhaps the sector where
carbon-related risks and opportunities
are the most financially germane – are
consistently higher than the FT500
as a whole.28
The CDP4 response rates within high-
impact clusters are shown below:
Since one would expect the response
rate of high-impact carbon sectors to
be superior to that of sectors that are
relatively marginally affected by climate
change-related impacts, the findings
in the table below are largely intuitive.
Of greater significance, we believe, are
the relatively poor response rates in the
two financial services clusters and the
food products cluster.
Outside the 10 high-impact clusters,
we observe that many sectors have had
conspicuously poor response rates to the
CDP over the past four years. Notable in
this regard are the Aerospace & Defense,
Healthcare Providers and Services, and
Surface Transport sectors, whose
response rates have consistently hovered
between 10–40%. While we have not
classified these sectors as high-impact,
they are certainly not the FT500 industries
that we consider to be least affected by the
physical effects and regulatory responses
to climate change. Investors should be
particularly concerned about the poor
response rate of the Surface Transport
sector, given the relatively high emission
levels in the industry.
28 The only company in the Electric Utilities – International sector not to respond to the CDP4 questionnaire
was Unified Energy System (EESR-RS). The company did respond to the CDP3 questionnaire.
Overall, 72% of the FT500 completed the CDP4 questionnaire, but the response rate among
most high-impact sectors is significantly higher:
Cluster Response Rate
Automobiles and Auto Components 82%
Banks and Diversified Financials 63%
Beverages & Tobacco/Food Products/Food & Drug Retailing 58%
Chemicals (Diversified and Specialty) 88%
Electric Power – North America 88%
Electric Utilities – International 94%
Insurance 63%
Industrial Conglomerates/Industrial Machinery 78%
Integrated Oil & Gas 71%
Metals & Mining and Steel 79%

23
Response Trends
This year we also examined historical
response rates to the CDP by region.
The results, displayed above, confirm that
regional response rates to the CDP are
highest in Europe, which is expected
given the region’s comparatively advanced
approach to climate change mitigation.
While response rates in Oceania (Australia
and New Zealand) are also relatively high,
only nine companies in this year’s FT500
are based in the region (compared to
153 in Europe).
Perhaps the most significant finding in
this analysis is the consistent gap between
the response rates of North American and
European-based companies. While the
absolute number of companies in these
regions is dissimilar (153 in Europe vs. 241
in North America), Europe’s response rate
has been more than 20% higher than North
America’s in each of the four CDP initiatives.
20%
30%
10%
40%
50%
60%
70%
80%
90%
100%
No Response 0 15 10 6 18 3 0
Declined to Participate
Region (number of companies)
1 4 9 1 26 2 2
Provided Information 1 3 1 0 36 0 1
Answered Questionnaire 1 56 134 2 155 6 6
Africa (3) Asia (78) Europe (156) Middle East (9) North America (236) South America (11) Oceania (9)
CDP4 FT500 Response by Region
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Africa Asia Europe Middle East North America Oceania South America
CDP1 CDP2 CDP3 CDP4
100%
Regional Response Rates to CDP1 – CDP4

24
Response Trends
CDP4 Response by Sample
29 These companies are: Allied Irish Banks (AIB-DB); Banca Intesa (BIN-MI); Gazprom (GAZP-RS); Lukoil
(LKOH-RS); Mediobanca (MB-MI); MMC Norilsk Nickel (GMKN-RS); Nordea Bank (NDA’SEK-SK);
Petroleos (Cepsa) (PETR4-BR); Sberbank Rossii (SBERP-RS) and Unified Energy System (EESR-RS).
We classified Russia as part of Europe for the purposes of this report.
11 41 9 133 90 43 52 5 94 67 50 189
12 26 11 55 43 18 46 2 29 60 4 35
3 7 0 14 20 5 42 10 38 10 3 52
13 60 30 78 112 54 360 83 95 224
Asia(39)
Australia
(134)
Brazil
(50)
Canada
(280)
Electric
Utilities
(265)
France
(120)
FT 500
(500)
FTSE
100
(100)
FTSE
250
Japan
(152)
S&P 500
(500)
No Response
Declined to Participate
Sample
(number of companies)
Provided Information
Answered Questionnaire
(250)
Germany
(200)
6389
10%
20%
40%
30%
50%
60%
70%
80%
90%
100%
Overall, these trends suggest that
European-based companies operating
in carbon-intensive industries are the
most likely to respond to the CDP.
That ten European-based companies
operating in high-impact carbon sectors
either declined to participate in, or did not
respond to, the CDP4 information request
should therefore present some concerns
for investors.29
(iii) Key Trends from CDP Geographic
and Sector Expansions
The first three iterations of the CDP
information request were sent to the
FT500 companies but in 2006 the CDP4
the process was expanded to more than
2,100 companies. This was made possible
through ten geographic and one sector
expansion in partnership with organizations
around the world. In this section we give
details of these partnerships, the headline
results from the other samples and
just a few of the highlights they reveal.
A report on each of the expansions
is available for free download at
www.cdproject.net/cdp4reports.asp
Asia (Excluding Japan)
Partner: Association for Sustainable
and Responsible Investment in Asia
(ASrIA)
Although climate change is an issue that
Asian corporate leaders recognize, most
are struggling to reconcile carbon risks
with strategic business models in an
environment where investors are generally
not addressing the issue and government
mandates are rare. National government
approaches to climate change vary across
the region and in general appear to lack
teeth. With the exception of Singapore,
none have imposed reduction targets.

