Carbon Disclosure Project Nordic Report 2010
On behalf of 534 investors with assets of US$64 trillion
Nordic Region Amanda Haworth Wiklund +46 (0)739 043840
[email protected]
Carbon Disclosure Project
[email protected] +44 (0) 20 7970 5660 www.cdproject.net
Carbon Disclosure Project
Carbon Disclosure Project 2010 This report and all of the public responses from corporations are available to download free of charge from www.cdproject.net. The members and signatories from the Nordic region are marked in blue text.
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ABRAPP - Associação Brasileira das Entidades Fechadas de Previdência Complementar Aegon N.V. Akbank T.A. . Allianz Global Investors AG ATP Group Aviva Investors AXA Group Banco Bradesco S.A. Bank of America Merrill Lynch BBVA BlackRock BP Investment Management Limited California Public Employees’ Retirement System California State Teachers’ Retirement System Calvert Group Catholic Super CCLA Investment Management Ltd Co-operative Asset Management Essex Investment Management, LLC Ethos Foundation Generation Investment Management HSBC Holdings plc ING
KLP Insurance Legg Mason, Inc. The London Pensions Fund Authority Mergence Africa Investments (Pty) Limited Mitsubishi UFJ Financial Group (MUFG) Morgan Stanley National Australia Bank Limited Neuberger Berman Newton Investment Management Limited Nordea Investment Management Northwest and Ethical Investments LP PFA Pension Raiffeisen Schweiz RBS Group Robeco Rockefeller & Co. SRI Group Russell Investments Schroders Second Swedish National Pension Fund (AP2) Sompo Japan Insurance Inc. Standard Chartered PLC Sun Life Financial Inc. TD Asset Management Inc. TDAM USA Inc. The Wellcome Trust Zurich Cantonal Bank
CDP Signatories 2010
Carbon Disclosure Project 2010 534 financial institutions with assets of over US$64 trillion were signatories to the CDP 2010 information request dated February 1st, 2010, including: Aberdeen Asset Managers Aberdeen Immobilien KAG Active Earth Investment Management Acuity Investment Management Addenda Capital Inc. Advanced Investment Partners Advantage Asset Managers (Pty) Ltd ´´ Zrt. AEGON Magyarország Befektetési Alapkezelo Aegon N.V. AEGON-INDUSTRIAL Fund Management Co., Ltd Aeneas Capital Advisors AGF Management Limited AIG Asset Management Akbank T.A.S. Alberta Investment Management Corporation (AIMCo) Alberta Teachers Retirement Fund Alcyone Finance Allianz Global Investors AG Allianz Group Altshuler Shaham AMP Capital Investors AmpegaGerling Investment GmbH Amundi Asset Management ANBIMA - Brazilian Financial and Capital Markets Association APG Asset Management Aprionis ARIA (Australian Reward Investment Alliance) Arma Portföy Yönetimi A.S. ASB Community Trust ASM Administradora de Recursos S.A. ASN Bank Assicurazioni Generali Spa ATP Group Australia and New Zealand Banking Group Limited Australian Central Credit Union incorporating Savings & Loans Credit Union Australian Ethical Investment Limited AustralianSuper AVANA Invest GmbH Aviva Investors Aviva plc AvivaSA Emeklilik ve Hayat A.S. AXA Group Baillie Gifford & Co. Bakers Investment Group Banco Bradesco S.A. Banco de Crédito del Perú BCP Banco de Galicia y Buenos Aires S.A. Banco do Brazil Banco Santander Banco Santander (Brasil) Banesprev Fundo Banespa de Seguridade Social Banesto (Banco Español de Crédito S.A.) Bank of America Merrill Lynch Bank Sarasin & Co, Ltd
Bank Vontobel Bankhaus Schelhammer & Schattera Kapitalanlagegesellschaft m.b.H. BANKINTER S.A. BankInvest Banque Degroof Barclays Group BBC Pension Trust Ltd BBVA Bedfordshire Pension Fund Beutel Goodman and Co. Ltd BioFinance Administração de Recursos de Terceiros Ltda BlackRock Blue Marble Capital Management Limited Blue Shield of California Group Blumenthal Foundation BMO Financial Group BNP Paribas Investment Partners BNY Mellon Boston Common Asset Management, LLC BP Investment Management Limited Brasilprev Seguros e Previdência S/A. British Columbia Investment Management Corporation (bcIMC) BT Investment Management The Bullitt Foundation Busan Bank CAAT Pension Plan Cadiz Holdings Limited Caisse de dépôt et placement du Québec Caisse des Dépôts Caixa de Previdência dos Funcionários do Banco do Nordeste do Brasil (CAPEF) Caixa Econômica Federal Caixa Geral de Depósitos Caja de Ahorros de Valencia, Castellón y Valencia, BANCAJA Caja Navarra California Public Employees’ Retirement System California State Teachers’ Retirement System California State Treasurer Calvert Group Canada Pension Plan Investment Board Canadian Friends Service Committee (Quakers) CAPESESP Capital Innovations, LLC CARE Super Pty Ltd Carlson Investment Management Carmignac Gestion Catherine Donnelly Foundation Catholic Super Cbus Superannuation Fund CCLA Investment Management Ltd Celeste Funds Management Limited The Central Church Fund of Finland Central Finance Board of the Methodist Church Ceres, Inc. Cheyne Capital Management (UK) LLP Christian Super Christopher Reynolds Foundation CI Mutual Funds’ Signature Advisors CIBC Clean Yield Group, Inc. ClearBridge Advisors
