Full Document Text

                
Slide 1 
 2 Degrees Network Presentation 
21 March, 2012 
 
The Evolution of Carbon Disclosure; 
from compliance to strategy 
 
Daniel Turner 
Head of Disclosure at CDP 
 
 

1. CDP Overview 
2. Sustainability trend visible through CDP data; illustrating 
the move from compliance to strategy  
3. CDP Reporter Services – how we work with companies 
4. Corporate Perspective – Philips 
5. Q&A 
Agenda 

                     
―CDP is to the future of business what 
the X-ray was to the then-future of 
medicine — without it, we would never 
have seen the insides of the patient's 
health.‖ 
 Christiana Figueres  
Executive Secretary of the UN 
Framework Convention on Climate 
Change (UNFCCC)  
Responders  (Investor & Supply Chain programs) 
2003 2004 2005 2006 2007 2008 2009 2010 2011 
235 295 355 
922 
1449 
2204 2456 
3050 
3715 
 CDP over time 
0 
100 
200 
300 
400 
500 
600 
700 
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 
35 
95 
155 
225 
315 
385 
475 
534 551 
655 
4.5 10 21 31 41 
57 55 64 71 78 
Signatory Investors Assets ($ Trillion) 

                     
 Carbon Action 
• Investors are requesting companies in the high emitting industries in 
G500 and FTSE AllWorld-800 to implement cost-effective greenhouse 
gas emissions reductions 
 
• Specifically companies are being encouraged to:  
• Make year-on-year emissions reductions; 
• Identify and implement investment in greenhouse gas emissions reduction 
initiatives which have a satisfactory positive return on investment; 
• Any companies that do not already have an emissions reduction target are 
asked to set and publicly disclose this. 
 
• Companies in the G500 and FTSE AllWorld-800 in industries with 
potential for high emissions in their supply chains are also asked 
to demonstrate their management of those emissions 
 

―Climate change is the first 
predictable industrial revolution‖ 
 Alan Brown 
Chief Investment Officer, Schroders 

Financial performance correlation to good CDP reporting 

Governance & Strategy 
 
 
 
93% Board level 
responsibility 
65% Monetary 
incentives 
68% 
Integrated 
strategy 
Risks & 
Opportunities 
Behaviour 
change 
initiatives 
Efficiency 
processes 
New 
products & 
services 
Reduction 
targets 
Carbon Performance Leadership Index (CPLI) strategies incorporate:  
Global 500 Actions Addressing Climate Change 

Financial impact of physical risks 
―An increase in natural disasters 
such as floods...may lower the 
plant operating rate for not just 
Honda but also its suppliers‖ 
 
―This could potentially have a 
negative effect on business results‖  
 
―The abnormal weather may come 
back to impact our business, so it 
is crucial to have CO2 emissions 
reduction measures in place‖ 
C o m p a n y  n a m e R i s k  d r i v e r P o t e n t i a l  i m p a c t T i m e f r a m e L i k e l i h o o d
H o n d a  M o t o r  C o m p a n y
C h a n g e  i n  p r e c i p i t a t i o n  
e x t r e m e s  a n d  d r o u g h t s
I n c r e a s e d  
o p e r a t i o n a l  c o s t > 1 0  y e a r s M o r e  l i k e l y  t h a n  n o t
Source: CDP 
Analytics 

Opportunities - Product Innovation 
Case Study: BASF SE 
Source: CDP Analytics 
Acquired Inge Watertechnologies AG 
(ultra-filtration specialist)   
•Helps BASF expand market position 
New product examples:  
 
ZETAG® - liquid flocculant technology 
 
MAGNAFLOC® LT - potable water treatment  
 
IRGATREAT®, Aseptrol® CW - a cooling 
water biocide system 
 
Abate® larvicide - controls malaria and other 
vector-borne diseases (agricultural solution)  
 
Rheomax DR technology –creates robust 
structures for flocculants (use in mining) 
•Found substantial cost savings 

Management Strategy - Employee Incentives 
Case Studies: Cisco & BG Group 
XPRIZE and IPRIZE 
 
•Prizes for new products addressing sustainability 
challenge 
•The first iPrize was awarded to an idea around the 
electrical grid 
•Winners created a business plan for an IP framework  
•$250,000 in prize money 
Source: CDP Analytics 
Annual Incentive Scheme (AIS)  
•A discretionary cash-based incentive 
•15% Group performance based on 
delivery of HSSE targets  
•Balanced scorecard: annual GHG 
reduction target as a KPI 

    Carbon Tax & pricing                 
 Shadow Price of Carbon  
• A growing number of companies across industries and geographies are employing internal CO2 
shadow prices for strategic decision-making. 
 