25
Expansions
The Asia Pacific Partnership will
be a closely watched event with
tangible progress dependent upon
a willingness to move beyond
aspirational targets.
Brazil sees enormous competitive
advantages in a future low-carbon
economy (renewable energies;
bio-fuels; others), and believes
it can significantly contribute
to mitigating climate change.
At the multilateral level, in early 2006
Ministers from Australia, China, India,
Japan, Republic of Korea and the United
States officially launched the Asia-Pacific
Partnership on Clean Development and
Climate (AP6) and agreed a charter and
work plan that outlines a model of
private-public taskforces to develop
immediate and medium-term actions
on climate change by mid 2006. This will
be a closely watched event with tangible
progress dependent upon a willingness
to move beyond aspirational targets.
The Asia ex-Japan segment consists
of 125 companies from the Asia Pacific
region, comprising 39 of the largest
companies in Asia excluding Japan and
86 companies from the other samples
such as the global FT500 and Electric
Utilities in this region.
Of the responding companies 45% were
first-time respondents having been included
in the CDP for the first time. For those
companies included in CDP previously,
we are seeing a general improvement
in quality of responses and increasing
recognition of carbon management as
a material business issue. Companies
leading in this respect tend to be
multinationals with recognized global
brand names. Two thirds of responding
companies disclosed that they were
undertaking or planning to undertake
initiatives to reduce carbon emissions,
however initiatives varied significantly
in substance. Far fewer — 23% of
respondents — were able to commit
to reduction targets.
Australia and New Zealand
Partner: Investor Group on Climate
Change (IGCC) Australia and New
Zealand
The Australian and New Zealand
governments have an evolving regulatory
response to climate change. Australia has
not ratified the Kyoto Protocol and takes
a predominantly voluntary approach to
emissions reduction at the Federal level.
Programs such as the Greenhouse
Challenge and the new Energy Efficiency
Opportunity Bill provide frameworks for
companies to measure, reduce and report
energy use and greenhouse emissions.
At the State level in Australia, there are
some forms of emissions trading and a
multi-jurisdictional taskforce has been
established to develop a national emissions
trading scheme by 2010. While New
Zealand has ratified the Kyoto Protocol
they are yet to decide their policy
response, abandoning their proposed
carbon tax at the last election.
Of the companies that completed
the CDP4 questionnaire, 93% indicated
that climate change related issues were
of relevance to their business, and 64%
identified specific risks and/or opportunities.
While 80% of respondents recognized
the importance of establishing management
accountabilities in relation to climate
change-related issues, only 33%
demonstrated that they had clear
accountabilities within their organization
for both the strategic (board-level) and
operational management of climate
change-related issues.
Brazil
Partner: ABN AMRO and ABRAPP,
project managed by Fabrica Ethica
The Brazilian Government has been
playing a pro-active and key role in
the UNFCCC negotiations. The Clean
Development Mechanism (CDM), for
example, arose from an original Brazilian
proposal and the country is one of the
leaders of the G77 and China Group.
Brazil has no GHG emissions reductions
targets in the first commitment period
of the Kyoto Protocol and this gives a
special meaning to Brazilian companies’
wide participation into CDP4. The country
sees enormous competitive advantages in
a future low-carbon economy (renewable
energies; bio-fuels; others), and believes it
can significantly contribute to mitigating
climate change.
The most important challenge for Brazilian
companies is to internalize climate change
policies into their sustainability strategies
and better understand the impact of
carbon on competitiveness and long-term
financial performance. Few Brazilian
companies have corporate GHG inventories
currently and their CDP4 responses
seldom include GHG emissions definite
data, representing just the first step of a
learn-by-doing exercise.