Climate Change Capital Group Ltd Close Brothers Group plc The Collins Foundation Colonial First State Global Asset Management Comite syndical national de retraite Bâtirente Commerzbank AG CommInsure Companhia de Seguros Aliança do Brasil Compton Foundation, Inc. Connecticut Retirement Plans and Trust Funds Co-operative Asset Management Co-operative Financial Services (CFS) The Co-operators Group Ltd Corston-Smith Asset Management Sdn. Bhd. Crédit Agricole S.A. Credit Suisse Daegu Bank Daiwa Securities Group Inc. The Daly Foundation de Pury Pictet Turrettini & Cie S.A. DekaBank Deutsche Girozentrale Deutsche Asset Management Deutsche Bank AG Deutsche Postbank Vermögensmanagement S.A., Luxemburg Development Bank of Japan Inc. Development Bank of the Philippines (DBP) Dexia Asset Management DnB NOR ASA Domini Social Investments LLC Dongbu Insurance Co., Ltd. DWS Investment GmbH Earth Capital Partners LLP East Sussex Pension Fund Ecclesiastical Investment Management Economus Instituto de Seguridade Social The Edward W. Hazen Foundation EEA Group Ltd Element Investment Managers ELETRA - Fundação Celg de Seguros e Previdência Environment Agency Active Pension Fund Epworth Investment Management Ltd Equilibrium Capital Group Erste Group Bank AG Essex Investment Management, LLC Ethos Foundation Eureko B.V. Eurizon Capital SGR Evangelical Lutheran Church in Canada Pension Plan for Clergy and Lay Workers Evli Bank Plc F&C Management Ltd FAELCE - Fundação Coelce de Seguridade Social FASERN Fundação Cosern de Previdência Complementar Fédéris Gestion d’Actifs FIDURA Capital Consult GmbH FIM Asset Management Ltd Financière de Champlain FIRA. - Banco de Mexico First Affirmative Financial Network First Swedish National Pension Fund (AP1) FirstRand Ltd.
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Carbon Disclosure Project
Five Oceans Asset Management Florida State Board of Administration (SBA) Folketrygdfondet Folksam Fondaction CSN Fondation de Luxembourg Fonds de Réserve pour les Retraites – FRR Forward Management, LLC Fourth Swedish National Pension Fund, (AP4) Frankfurter Service Kapitalanlage-Gesellschaft mbH FRANKFURT-TRUST Investment Gesellschaft mbH Friends Provident Holdings (UK) Limited Front Street Capital Fukoku Capital Management, Inc. Fundação AMPLA de Seguridade Social Brasiletros Fundação Atlântico de Seguridade Social Fundação Banrisul de Seguridade Social Fundação Codesc de Seguridade Social FUSESC Fundação de Assistência e Previdência Social do BNDES - FAPES Fundação Forluminas de Seguridade Social Fundação Itaúsa Industrial Fundação Promon de Previdência Social Fundação São Francisco de Seguridade Social Fundação Vale do Rio Doce de Seguridade Social - VALIA FUNDIÁGUA - Fundação de Previdência da Companhia de Saneamento e Ambiental do Distrito Federal Futuregrowth Asset Management Gartmore Investment Management Limited Generali Deutschland Holding AG Generation Investment Management Genus Capital Management Gjensidige Forsikring GLG Partners LP GLS Gemeinschaftsbank eG, Germany Goldman Sachs & Co. GOOD GROWTH INSTITUT für globale Vermögensentwicklung mbH Governance for Owners LLP Government Employees Pension Fund (“GEPF”), Republic of South Africa Green Cay Asset Management Green Century Funds Groupe Investissement Responsable Inc. GROUPE OFI AM Grupo Banco Popular Gruppo Monte Paschi Guardian Ethical Management Inc Guardians of New Zealand Superannuation Guosen Securities Co., LTD. Hang Seng Bank HANSAINVEST Hanseatische Investment GmbH Harbourmaster Capital Harrington Investments, Inc The Hartford Financial Services Group, Inc. Hastings Funds Management Limited Hazel Capital LLP HDFC Bank Ltd Health Super Fund Henderson Global Investors