• Approach to determining shadow prices varies, however most companies are using projections on 
the future costs of regulations. These trends are global despite the fact that EU-ETS is the only direct 
pricing scheme today. 
 
• Electric utilities, oil & gas companies, and major energy consumers appear to be particularly active in 
employing these internal CO2 drivers for strategy and portfolio moves. 

Emission Reduction Activities 
 
 
 
% of Global 500 with Emissions Reduction Activities 
Access to over 7000 emissions reduction activities with CDP Analytics  
Representing a total of 1,780 Initiatives 
Commitment to medium to 
long term investments: 
 
59% payback period < 3 years  
 
41% payback period > 3 years 
Emission Reduction Activities as important strategic 
priority of the world‘s largest listed companies 

Emissions Reduction Activities 
Global 500 Top 5 Emissions Reduction Activities By Payback Period  
Source: CDP Analytics 

Product Efficiency    
New Integrated Paint Process (IPP) technology 
 
•Payback Period < 1 year 
 
•Brought emissions per vehicle produced down to 
1.60 kg (2009: 1.77 kg) 
 
Case Study: BMW Group 
Source: CDP Analytics 
•Reduced its solvent emissions (VOC) by around 10% 
 
•Achieved 2012 target: paint shop energy consumption reduced by 30% and CO2 
emissions reduced by 43% 
 
•Able to expand the production capacity of its plant facilities to mid-term volume 

Emissions Reduction - Energy Efficiency 
Case Study: Eaton & Cisco 
Source: CDP Analytics 
Implemented HVAC equipment upgrades and 
improvements to 35 plants which will reduce 
emissions by over 9,000 tonnes 
 
Upgraded to more efficient lighting on vehicle 
manufacturing plants to reduce emissions by 
over 10,000 tonnes 
 
Both schemes had payback of less than three 
years 
 
Sometimes the simplest things are the most 
effective 
 
A top down instruction from Senior 
Management to change employee 
behaviour to turn off all systems during 
holiday periods saved over 15 million kwh 
of electricity equating to over 7000 tonnes 
of CO2e . 
 

Scope 3 Measurement   
 
 
 
•Currently 72% of the Global 500 
report on scope 3 to some extent 
 
•GHG protocol recently published  
its scope 3 standard  
 
•CDP Supply Chain team on the 
Steering Group  
 
•Standardized method, defines 15 
categories 
 
•This will raise the bar for corporate 
climate change leadership  
 
 

Scope 3 Measurement 
Global 500 Responding Companies Top 10 Scope 3 Sources 
Source: CDP Analytics 

Verification  
•CDP raised the bar for verification in 2011 and published a ‗recognised 
standards‘ list for 2012 – this is a criteria for inclusion in CPLI 
 
•Over 140 companies from Global 500 in 2011 met this new standard, 
although over 200 had reported that they verified their emissions. 
 
•Of those Scope 1 & 2 emissions that were verified, over 50% reported 
verification to a 90 – 100% capacity  
 Proportion of scope 1, 2, and 3 emissions verified / assured 
Source: CDP Analytics 

                    
Membership programme which is designed to help companies achieve their carbon goals 
 
Fast growing with over 60 members in 15 countries 
Email: reporterservices@cdproject.net to schedule a personal  presentation 
 CDP Reporter Services 

CDP Analytics 
• Benchmark against CDP’s global 
dataset 
• Powerful search filters — geography, 
index, sector or company 
• Turn CDP data into valuable 
information to drive internal action 
• Simple to use with pre-defined reports 
 
Emissions Reporting Tool 
• Move from spreadsheets to web-
based carbon management tool 
• Visualize GHG data and trends  
• Organize data according to your 
business structure – divisions, facilities, 
assets and geographies 
• Identify hot spots for reductions 
 
 CDP Reporter Services – Software Solutions 
                    
 

 CDP Reporter Services – Networking and Best Practice 
                      

 
Please contact me for any follow up questions 
 
daniel.turner@cdproject.net 
 
+44 (0) 207 970 5675