26
Expansions
Canada
Partner: Conference Board of Canada
Changes to regulatory frameworks,
emissions-trading markets and increased
investor interest in environmental
performance are combining to change
the climate change landscape in Canada.
In the spring of 2005, the Government of
Canada announced a new climate change
plan, ‘Project Green.’ A key element of
the plan was a ‘Large Final Emitter’ system
that would regulate the GHG emissions
of nine energy intensive industries.
Against the backdrop of domestic GHG
emissions that have continued to increase
and are now 35% above 1990 levels, the
spring of 2006 saw the newly elected
federal Conservative government
announce its intention to replace Project
Green with a ‘Made in Canada’ climate
change plan. Canada’s status within the
Kyoto Protocol framework is currently
uncertain, and alternative options such
as the Asia-Pacific Clean Technology
Partnership and the G8+5 initiative are
under consideration.
81% of the Canadian companies that
responded to the CDP information
request indicated that climate change
poses business risks or opportunities.
In Canada disclosure goes hand-in-hand
with equity market capitalization. Nearly
two-thirds of the top 50 companies
responded, and close to half of the
top 100 responded.
Electric Utilities
Partner: CalPERS and CalSTRS
The Electric Utilities sector is one of the
largest emitters of greenhouse gases,
about 40% of total GHGs worldwide.
As a result, the sector faces increasing
regulatory pressure to reduce its
emissions in many countries. The EU
ETS places reduction caps on carbon
emissions from key sectors including
the Electric Utility sector. Similar trading
schemes are under development in
Canada, Australia and New Zealand,
while Japan is closely monitoring the
European model. In the U.S. the North-
Eastern States and California are
developing emissions trading schemes
at a state level. Moreover, some U.S.
utilities companies have taken public
positions in support of a nationwide
mandatory, market-based policy to
control carbon dioxide emissions.
The highest proportion of responses
came from Europe, representing 22%
of companies surveyed, where 55%
of companies responded. This is not
surprising, given the impact that the
EU ETS has had on this sector. North
America, which had the highest number
of companies surveyed (over a third),
came second with 50% of companies
responding to the survey. Response rates
in other geographies varied. For example,
28% of Asian companies responded. This
response rate is largely due to Japanese
companies, of which all companies that
were surveyed responded. Not a single
Chinese electric utility responded to
the survey even though 32 were sent
questionnaires. This lack of disclosure
from utilities in a country that is responsible
for a growing proportion of global carbon
emissions is of particular concern.
France
Partner: AXA and ADEME
France is strongly committed to
implementing measures against climate
change. Its Kyoto target is relatively low
(a stabilization of emissions between
1990 and 2008-2012) because of the
importance of nuclear power plants in
its electrical production system. In 2004,
French emissions were 0.4% below the
1990 baseline. The French government
also decided to set a high level target for
2050: the reduction of greenhouse gases
(GHG) emissions by 75% (“Factor 4”).
The 2005 Climate Action Plan and Law
on Energy set new targets and means
for energy efficiency and the development
of renewable energy. While the large
industry is covered by the EU ETS,
France launched an Energy Efficiency
Scheme (“white certificates”) in 2005,
set new technical regulations for the
building sector and increased its fiscal
measures for households and SMEs.
New financial mechanisms including
domestic GHG emission reduction
projects are being developed.
The Electric Utilities sector
is one of the largest emitters
of greenhouse gases, about
40% of total GHGs worldwide.
The German Government
committed in its Coalition
Agreement to reduce greenhouse
gas emissions by 40% (compared
with 1990) by 2020, provided that
EU Member States agree to a 30%
reduction of European emissions
over the same period.

27
Expansions
Germany
Partner: BVI
Germany has taken significant steps
to address the issue of climate change.
By 2003, Germany had reduced its
greenhouse gas emissions by 18.5%
(compared with 1990) approaching its
goal of a 21% reduction during the period
2008-2012. The country has enacted
renewable energy legislation and
participates in the EU Emissions Trading
Scheme. The government recently
published a scientific study on the
expected climatic impacts in Germany.
Furthermore, the German Government
committed in its Coalition Agreement
to reduce greenhouse gas emissions
by 40% (compared with 1990) by 2020,
provided that EU Member States agree
to a 30% reduction of European emissions
over the same period.
Almost two-thirds of responding companies
reported some form of emissions data.
However, the data often was not aligned
with accepted reporting methodologies.
Two-thirds of respondents are already
employing low carbon technologies. Some
leading companies have undertaken a
range of reduction initiatives, with the
cost versus benefit ratios demonstrating
that reducing emissions often correlates
with saving money.
Japan
Partner: (ASrIA) and the CDP
Secretariat Japan
In Japan, companies with significant
emissions from operations or transport
have been legally bound to report their
GHG emissions since 1st April, 2006. The
Japanese Ministry of the Environment set
up a voluntary emissions trading scheme
in 2006 and the Japanese Government
began purchasing Kyoto mechanism credits
through NEDO, New Energy and Industrial
Technology Development Organization,
this year.
Outside of Europe, Japan has the highest
response rate to the CDP questionnaire
demonstrating a reasonable understanding
of the importance of climate change for
Japanese business. Many responses report
the development and take up of energy
saving technologies in both processes
and products along with significant
purchases of GHG emissions rights.
UK
Partner: UKCIP and Defra
The UK’s continued commitment to
tackling climate change and achieving
its emissions reduction target of a 20%
reduction on 1990 levels by 2010 was
further addressed by Government through
the launch of “Climate Change: The UK
Programme” (CCUKP) in March 2006.
The launch of the CCUKP was preceded
by two important international climate
policy developments; the UK hosted
G8 summit in July 2005 and the 11th
Conference of the Parties and first
Meeting of the Parties of the UNFCC in
Montreal in November. A significant focus
of the latter event was the effectiveness
of market based trading schemes to cut
carbon by global industry. Recent decisions
by EU governments to offer lax allocations
to industry for the next phase of the EU
Emissions Trading Scheme continue to
cause debate over whether such schemes
will achieve meaningful reductions.
The FTSE100 is the highest responding
of all CDP samples, whilst the FTSE250
lags their larger competitors. 10% of the
FTSE100 reported that they considered
the impacts of climate changes to pose
a high risk for their business operations.
Despite increasing realization of climate
risks, the majority of FTSE350 companies
are not treating this as a priority in their
risk management strategies.
U.S.
Partner: Calvert Group and the Investor
Network on Climate Risk (INCR)
2006 may have been a tipping point in
U.S. public and corporate perception of
climate change. Many prominent leaders
in the U.S. business community now
recognize that climate change will result
in physical, regulatory, competitive and
reputational risks for their firms along
with substantial market opportunities.
The vice chairman of Merrill Lynch recently
declared, “We are conducting an enormous
chemical experiment with potentially
huge consequences for our environment,
for our economies, and for human life.”
Goldman Sachs agrees: “We believe
climate change is one of the most
significant environmental challenges of
the 21st century and is linked to other
important issues such as economic growth
and development, poverty alleviation,
access to clean water, and adequate
2006 may have been a
tipping point in U.S. public
and corporate perception
of climate change.
Outside of Europe, Japan
has the highest response rate
to the CDP4 questionnaire.
The FTSE100 is the highest
responding of all CDP samples.