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Hermes Fund Managers HESTA Super Hospitals of Ontario Pension Plan (HOOPP) HSBC Global Asset Management (Deutschland) GmbH HSBC Holdings plc HSBC INKA Internationale Kapitalanlagegesellschaft mbH Hyundai Marine & Fire Insurance IDBI Bank Limited Illinois State Treasurer Ilmarinen Mutual Pension Insurance Company Impax Asset Management Ltd Industrial Bank Industrial Bank of Korea Industry Funds Management Infrastructure Development Finance Company Ltd. (IDFC) ING Insight Investment Management (Global) Ltd Instituto de Seguridade Social dos Correios e Telégrafos - Postalis Instituto Infraero de Seguridade Social INFRAPREV Insurance Australia Group Investec Asset Management Irish Life Investment Managers Itaú Unibanco Banco Múltiplo S.A. J.P. Morgan Asset Management Janus Capital Group Inc. The Japan Research Institute, Limited Jarislowsky Fraser Limited The Joseph Rowntree Charitable Trust Jubitz Family Foundation Jupiter Asset Management K&H Investment Fund Management / K&H Befektetési Alapkezelo Zrt KB Asset Management KB Financial Group KB Kookmin Bank ´´ NV KBC Asset Management KCPS and Company KDB Asset Management Co., Ltd. Kennedy Associates Real Estate Counsel, LP KEPLER-FONDS Kapitalanlagegesellschaft m.b.H. KfW Bankengruppe KLP Insurance Korea Investment & Trust Management Korea Technology Finance Corporation KPA Pension Kyobo AXA Investment Managers La Banque Postale Asset Management La Financière Responsable Landsorganisationen i Sverige LBBW - Landesbank Baden-Württemberg LBBW Asset Management Investmentgesellschaft mbH LD Lønmodtagernes Dyrtidsfond Legal & General Group plc Legg Mason, Inc. Lend Lease Investment Management Light Green Advisors, LLC Living Planet Fund Management Company S.A. Local Authority Pension Fund Forum The Local Government Pensions Institution
Local Government Super Lombard Odier Darier Hentsch & Cie The London Pensions Fund Authority Lothian Pension Fund Macif Gestion Macquarie Group Limited Magnolia Charitable Trust Maine State Treasurer Man Group plc Maple-Brown Abbott Limited Marc J. Lane Investment Management, Inc. Maryland State Treasurer Matrix Asset Management McLean Budden MEAG Munich Ergo Asset Management GmbH Meeschaert Gestion Privée Meiji Yasuda Life Insurance Company Merck Family Fund Mergence Africa Investments (Pty) Limited Meritas Mutual Funds MetallRente GmbH Metzler Investment GmbH MFS Investment Management Midas International Asset Management Miller/Howard Investments Mirae Asset Global Investments Co. Ltd. Mistra, The Swedish Foundation for Strategic Environmental Research Mitsubishi UFJ Financial Group (MUFG) Mitsui Sumitomo Insurance Co.,Ltd Mizuho Financial Group, Inc. Mn Services Monega Kapitalanlagegesellschaft mbH Morgan Stanley Motor Trades Association of Australia Superannuation Fund Pty Ltd Mutual Insurance Company Pension-Fennia Natcan Investment Management The Nathan Cummings Foundation National Australia Bank Limited National Bank of Canada National Bank of Kuwait National Grid Electricity Group of the Electricity Supply Pension Scheme National Grid UK Pension Scheme National Pensions Reserve Fund of Ireland National Union of Public and General Employees (NUPGE) Natixis Nedbank Limited Needmor Fund Nelson Capital Management, LLC Nest Sammelstiftung Neuberger Berman New Amsterdam Partners LLC New Jersey Division of Investment New Mexico State Treasurer New York City Employees Retirement System New York City Teachers Retirement System New York State Common Retirement Fund (NYSCRF) Newton Investment Management Limited NFU Mutual Insurance Society NGS Super NH-CA Asset Management
CDP Signatories 2010
Nikko Asset Management Co., Ltd. Nissay Asset Management Corporation NORD/LB Kapitalanlagegesellschaft AG Nordea Investment Management Norfolk Pension Fund Norges Bank Investment Management (NBIM) Norinchukin Zenkyouren Asset Management Co., Ltd North Carolina State Treasurer Northern Ireland Local Government Officers’ Superannuation Committee (NILGOSC) Northern Trust Northwest and Ethical Investments LP Oddo & Cie Old Mutual plc OMERS Administration Corporation Ontario Teachers’ Pension Plan OP Fund Management Company Ltd Oppenheim Fonds Trust GmbH Opplysningsvesenets fond (The Norwegian Church Endowment) OPSEU Pension Trust Oregon State Treasurer Orion Asset Management LLC OTP Fund Management Plc. Pax World Funds Pensioenfonds Vervoer Pension Fund for Danish Lawyers and Economists The Pension Plan For Employees of the Public Service Alliance of Canada Pension Protection Fund Pensionsmyndigheten PETROS - The Fundação Petrobras de Seguridade Social PFA Pension PGGM Phillips, Hager & North Investment Management Ltd. PhiTrust Active Investors Pictet Asset Management SA The Pinch Group Pioneer Alapkezelo´´ Zrt. PKA Pluris Sustainable Investments SA Pohjola Asset Management Ltd Portfolio 21 Investments Portfolio Partners Porto Seguro S.A. PRECE Previdência Complementar The Presbyterian Church in Canada PREVI Caixa de Previdência dos Funcionários do Banco do Brasil PREVIG Sociedade de Previdência Complementar Principle Capital Partners Psagot Investment House Ltd PSP Investments Q Capital Partners Co. Ltd QBE Insurance Group Limited Rabobank Raiffeisen Schweiz Railpen Investments Rathbones / Rathbone Greenbank Investments RBS Group Real Grandeza Fundação de Previdência e Assistência Social
