‘Momentum’ from the boardroom pushes more companies to reward climate awareness

By Daniel Cusick | 11/04/2015 08:28 AM EST

For employees of many major corporations, including members of the Standard & Poor’s 500, being a valued worker means a lot more these days than pleasing the boss or putting in a hard day’s work.

According to the climate-focused investor nonprofit CDP, the path to good reviews and even financial bonuses will include development of an environmental ethic, whether one occupies an executive suite or a workstation on the factory floor.

CDP says more firms — including U.S. megabrands Bank of America Corp., Best Buy Co. Inc., CSX Corp. and Hewlett-Packard Co. — are now rewarding executives and staff for finding ways to reduce their company’s carbon footprint and meet other environmental targets.


In fact, 83 percent of S&P 500 companies disclosing information to CDP for its latest global climate change report said they offer direct incentives, including monetary rewards, to staff for helping meet internal energy efficiency and greenhouse gas reduction targets.

That compares to 49 percent of respondents who said such incentives existed at their firms in 2010, according to CDP, which is based in the United Kingdom but has achieved global prominence as an evaluator of corporate environmental metrics.

"The businesses that provide the goods and services Americans use every day know that linking action on climate change to company performance is the new normal," Lance Pierce, CDP’s president for North America, said in a statement announcing the 2015 report’s findings. "Companies’ investors and customers are demanding a low carbon economy, and by incentivizing staff to meet these needs, corporate America is starting to get the job done."

CDP’s analyses are based on questionnaires submitted by nearly 5,500 companies worldwide covering a variety of issues, including climate, water and forest health. CDP’s climate data, submitted by nearly 2,000 companies operating on nearly every continent, are meant to help gain a deeper understanding of how the private sector is responding to the challenges and opportunities around climate change.

33 U.S. companies make the ‘A-list’

As part of its analysis, CDP identified a group of top-performing firms, or "A-listers," that are setting the bar for corporate performance on climate change. Those 113 "A-list" companies include 33 U.S. firms across multiple economic sectors — from consumer goods and financial institutions to heavy manufacturers and utilities. By market capitalization, the largest U.S. A-listers for 2015 are IT giants Apple Inc., Microsoft Corp. and Google Inc., according to CDP.

While some global brands stand out in the report, CDP found that all responding companies, regardless of industry sector or country of origin, are doing better today than they were five years ago on corporate climate metrics.

For example, 98 percent of all responding companies in 2015 said that climate change is an issue being addressed at the board level or by senior management, compared to 80 percent in 2010. For the S&P 500 subset, CDP recorded a 95 percent positive response rate for climate action by board members and senior executives in 2015, compared to 67 percent in 2010.

Perhaps more significant, according to CDP, is that 89 percent of all responding firms said they are actively engaged in emissions reduction activities today, compared to 47 percent in 2010. More than a third of all reporting companies, for instance, said they have switched to renewable energy resources to reduce their carbon footprints, while 71 percent said they had adopted energy efficiency measures.

Among S&P 500 respondents, 96 percent said they were actively reducing carbon emissions this year, compared to 52 percent five years ago, according to CDP.

Meanwhile, corporate engagement with policymakers over concerns about climate change rose from 60 percent of responding companies in 2010 to 84 percent this year.

Paul Dickinson, CDP’s co-founder and executive chairman, suggested the 2015 results reflect a fundamental change in climate awareness and engagement by the private sector.

"The influence of the corporation is mighty," he said in a statement. "The momentum of business action on climate change suggests we have reached a tipping point, where companies are poised to achieve their full potential."

However, Dickinson added, "They need ambitious policy at both a national and international level that will support them in this regard and will catalyze participation from industry at scale."

Data centers continue to be a problem

In a forward to this year’s CDP report, Meg Whitman, president and CEO of Hewlett-Packard, noted that the Internet and communications technology sector "is uniquely suited to combat climate change by enabling more sustainable business models and revolutionizing industries at speed and scale."

But, Whitman added, the IT sector must work harder to reduce its carbon footprint, especially in the area of energy consumption by data centers that serve as the nerve centers of the global Internet. "Today, data centers that power the public cloud use more energy than the countries of Germany and Japan combined, and may soon require more energy than we can even produce each year," she said.

But companies like Hewlett-Packard, a CDP A-lister, along with other IT giants are beginning to embrace renewable energy at scale, including through purchases of large amounts of power from utility-scale wind and solar farms.

Last July, Hewlett-Packard signed a 12-year power purchase agreement with SunEdison Inc. for 112 megawatts of wind power from a Texas facility. The PPA is sufficient to power 100 percent of the company’s Texas data center, which supports Hewlett-Packard’s internal global IT operations, as well as some external customers.

"I’m thrilled to say that this agreement will help us reach our 2020 operational greenhouse gas emissions reduction goal by the end of fiscal year 2015, five years ahead of schedule," Whitman said.

It also makes Hewlett-Packard the first global IT firm to set and achieve a greenhouse gas reduction target using the "3% Solution" approach developed by CDP and the World Wldlife Fund, she said. The model provides corporations with a guide for setting greenhouse gas targets on a track to stay below the 2 degrees Celsius increase identified by scientists as a critical warming threshold, while at the same time driving profits.