28
Expansions
energy supplies.” In addition to new
commitments such as General Electric’s
Ecomagination (which expects $20 billion
in sales of clean energy products by 2010),
companies are calling for U.S. government
action on climate change to provide
regulatory certainty for companies whose
global competitiveness may be at risk
because of lack of clarity and leadership
from the federal government.
Trends in U.S. corporate climate change
disclosure have improved and this is
demonstrated by CDP both through
companies receiving the questionnaire
for the first time and those that that have
been in CDP previously. This year sees
the highest ever response rate from U.S.
companies to CDP.
Country / Sector Partner Web Address
Asia
Association for Sustainable and
Responsible Investment in Asia
(ASrIA)
www.asria.org
Australia and New Zealand
Investor Group on Climate
Change (IGCC)
www.igcc.org.au
Brazil ABN AMRO www.abnamro.com
Brazil ABRAPP www.abrapp.org.br
Brazil Fabrica Ethica www.fabricaethica.com.br
Canada Conference Board of Canada www.conferenceboard.ca
Electric Utilities CalPERS www.calpers.ca.gov
Electric Utilities CalSTRS www.calstrs.com
France AXA www.axa.com
Germany BVI www.bvi.de
Japan CDP Secretariat Japan www.cdproject.net
France ADEME www.ademe.fr
UK UK Climate Impacts Programme www.ukcip.org.uk
UK
Department for Environment,
Food and Rural Affairs (DEFRA)
www.defra.gov.uk
U.S. Calvert Group www.calvert.com
U.S.
Investor Network on Climate
Risk (INCR)
www.incr.com

4For the fourth Carbon Disclosure Project,
ten questions were asked that focused
on the following:
1. Commercial risks/opportunities posed
by climate change
2. Impacts of GHG regulation
3. Physical risks posed by climate change
4. Relevant technologies and innovation
5. Management responsibility for
climate change
6. Total annual emissions in tonnes of CO2e
7. Emissions from products and services
8. Emissions reduction programs and targets
9. Emissions trading
10. Energy costs

30
Summary of Key Findings
This section analyses responses to the
CDP questions in relation to ten factors.
(i) Financial Exposure to GHG Regulation
As global emissions regulations continue
to tighten, more and more industrial
sectors could find themselves exposed
to carbon constraints on their operations.
Forward-looking companies have
responded to this trend by integrating
hypothetical carbon prices into capital
spending and project planning models,
while some industry analysts are beginning
to broaden their valuation models to
include companies’ carbon exposure.
For this year’s CDP report, we have
developed a basic model to help illustrate
how the “monetization” of GHG emissions
can have both positive and negative
financial effects on companies.
To carry out this analysis the following
steps were taken:
1. We recorded companies’ annual
global CO2e emissions (Scope 1
and Scope 2 from the GHG Protocol)30
from 2001 – 2005 inclusive;
2. We determined the annual percentage
increase/decrease over this time period;31
3. We took the average annual
percentage increase/decrease over this
time period and multiplied it by the
company’s last known actual emissions
(2005) in order to project the company’s
global CO2e emissions in 2006 – 2012;32
At this point, we introduced a hypothetical
carbon regime modeled on the Kyoto
Protocol. We assumed that companies
were required to reduce their 2005 global
GHG emissions (Scope 1 and Scope 2) by
10% by 2012. While this percentage is
significantly higher than the 5.2% global
average called for in the Kyoto Protocol,
the baseline year in our regime (2005) is
considerably less demanding than that
used in the Kyoto Protocol (1990).33
In the next step, we subtracted each
company’s reduction target from their
projected (i.e. business as usual) 2012
emissions. This yielded each company’s
projected reduction obligation. We then
multiplied each company’s projected
reduction obligation by $25.34
Finally, instead of presenting the
compliance costs as absolute numbers,
we presented them as a percentage of
each company’s reported 2005 Earnings
Before Interest, Tax, Depreciation and
Amortization (EBITDA).35
Summary
of Key Findings
30 Under the WRI/WBCSD GHG Protocol, Scope 1 emissions refer to “direct” emissions resulting from fuel
combustion and manufacturing activities. Scope 2 emissions refer to “indirect” emissions resulting from
the generation of electricity purchased off the grid. We have used both Scope 1 and Scope 2 emissions
since not all companies disaggregated their emissions footprint into Scopes.
31 Annual emissions data were taken from company responses to the CDP. In cases where there were data
gaps, emissions data were retrieved from company environmental reports. In years for which no
emissions data were publicly available, we used the average reported emissions in the years
immediately preceding and following the data gap in order to complete the series.
32 This is to say that we have applied a fixed annual growth rate in the 2006 – 2012 period equal to the
average annual growth rate observed in the 2001 – 2005 period.
33 Assuming that a company’s 1990 emissions were lower than their 2005 emissions, any reduction target
derived from a 1990 baseline would imply more onerous mitigation efforts.
34 According to Point Carbon, the average price for one tonne of CO2 (EUAs) from July 1/05 to July 1/06
was slightly under 22 Euros, which we have rounded to $25 USD.
35 All EBITDA figures were converted to USD.