Rei Super Resona Bank, Limited Reynders McVeigh Capital Management Rhode Island General Treasurer RLAM Robeco Robert Brooke Zevin Associates, Inc Rockefeller & Co. SRI Group Rose Foundation for Communities and the Environment Royal Bank of Canada RREEF Investment GmbH The Russell Family Foundation Russell Investments SAM Group Sampension KP Livsforsikring A/S Samsung Fire & Marine Insurance Samsung Life Insurance Sanlam Investment Management Santa Fé Portfolios Ltda Sauren Finanzdienstleistungen GmbH & Co. KG Schroders Scotiabank Scottish Widows Investment Partnership SEB SEB Asset Management AG Second Swedish National Pension Fund (AP2) Seligson & Co Fund Management Plc Sentinel Investments SERPROS Fundo Multipatrocinado Service Employees International Union Benefit Funds Seventh Swedish National Pension Fund (AP7) The Shiga Bank, Ltd. Shinhan Bank Shinhan BNP Paribas Investment Trust Management Co., Ltd Shinkin Asset Management Co., Ltd Siemens Kapitalanlagegesellschaft mbH Signet Capital Management Ltd SIRA Asset Management SMBC Friend Securities Co., LTD Smith Pierce, LLC SNS Asset Management Social(k) Sociedade Ibgeana de Assistência e Seguridade (SIAS) Solaris Investment Management Limited Sompo Japan Insurance Inc. Sopher Investment Management SPF Beheer bv Sprucegrove Investment Management Ltd Standard Bank Group Standard Chartered PLC Standard Life Investments State Street Corporation Storebrand ASA Strathclyde Pension Fund Stratus Group Sumitomo Mitsui Banking Corporation Sumitomo Mitsui Card Company, Limited Sumitomo Mitsui Finance & Leasing Co., Ltd Sumitomo Mitsui Financial Group Sumitomo Trust & Banking
Sun Life Financial Inc. Superfund Asset Management GmbH Sustainable Capital Svenska Kyrkan, Church of Sweden Swedbank Ab (publ) Swiss Reinsurance Company Swisscanto Holding AG Syntrus Achmea Asset Management TD Asset Management Inc. TDAM USA Inc. Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF) Tempis Capital Management Co., Ltd. Terra Forvaltning AS TfL Pension Fund The University of Edinburgh Endowment Fund Third Swedish National Pension Fund (AP3) Threadneedle Asset Management Tokio Marine & Nichido Fire Insurance Co., Ltd. Toronto Atmospheric Fund The Travelers Companies, Inc. Trillium Asset Management Corporation TRIODOS BANK TrygVesta UBS AG Unibanco Asset Management UniCredit Group Union Asset Management Holding AG Unipension UNISON staff pension scheme UniSuper Unitarian Universalist Association The United Church of Canada - General Council United Methodist Church General Board of Pension and Health Benefits United Nations Foundation Universities Superannuation Scheme (USS) Vancity Group of Companies Veritas Investment Trust GmbH Vermont State Treasurer VicSuper Pty Ltd Victorian Funds Management Corporation VietNam Holding Ltd. Visão Prev Sociedade de Previdência Complementar Waikato Community Trust Inc Walden Asset Management, a division of Boston Trust and Investment Management Company WARBURG - HENDERSON Kapitalanlagegesellschaft für Immobilien mbH WARBURG INVEST KAPITALANLAGEGESELLSCHAFT MBH The Wellcome Trust Wells Fargo West Yorkshire Pension Fund WestLB Mellon Asset Management Kapitalanlagegesellschaft mbH (WMAM) The Westpac Group Winslow Management Company Woori Bank YES BANK Limited York University Pension Fund Youville Provident Fund Inc. Zegora Investment Management Zurich Cantonal Bank
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Contents
Foreword Tarja Halonen, President of Finland
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Introduction Paul Dickinson, CEO Carbon Disclosure Project
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Executive Summary Ole Beier Sørensen, ATP and Chairman of IIGCC
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2.
Nordic Region Report Amanda Haworth Wiklund, Director CDP Nordic region
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3.
The Carbon Disclosure and Performance Scores
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Guest commentary: Investments in grids – a key success factor in the new energy era Martin Gavelius, PricewaterhouseCoopers
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Governance, Strategy and Emissions
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1.
4.
5.
6.
