by Mark Brownlie
November 23, 2011 - The industrial sector in
Canada with perhaps the most significant financial and regulatory
risks related to climate change is doing a poor job of letting
investors know how they are managing those risks.
Results from the 2011 Carbon Disclosure Project (CDP) show that
only 54 percent of Canada's largest energy and utility companies
responded to the request for information on greenhouse
The CDP is a collaborative global effort of 550 institutional
investors with more than $70 trillion of assets. Signatory
investors include Morgan Stanley, Barclays, HSBC and the big
Canadian banks and institutional investors. The annual CDP
questionnaire asks companies to share their greenhouse gas
strategies, targets, risks and opportunities, and emissions
amounts. The questionnaire was sent to Canada's 200 largest
companies, and more than 6,000 companies worldwide.
The overall response rate for Canadian companies was 54 percent,
the same as that of the energy and utilities sector. However, given
the potential for climate change regulations and impacts to
financially affect energy companies disproportionately higher, the
relatively low response rate suggests that energy companies are
either not taking the issue seriously or are not ready for an
increasingly transparent world. Compared with the 67 percent
response rate for the lower risk communication and high tech
sector, the energy sector's showing is baffling.
Among the bigger players in the oil and gas business not
responding to the 2011 survey were TransCanada, MEG Energy,
Pengrowth, Precision Drilling, and Athabasca Oil Sands. On the
transparent side, Suncor, Cenovus, ARC Resources, and Encana were
highlighted as carbon disclosure leaders.
It's no secret that information is the key that allows investors
to better understand, evaluate and assess potential risk and
return. Markets value transparency. When the information is
missing, investors can't make good decisions.
In addition to typical financial data, institutional investors
are looking for a broad range of environmental and social
information because they are factors that drive long-term
profitability. The CDP signatory investors believe that managing
greenhouse gas emissions and minimizing climate change impacts are
fundamental to achieving strong returns for shareholders.
Once a company starts measuring and reporting greenhouse gas
emissions, the company starts managing them-creating programs,
setting targets, introducing internal incentives, and reducing
Institutional investors, financial analysts, stock exchanges,
governments, and environmental and social advocates are
increasingly pressuring companies for greater non-financial
disclosure to help make more balanced decisions and to restore
confidence in business.
In response, sustainability reporting-covering the triple bottom
line of economic, environmental and social performance-is rapidly
emerging as a valuable business practice among leading
These publications provide readers with information not commonly
found in annual financial reports. In addition to information on
greenhouse gases, they also often cover water use, land
reclamation, spills, employee learning and development, safety,
community relations, corruption and a host of other issues of
interest to stakeholders.
Not surprisingly, 88 percent of the companies not responding to
the CDP questionnaire did not publish a company sustainability
Note: The 2011 Carbon Disclosure Project Canada 200 Report was
released in October and can be downloaded here
Mark Brownlie is Chief Executive of Responsibility Matters Inc.,
a Calgary-based advisory firm helping companies and non-profits
with sustainability strategies and communications.