31
We have included above an illustration
of this GHG regime. Using the Electric
Power – North America sector as an
example, this graph shows how the
emissions trajectories of sector peers
can differ and how, under certain
regulatory and market assumptions, this
divergence could have a competitive
impact on the companies involved.
This type of analysis represents a
“back-stop” scenario in that it assumes
companies have no other option in
meeting their projected reduction
obligation but to purchase emission
credits on the market at a hypothetical
fixed price.36
A host of other factors that
extend well beyond the scope of the CDP
are also left unexamined in our analysis.
These include geographic exposure to
carbon regulations, the elasticity of
consumer demand, and company-specific
marginal abatement costs.
While the model that we developed for
the purposes of this project therefore
excludes a number of factors that should
clearly be addressed in comprehensive
carbon risk analysis, it nevertheless
provides a preliminary glimpse at how the
regulation of carbon emissions might
affect the bottom line of individual
FT500 firms.
The results of our analysis demonstrate
at least four major points.
• The financial implications of GHG
regulation vary significantly across
high-impact industries. Based on our
analysis, the Electric Power – North
America sector faces both the highest
upside and downside exposure to GHG
regulation. At the other end of the
spectrum, the Automobiles and Auto
Components cluster faces the lowest
overall exposure.37
• The risk differentials within each
industry are also highly significant.
In the Electric Power – North America
sector, the company with the highest
compliance costs faces expenditures
in excess of 25% of its reported 2005
EBITDA. By contrast, the sector
competitor that is least exposed faces
negative compliance costs totaling
10.6% of its reported 2005 EBITDA.
This discrepancy, which is financially
meaningful in every high-impact cluster
with the exception of Automobiles, is
largely a reflection of the fact that some
0
20
40
60
80
100
120
140
160
180
Entergy
Entergy 10% Reduction
Southern
Southern 10% Reduction
Cost for Southern to reach
10% reduction at $25 per tonne:
$1,119,026,516
Cost for Entergy to reach
10% reduction at
$25 per tonne:
-$298,128,755
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year
MillionTonnesofGHGEmissions(CO2
e)
Sample Historical and Projected Emissions in the Electric Power – North America Cluster
36 We also assume that companies cannot reduce their CO2e emissions through internal abatement
measures or through the purchase of emission credits from domestic or international (CDM/JI)
offset projects.
37 However, the most critical carbon risk issue in the Automobile sector is the management of product
(e.g. vehicle) emissions, which are not taken into account in this regime.

32
companies’ emissions are growing
much more quickly than those of their
sector peers. As global GHG regulations
continue to tighten, these discrepancies
are likely to have increasingly significant
differentiating effects on companies.
• Under certain regulatory and market
assumptions, some companies could
benefit financially from GHG regulation.
In a cap-and-trade scheme, for example,
companies that emit below their reduction
target can monetize the difference by
selling surplus emission credits on the
market. In our model, the companies
with the lowest compliance costs in
the Food Products, Chemicals and
two Utilities clusters are projected to
be (on the basis of their actual emissions
figures recorded in 2001 – 2005) in a
surplus position in 2012.
• Finally, our analysis suggests that in every
high-impact cluster with the exception
of Metals & Mining and Steel, companies
could reduce their business as usual
2012 emissions to 10% below 2005
levels for a cost well under 1% of their
reported 2005 EBITDA.38
This is not to
say that FT500 companies could actually
reduce their emissions for this price, but
rather that, under certain assumptions,39
companies could make meaningful
reductions in their GHG emissions
for a fraction of their annual earnings.
(ii) Emissions Intensity
While a company’s absolute level
of GHG emissions is a key factor in
determining its overall carbon risk
profile, it is also important to consider
how efficiently a company is producing
its goods/services from an “emissions”
point of view. This year we have analyzed
the emissions intensity of FT500
companies operating in the ten highest
carbon-impact clusters. We have
measured intensity as tonnes of global
CO2e emissions (Scope 1 and Scope
2 under the GHG Protocol) for every
million dollars in sales.40
While we
chose sales as a normalizing metric,
there are various ways to measure
emissions intensity. Over the page
we present some of the measures
used by selected FT500 companies
in different industry sectors.
In every high-impact cluster, with
the exception of Metals & Mining
and Steel, companies could reduce
their “business as usual” 2012
emissions to 10% below 2005
levels for a cost well under 1%
of their reported 2005 EBITDA.
-15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
Metals & Mining
and Steel
Integrated
Oil & Gas
Industrial
Conglomerates and
Industrial Machinery
Electric Utilities -
International
Electric Power -
North America
Chemicals (Diversified
and Specialty)
Beverages & Tobacco, Food Products,
Food & Drug Retailing
Automobiles and
Auto Components
Compliance Cost as a percentage of 2005 EBITDA
10% Reduction, $25/Tonne Carbon Cost
38 And in four of the ten clusters (Electric Utilities – International, Electric Power – North America,
Chemicals and Food Products) the costs are negative.
39 The central assumptions used here are a fixed marginal abatement cost of $25 per tonne and future
emissions growth in line with that observed from 2001 to 2005.
40 We converted all 2005 Sales figures to USD.