Materials
24
Energy & Utilities
25
Transportation
26
Industrials
27
Telecommunications & IT
29
Financials
30
Health Care
31
Consumer Discretionary
32
Consumer Staples
33
Risks and Opportunities
34
Materials
36
Energy & Utilities
39
Transportation
41
Industrials
43
Telecommunications & IT
46
Financials
48
Health Care
50
Consumer Discretionary
51
Consumer Staples
53
Global Key Trends Summary
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Appendix 1 Company scores
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Appendix 2 Description of disclosure and performance scoring
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”Our Common Future” was the title of the report which in 1987 popularized the concept of sustainable development as “development which meets the needs of the present without compromising the ability of future generations to meet their needs”. Today, it is generally accepted that sustainable development stands on three pillars: economic strength, social cohesion and environmental protection. It is also a common truth that each sector of each society has to take its responsibility. We all need to co-operate: the state has to do its share, and so must the business community, NGOs and individuals alike. The UN Global Compact actually offers a network for companies who share universal values. But what has dramatically changed since the Bruntland Commission is our deepened knowledge and concern on climate change. We see sustainable development and mitigating climate change as interwoven issues in an increasingly complex network. We have to combine our efforts, and many promising signs are already in the air. Governments have allocated economic stimuli to green funds, innovative clean teach industries attire a good share of private investments, a chemical company cuts green house gas emissions more than a half – and saves billions of dollars. These signals show that combating climate change rewrites the rules how successful companies do business. Actually, more than 1500 organizations from some 60 countries produced sustainability reports along the guidelines of the Global Reporting Initiative, clearly more than a year before. It is relevant to report and measure, because what you measure is what you manage. The Carbon Disclosure Project is a concrete example on this. It is encouraging to realise, that regardless the economic downturn, climate change performance remains among high priorities. Disclosing emission data increases transparency and accountability, it enables investors, customers and consumers as well as authorities to assess and take better informed decisions. It is a tool to drive towards a low carbon economy. The journey towards global sustainability has begun.
Tarja Halonen President of the Republic of Finland Co-Chair of the UN High-Level Global Sustainability Panel
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1 Paul Dickinson, CEO Carbon Disclosure Project This year began with the clouds of global recession hanging over the economy. It was also tainted with heavy disappointment at the failure to reach agreement on a global deal at Copenhagen and smears against climate change science. Many asked us whether this would decrease corporate engagement in climate change. Would companies abandon commitments to carbon reporting and management to focus instead on shorter term wins? Would companies throw out their carbon reduction plans due to the lack of a global framework? The answers to these questions lie in CDP’s 2010 dataset and I am delighted to say, that the answer is a categorical ‘no’. Fuelled by opportunities to reduce energy costs, secure energy supply, protect the business from climate change risk and damaged reputation, generate revenue and remain competitive, carbon management continues to rise as a strategic priority for many businesses. Companies globally are seizing commercial carbon opportunities, often acting ahead of any policy requirements. More companies than ever before are reporting through CDP and measuring and reporting their emissions.
Introduction
The demand for primary corporate climate change data is growing too – it is now accessed through Bloomberg and Google Finance. It is also used by an increasing number of investment research providers and sell-side brokers to generate new insights into the impacts of climate change on global industry and to highlight the associated opportunities. The demand for analysis of CDP data is also growing and this year we launch a new performance score, which identifies companies who exhibit leadership in managing their carbon risks and exposures. We have also launched two index products based on CDP data – the FTSE CDP Carbon Strategy Index series and the Markit Carbon Disclosure Leadership Index. These products give investors exposure to companies better positioned in the transition to a low carbon economy. CDP has set three key focus areas for the immediate future. One is to work with companies and the users of our data to continue improving quality and comparability. Data that supports action is central to fulfilling CDP’s mission, to accelerate solutions to climate change by putting relevant information at the heart of business, policy and investment decisions. We have given greater weighting within our scoring to verification this year and advancing reporting consistency is crucial. In addition, we are also launching a new package, Reporter Services, exclusively for responding companies, to help them develop their carbon management strategies through increased data quality, deeper analysis and the sharing of best practice.
Never forget that climate change is a global problem and we need a global solution. That is why our second key focus is on globalizing CDP’s programs in all major economies in the coming years. Beyond CDP’s Investor program, which sits at the heart of CDP, we intend to grow our Supply Chain and Public Procurement programs, as well as CDP Water Disclosure, to ensure that we maximize the fulfilment of CDP’s mission. Our third key focus is mitigation and emissions reduction. The number of companies within the Global 500 (FTSE Global Equity Series) reporting reduction targets has already increased fourfold since CDP’s first reporting year. But this is just the first step. We know that we can do far more to help advance emissions reductions and are fully committed to working with investors and industry to achieve this. It is through partnerships that we can achieve the largest impact. We’re delighted to be working our global advisor, PricewaterhouseCoopers and our global sponsor Bank of America, as well as Accenture, Microsoft and SAP to accelerate our mission and highlight the huge opportunities for business to capitalize on the transition to a low carbon economy. These are exciting times for business, with significant changes coming to the way we produce and consume energy. New power from low or zero emissions sources is an urgent priority for climate change policy that simultaneously helps deliver energy security. New technologies such as smart grids, electric vehicles, alternative fuel sources, advanced telepresence videoconferencing, are showing a clear case for business growth with reduced emissions. The opportunities for business are enormous – it is through the intelligent investment of capital into the right solutions, identified by the business community, that we will achieve the low carbon future we need.
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Executive Summary Ole Beier Sørensen Ph.D., Chief of Strategy and Research at ATP and Chairman of the Institutional Investors Group on Climate Change (IIGCC) For the fourth year in a row, the number of Nordic companies reporting to the CDP continues to increase, with 131 companies responding to the 2010 questionnaire. The overall response rate in the region was 66%, split between Denmark, Finland, Norway and Sweden at 73%, 65%, 49% and 74% respectively.
There are clear indications that strategies and approaches are maturing in many companies and that a large number of respondents have developed integrated approaches over the past five years. However, there is still variation and room for maturation in the approaches adopted for climate-related risk and opportunity.
The vast majority of companies reporting to CDP (79%) make their responses publicly available.
There are numerous examples of best practice approaches: where strategy and targets are set and reviewed at high level; where strategies are implemented throughout the management structure; and where results are audited alongside financial reporting. On the other hand, these best practice examples are contrasted by a fairly widespread tendency to treat climate change as part of corporate social responsibility (CSR) or sustainability, separate from other strategic and operational challenges. Moreover, it is not uncommon for companies to refer simply to an "annual review" when asked about the mechanisms for reviewing progress and status.
Governance and strategy The steadily increasing number of responses is very reassuring, particularly against the backdrop of the economic downturn. Less focus on carbon and energy efficiency and climate-related risks might be expected but there are no signs of this in company responses. In fact, there are clear indications that good performance on climate change remains high on the agenda for most large companies in the Nordic region, and that it is increasingly considered an important source of competitive advantage. A growing number of companies are placing the responsibility for climate-related matters at a high strategic level in their organisations. Eighty-nine percent of companies report that the highest level of responsibility for climate change lies with a board committee or other executive body, compared with 77% in 2009. This compares favourably with results from the Global 500 companies (84%). In the same vein, incentives to encourage attainment of GHG targets are becoming an even more common element supporting implementation strategies: 44% of Nordic respondents provide incentives for the management of climate-related issues, up from 30% in 2009.
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Emission targets
Risks and opportunities
Eighty percent of respondents have a current emissions reduction target or are in the process of developing one1. Chapter four offers significant detail on the wide range of initiatives and approaches adopted by companies across the great variation of sectors, company types and geographies in the region. This information is very valuable to companies and investors as a source of inspiration in strategy and target development.
The company responses point to two key drivers of emissions reduction strategies. Firstly, there is strong consideration of the incentives to cut carbon, energy and fuel costs, thereby reducing exposure to regulatory risks. Secondly, there is strong consideration of brand and reputational aspects of climate behaviour and efficiency. On this latter point, companies cite a number of factors that are prompting concrete action. Namely, material concerns related to brand value, prospects for sales and market share and, finally, employee loyalty and the cost of capital.
A clear majority of respondents (62%) engage with policy makers directly or through business organisations and think tanks. This number is somewhat lower than the 80% registered by the Global 500 survey. There is significant variation between sectors in this field. Engagement activities generally play a markedly stronger role for the companies and industries most exposed to regulatory and reputational risks and opportunities. As a particular point of interest, the analysis shows that demands from, and risks faced by, business-tobusiness customers is an important driver of emissions reduction strategies. Three sectors, Transportation, Energy & Utilities and Materials2, account for 92% of Scope 1 emissions. The Materials sector alone accounts for 65% of Scope 2 emissions. Therefore, overall success with respect to reducing emissions depends heavily on achievements in the most emissions intensive sectors. While most companies in the Materials sector have set reduction targets or are in the process of doing so, less clarity is seen in the targets of most companies in the Energy & Utilities sector. Major Transportation companies report a lower aggregate emission level for 2009, attributable not only to the economic downturn but also, and most importantly, to specific reduction measures put in place.
1 2
Regulatory risks are most likely to be regarded as material. Moreover, concerns relate to the near term: i.e. the here-and-now or within the next few years. Underlining this aspect, firms in high emission and energy intensive sectors such as Materials, Energy & Utilities, Transportation, Industrials and Consumer Staples, highlight sudden changes to regulatory frameworks and uncertainty over Phase 3 of the EU Emissions Trading Scheme as particular concerns. Physical risks are considered important and significant, but they are thought of as long term rather than short term, more manageable and therefore less material. Most large firms in the Nordic region consider themselves well placed to take advantage of the opportunities posed by the need to reduce carbon emissions globally. Many companies cite strong traditions in the Nordic countries in relevant fields driven by relatively tough regulation as an important part of the platform and many of them provide products and services that are considered very much part of the solution.