33
We calculated companies’ actual
emissions intensity for 2001 – 2005 by
using known emission and sales figures.
In order to come up with projected
emissions intensity figures for 2006 –
2012, the following steps were taken:
1. We inputted companies’ projected
emission figures for 2006 – 2012,
as described above in section (i);41
2. We determined the annual percentage
increase/decrease in companies’ reported
sales from 2001 – 2005 inclusive;
3. We took the average annual
percentage increase/decrease in sales
over this time period and multiplied it by
the company’s last known sales (2005)
in order to project companies’ sales from
2006 – 2012; 42
4. We then divided companies’ projected
2006 emissions by their projected 2006
sales, and so on and so forth until 2012.
We have included above an example of
this analysis from the Chemicals cluster.43
This analysis shows that, while both
Praxair’s and Dow’s emissions intensity
is projected to trend downward through
the 2006 – 2012 period, Dow is projected
to release substantially fewer emissions
for every million dollars in sales going
forward (a trend that began in 2001).
In light of the fact that Dow’s reported
emissions to the CDP in absolute terms
have been more than twice that of Praxair’s
in each of the last five years, this analysis
underscores the importance of taking
financial metrics into account when
determining the risk profile of relatively
“large” emitters.44
Banks &
Diversified
Financials
Pharmaceuticals Automobiles Electric Utilities
BMW
DaimlerChrysler,
General Motors,
Peugeot, Toyota
Abbott Laboratories,
Eli Lilly, Novartis,
Schering-Plough,
Wyeth
Nestlé, Unilever
Handelsbanken,
HBOS
Standard
Chartered
UBS
FT500
Southern
Company
American
Electric
Power
Iberdrola
Kilograms CO2
Vehicle Production
Kilograms CO2
Tonnes
Food Product
Tonnes CO2 FTE LBs CO2 MWh
Tonnes CO2
GWh
Metric Tonnes CO2
$MM Sales
Kilograms CO2
Total Revenue
CO2
Square Footage
Grams CO2
KWh
Food Products
Select Emissions Intensity Methodologies
41 In cases where there were data gaps in the middle of the 2001 – 2005 series, we used the average
reported emissions in the years immediately preceding and following the data gap in order to complete
the series.
42 This is to say that we have applied a fixed annual growth rate in the 2006 – 2012 period equal to the
average annual growth rate observed in the 2001 – 2005 period.
43 The Chemicals cluster comprises the Diversified Chemicals and Specialty Chemicals sectors.
We have classified Dow as being in the former and Praxair as being in the latter.
44 Praxair is a relatively large emitter compared to the FT500 as a whole; however, compared to peers
in the Chemicals cluster the company’s annual GHG emissions are average.

34
(iii) FT500 Emissions by Sector
Overall, companies in CDP4 reported
3,343,618,288 tonnes of GHG emissions,
up from 2,994,834,887 tonnes in CDP3
(see graph). The total GHG emissions
reported to the CDP increased over
70% from 2001 to 2005.
While the FT500 comprises 65 individual
industry sectors, as categorized by
Innovest, 80% of the total GHG emissions
reported by FT500 companies in 2005
occurred in just four sectors: Electric
Utilities – International (25%); Electric
Power – North America (24%);45
Integrated Oil & Gas (20%); and Metals
& Mining and Steel (11%).
80% of the total GHG emissions
reported by FT500 companies in
2005 occurred in just four sectors:
Electric Utilities – International
(25%); Electric Power – North
America (24%);46
Integrated Oil &
Gas (20%); and Metals & Mining
and Steel (11%).
0
500
1000
1500
2000
2500
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year
Praxair Dow
TonnesofGHGEmissions/Sales(MillionsofUSD)
Sample Emissions Intensity in the Chemicals Cluster
Total GHG Emissions Reported to CDP
45 Also includes GHG emissions reported by Duke Energy, which is classified this year in the Multi-Utilities
and Unregulated Power sector.
46 Also includes GHG emissions reported by Duke Energy, which is classified this year in the Multi-Utilities
and Unregulated Power sector.
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2001 2002 2003 2004 2005
Year
BillionsofTonnesCO2
e(scope1,2and3emissions)