Carbon disclosure and performance leaders The Carbon Disclosure Leadership Index (CDLI) has been developed to highlight the companies that provide the most comprehensive responses to the CDP information request. The CDLI 2010 includes the top 10%, or 20 leading Nordic companies that have provided public responses. The main objective of the CDLI is to identify leaders and to inspire other Nordic companies to participate and commit to full carbon disclosure. It is important to realise that the index is based on self-reported and, in many cases, non-verified company responses, and that the company score is not a guarantee for actual company performance. Companies representing the Industrials and Materials sectors are well positioned in this year’s CDLI. For the first time this year, Nordic companies have also been scored for carbon performance. While performance scoring is an instructive exercise for all stakeholders, it should be recognised that this is a process that will evolve over time. Investors are recommended to review individual company disclosures in addition to performance rankings in order to gain the most comprehensive understanding of company performance. The five companies that achieve the highest performance band (A) come from five different sectors, only one of which (Materials) is carbon-intensive.
Details of emission reduction targets begin on page 28 The sectoral split is based on the Global Industry Classification Standard (GICS), but with four sectors merged into pairs (Energy with Utilities, Telecommunications Services with Information Technology). In addition, Transportation is treated separately from the other GICS Industry Groups in the Industrials sector on account of its relatively high carbon intensity. Thus, in this report, the Industrials sector comprises only Capital Goods and Commercial & Professional Services, and Transportation is referred to as a sector.
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2 Amanda Haworth Wiklund, Director Carbon Disclosure Project Nordic Region General corporate awareness, understanding, engagement with and actions to safeguard enterprises against the negative effects of climate change are growing noticeably in the Nordic region. Where governments may be hampered by conflicting interests, industry seeks its own survival and finds ways to move ahead, using its best entrepreneurial talents to ensure its own sustainability and share value. There was a large turnover of companies in the Nordic 200 this year. The number of responding companies increased to 131, with four companies responding after receiving the request for the first time. Eleven previous non-responders submitted completed questionnaires and one company that had participated only in 2007 decided to resume. This latter had been approached by a customer through the CDP Supply Chain programme, and is one of a number of examples of this providing significant impetus for companies to tackle climate issues. Two other companies that have never responded contacted the office to enquire about how to start their reporting process and will hopefully disclose in 2011. The workshops, held in each country in March 2010 for companies wishing to learn how best to tackle the complexities of the CDP questionnaire, were again well attended. We welcome new and returning attendees to workshops planned for March 2011.
Nordic Region Report
Fig. 1 Number of Nordic company responses between 2007 and 2010 131
CDP 2010
128
CDP 2009
110
CDP 2008
84
CDP 2007 0
60
90
120
Box 1 Responders and non-responders
The ten largest nonresponders by market capitalisation1 Sampo plc REC Group Hexagon AB Elisa Corporation Aker ASA Securitas AB Lundbergs AB Marine Harvest Group YIT Group Fred. Olsen Energy ASA
Non-responders in 2010 that responded in 2009 GN Store Nord Intrum Justitia AB Stockmann
1 Based on market capitalisation data available from Bloomberg on January 8th 2010
12
30
New responders in 2010 Arendals Fossekompani Cermaq ASA Citycon Oyj FLSmidth & Co. A/S Frontline ASA PA Resources AB Pöyry plc Royal Caribbean International Schibsted ASA Seadrill Management AS Talvivaara Mining Company Uponor Corporation Wallenstam AB Wihlborgs Fastigheter AB Vaisala Oyj Yara International ASA
150
Fig. 2 Number of company responses by sector and country 4
Other Industrials
3
Financials
2
3
Consumer Staples
4
7 7
2
5 1 1
4
2
3
4
2 1
2
Health Care
Telecommunications & IT
3
2
2
Energy & Utilities
14 14
9
Consumer Discretionary
4
2
1
Materials
2 4
5 1 1 1
Transportation 0
Denmark
9
Finland
5
Norway
10
20
25
30
35
Sweden
There are two new developments to highlight in this year’s Nordic report: • For the first time, the full CDP Nordic Report will only be published electronically, in response to user feedback. • Nordic companies have been scored for carbon performance as well as disclosure. During the 10 years that CDP has monitored disclosure practices, corporate activity has advanced to a stage where analysis of performance can aid investors who want to identify leading companies in carbon management. After a pilot in 2009, a performance scoring methodology has been established and implemented.
15
Our continued thanks go to investor partners ATP, KLP and Nordea, each of which in its own way has been very supportive during the year. ATP has been a strong Nordic Partner profile for CDP internationally and for the UNFCCC COP 15 event in Copenhagen. KLP has launched the Sustainable Value Creation Initiative which is assisting in drawing company focus to the many facets of investors’ ethical concerns. Nordea is warmly welcomed this year as a new Nordic Partner whose engagement in SRI issues is becoming increasingly significant.