35
For investors, this breakdown clearly
demonstrates that there is a premium
on emissions data collected through
the CDP for high-impact industries,
and in particular the Electric Utilities –
International, Electric Power – North
America, Integrated Oil & Gas and Metals
& Mining and Steel clusters. As shown
earlier, emissions disclosure to the CDP
in all three sectors has historically been
well above average compared to the
FT500 index as a whole, particularly
in the two utilities sectors.
Opposite we show the absolute number
of GHG emissions reported by high-impact
sectors to the CDP from 2001 – 2005.47
The main finding from this analysis is that
most FT500 emissions in 2001 – 2005
were generated by companies in just four
clusters: Electric Utilities – International;
Electric Power – North America; Integrated
Oil & Gas; and Metals & Mining and Steel.
This implies higher exposure to carbon-
driven risks and opportunities (such as
GHG regulation) in these sectors.
A secondary finding from this analysis is
that, with some clear movement to the
contrary, emissions in most high-impact
clusters are trending upward. In every
high-impact cluster with the exception
of Automobiles, reported 2005 emissions
were up markedly from 2001 levels. This
is likely a reflection of the economic growth
sustained in these industries over the
early 2000s and a function of improved
disclosure practises.
(iv) FT500 Emissions Occurring
in Annex B Countries
In addition to their global emissions figures,
companies participating in CDP4 were
also asked to provide: a) their emissions
in Annex B countries of the Kyoto Protocol;
and b) their emissions in the EU ETS.
Of the 246 companies that disclosed
emissions data in CDP4, 59% (n 144)
reported both global and Annex B
emissions, while 41% (n 100) provided
global, Annex B and EU ETS emissions.48
The main finding from this analysis
is that most FT500 emissions
in 2001 – 2005 were generated
by companies in just four clusters.
Emissions in most high-impact
clusters are trending upward.
Electric Utilities – International 25%
Electric Power – North America 24%
Automobiles 1%
All other sectors 15%
Integrated Oil & Gas 20%
Chemicals 3%
Metals & Mining and Steel 11%
Beverages / Tobacco, Food and Food Retail 1%
Breakdown of 2005 Emissions by Sector
47 Whilst in CDP4 the majority of companies reported 2005 data, some only reported 2004 data therefore
the 2005 data will increase in CDP5.
48 Improved disclosure, rather than increasing emissions, accounts for a large proportion of the rise
in all three categories of emissions.

36
Industry GHG Emissions 2001 – 2005
Year
Global Emissions
Reported to CDP
Annex B Emissions
Reported to CDP
Percentage of Global Emissions
Occurring in the Annex B Countries
2005 3,343,943,508 2,073,981,133 62.0%
2004 3,269,363,458 1,198,814,646 36.7%
2003 2,860,338,460 1,480,118,412 51.7%
2002 2,489,634,224 879,814,628 35.7%
2001 1,963,950,658 276,616,931 14.1%
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
1,000,000,000
Automobiles
Chemicals
Electric Power – North America
Electric Utilities – International
Integrated Oil & Gas
Metals & Mining and Steel
Industrial Conglomerates & Machinery
Food Products
All Other Sectors
TonnesofGHGEmissions(CO2
e)
2001 2002 2003 2004 2005

37
On the basis of emissions data collected
in CDP4, we find that approximately 62%
of all GHG emissions generated by FT500
companies are being released in Annex B
countries.49
This is significant because these
are the countries that are either regulating
or are likely to regulate their GHG emissions.
While the United States – technically an
Annex B country – has yet to implement
emission regulations at the federal level,
a growing body of evidence suggests that
these regulations are likely at some point
in the future.50
Indeed, through the Regional
Greenhouse Gas Initiative (RGGI) and recent
legislative developments such as new
emissions standards in California, GHG
regulatory risks at the state level are
already a reality for many U.S. based
FT500 companies.
(v) Quality of Emissions Data
In order to provide investors with reliable
and accurate research on the investment
implications of climate change, financial
analysts require consistent and comparable
data on company-specific emissions. As
we reported last year, the quality of currently
available emissions data, while steadily
improving, still falls far short of the quality
expected of traditional financial data.
The single biggest problem is lack of
disclosure. While 73% of responding
companies disclosed their emissions data
in CDP4 (compared to 77% in CDP3 and
75% in CDP2), overall, the project yielded
emissions data for about half (48%) of the
FT500 (246 out of 500). This compares to
54% in CDP3 and 46% in CDP2. The lack
of 100% emissions disclosure is likely
a function of many different factors,
including the absence of adequate GHG
measurement systems and protocols
in the management framework of some
companies (particularly those operating
in low-impact sectors) and the lack of
legislation requiring emissions disclosure.
The data may also indicate that, given
the growing financial importance of GHG
emissions management in certain industrial
sectors, firms may be less willing to publicly
disclose details of their GHG emissions
profile particularly where it is incomplete
or not verified.
49 This figure is based on the geographic distribution of emissions for the 246 companies that disclosed
their emissions data in CDP4. It refers to Scope 1, Scope 2 and Scope 3 emissions.
50 In Section 7 recent climate change developments in U.S. climate change policies are summarised.
0%
10%
20%
30%
40%
50%
60%
CDP 1 CDP 2 CDP 3 CDP 4
Percentage of FT500 Companies Providing Emissions Data

38
A second problem is data comparability.
When reviewing this year’s emissions
data, multiple complications arose due
to the widely varying scope of company
reporting. Emissions reported ranged
from simply how much energy was used
at company headquarters to a full
accounting of direct, indirect and business
travel-related emissions. Although we
are encouraged by the uptake of such
standardized methodologies as the GHG
Protocol, there still remains a dearth of
companies that provide details regarding
the boundaries of their emissions reporting.
However, we note that, overall, more
companies used the GHG Protocol to report
their emissions in CDP4 than CDP3. The
standardization that is emerging on this
front will allow for improved comparative
analysis going forward.
A third problem is a lack of verification
of reported GHG emissions. While many
companies reported in CDP4 that their
emissions data had been audited and/or
verified by a qualified third party, a large
number of companies either did not
comment on the authenticity of their GHG
emissions data or indicated that the data
had not been verified, despite being asked.
Without “digging beneath the surface”
for data and information that extends
beyond the scope of the CDP, it is
virtually impossible to distinguish in any
rigorous way those FT500 companies
that are reporting emission reductions
from those that are actually achieving
them. Going forward as the CDP database
extends over time this analysis will
become easier.
The final challenge that investors face
in using CDP data is that disclosure
fluctuates significantly from one sector
to the next, as illustrated by the
graph below.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Percentage
Sector
HouseholdandPersonalProducts
Advertising
Aerospace
AirFreight&Couriers
Automobiles&AutoParts
Banks
Beverages&Tobacco
BuildingProducts
Chemicals
CommunicationsEquipment
ComputersandPeripherals
Construction&FarmMachinery
ConstructionMaterials
DiversifiedFinancials
ElectricUtilities
ElectronicEquipmentandInstruments
EnergyEquipmentandServices
FoodandDrugRetailing
GasUtilities
HealthcareEquipmentandSupplies
Hotels,RestaurantandLeisure
HouseholdDurables
IndustrialConglomerates/Machinery
Insurance
IntegratedOilandGas
Telecommunications
MetalsandMiningandSteel
MultilineRetail
Oil&GasExploration&Production
PaperandForestProducts
Pharmaceuticals
PublicServices
RealEstate
SemiconductorEquipment
SpecialtyRetail
SurfaceTransport
Textiles&Apparel
Trading&Distribution
FoodProducts
ElectricalEquipment
CDP 2 CDP 3 CDP 4
Emissions Disclosure Within Individual FT500 Sectors

39
The graph on the previous page shows the
percentage of each industrial sector that
disclosed emissions data in CDP2, CDP3
and CDP4. Unsurprisingly, the main finding
from this analysis is that companies
in high-impact sectors tend to have
significantly higher emissions disclosure
rates than companies in low-impact
sectors. For example, over 75% of firms
in the Chemicals, Electric Power –
North America and Electric Utilities –
International clusters are consistently
providing emissions data to the CDP.
This is an important point for investors
since it shows that the CDP is capturing
a relatively large proportion of emissions
data from companies in high-risk sectors.
One exception to this trend is found
in the Industrial Conglomerates and
Industrial Machinery cluster. These
two sectors have never had an emissions
disclosure rate above 45% in any
iteration of the CDP.
Looking within individual high-impact
sectors, there are several instances
where companies failed to provide
emissions data in CDP4 when every
one of their industry competitors provided
this information. Examples include
Monsanto in the Specialty Chemicals
sector, Edison International in the
Electric Power – North America sector
and Norilsk Nickel in the Metals & Mining
cluster. Failure to disclose information
(of any kind) that is nearly universally
provided by sector peers should raise
some concerns for investors.
Finally, and as expected, our analysis
shows that the disclosure of GHG
Barclays’ Natural Resources
Team has provided long-term
financing for 2,500 MW of
renewable generating capacity.
Royal Bank of Canada’s $50
million Alternative Energy Fund
has financed 26 wind farms in
Europe and North America with
a total projected capacity of
1 GW.
51 There are ten companies from the Middle East and three from Africa in CDP4.
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Africa Asia Europe Middle East North America Oceania South America
2001 2002 2003 2004 2005
Percentage of Regions Providing Emissions Data
emissions through the CDP initiative ranges
significantly across geographic regions.
The graph below shows that slightly under
70% of European-based firms provided
2005 emissions data in CDP4, while the
percentage for North American-based
firms was 34%. More broadly, the graph
shows that Europe and Oceania are
the regions with the highest emissions
disclosure rates, although the absolute
number of FT500 companies in these
regions ranges significantly (153 in
Europe vs. 9 in Oceania). The graph
also demonstrates that the CDP initiative
is yielding very little emissions data for
companies based in Africa and the Middle
East. No African company has ever
provided emissions data to the CDP,
and only once has a company based in
the Middle East provided emissions data.51
It is highly important to keep in mind the
absolute number of companies in these
regions when interpreting these findings.
Since over 95% of the FT500 companies
in CDP4 are based in Asia, Europe and
North America (n=80 in Asia; n=153 in
Europe; and n=241 in North America),
we believe the most important message
in this analysis is the relative lack of
disclosure among North American-based
firms. With the exception of Africa and
the Middle East, North America has
consistently had the poorest regional
emissions disclosure rate to the CDP.
Again, while this is likely partly a function
of the large number of U.S. based
companies in the FT500, it could also be
an indication of the region’s comparatively
poor strategic management of climate
change-related issues.

Carbon Disclosure Project 2006

Carbon Disclosure Project 2006

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