“For Atea, the CDP report is definitely a step up the ladder of understanding that both environmental concern as well as the economic consequences and possibilities are serious topics that demands high level attention – and not just because it ‘looks nice’.” Atea
13
3 The Carbon Disclosure Leadership Index (CDLI) includes the companies with the highest disclosure scores and provides a valuable perspective on the range and quality of responses to CDP’s questionnaire. A more detailed description of how the disclosure scores should be interpreted can be found in Appendix 2. This year’s CDLI includes the topscoring 10% of the Nordic 200: twenty in total. To qualify for this leadership index, a company must respond to CDP using the online response system prior to the deadline and make its response available for public use.
14
The Carbon Disclosure and Performance Scores Table 1 The Nordic 200 Carbon Disclosure Leadership Index (CDLI) scores Company
Country
Sector
Carbon Disclosure Score
Ranking
Stora Enso
Finland
Materials
93
1
Nokia Group
Finland
Information Technology
91
2
Outotec
Finland
Industrials
90
3
SCA
Sweden
Materials
90
3
UPM-Kymmene
Finland
Materials
90
3
Novo Nordisk
Denmark
Health Care
89
6
Danisco
Denmark
Consumer Staples
86
7
Outokumpu
Finland
Materials
86
7
Skanska
Sweden
Industrials
85
9
Lundin Petroleum
Sweden
Energy
83
10
Norske Skog
Norway
Materials
83
10
Fortum
Finland
Utilities
82
12
SEB
Sweden
Financials
82
12
Vestas Wind Systems
Denmark
Industrials
82
12
SAAB
Sweden
Industrials
81
15
H Lundbeck
Denmark
Health Care
80
16
TeliaSonera
Sweden
Telecommunication Services
80
16
D/S Norden
Denmark
Transportation
79
18
Rockwool International
Denmark
Industrials
78
19
SSAB
Sweden
Materials
78
19
Table 2 The Nordic 200 Carbon Performance Leadership Index (CPLI) companies in alphabetical order Company
Sector
Country
Also in the CDLI?
Danisco A/S
Consumer Staples
Denmark
Ç
Nokia Group
Information Technology
Finland
Ç
Novo Nordisk
Health Care
Denmark
Ç
SEB
Financials
Sweden
Ç
Stora Enso
Materials
Finland
Ç
The Carbon Performance Leadership Index (CPLI) includes all publicly responding companies in the Nordic 200 which achieved a Carbon Performance Score in Band A – a total of five companies. A more detailed description of how the performance scores should be interpreted is found in Appendix 2. All five companies in the CPLI are also represented in the CDLI, suggesting that a high disclosure score is a good foundation for a high performance score (or vice versa). The table is sorted alphabetically by company name. Overall, 87 Nordic 200 companies (66% of respondents) received a performance score. A complete listing of companies and their scores is included in Appendix 1. Companies that did not qualify for a performance score appear with a dash in the Performance Score column.
Highlights from the Nordic 200 indices Tables 1 and 2 suggest three points that are worth highlighting from the Nordic 200 results. First, the quality of responses to the CDP questionnaire continues to increase. The average score in the CDLI this year is 84, up from 76 in 2009. Since the scoring methodology remains in essence the same, this means that leading companies are improving their capacity to measure and disclose emissions, to focus strategically on climate change as a business issue, and to demonstrate a clear grasp of the related risks and opportunities.
Secondly, best practice on carbon disclosure and performance may be found across a broad range of economic activity. Eight out of nine industrial sectors are represented in the CDLI, and the five companies in Band A of the CPLI come from five different sectors, only one of which (Materials) is carbon-intensive. On the other hand, the over-representation of Materials in both indices is encouraging, since this is one of the sectors where the potential for action to mitigate climate change is greatest, on account of relatively high direct emissions and energy usage. Thirdly, a year is a long time when it comes to improving carbon disclosure. Eight firms, including the top performer, Stora Enso, and one of those in joint third position, SCA, are new entrants in the CDLI compared with 2009. Four out of the five leading performers are Finnish, with Nokia, Outotec and UPM-Kymmene all improving their position in the index to join Stora Enso. In general, country differences have widened a little compared with 2009. Judging by the number of companies in each index relative to the total number of publicly disclosing companies from each country, Denmark is the best performer, closely followed by Finland. Sweden is slightly under-represented, while Norway is clearly under-represented this year, with just one entry in the CDLI.
15
Guest commentary
Investments in grids – a key success factor in the new energy era Martin Gavelius, Director of Energy & Utilities, PricewaterhouseCoopers Upgrades to the energy supply grids are essential in order for the European Union (EU) to reach climate goals and ensure a reliable energy supply to industry. New smart grids and sensor nets are also needed to increase the use of renewable energy sources. The current grids were built to suit large-scale, centralized electricity production. The new energy era demands more flexible systems, capable of balancing production and consumption. If the EU’s climate goals for year 2020 are to be achieved, then modernisation and rebuilding of the European electricity and power nets is essential. The European Network of Transmission Operators for Electricity, Entso-e, confirms that investments in the order of €18 billion will be required within the next five years. For example there is a need for renovation or new transmission cables totalling almost 19,000 kilometres during the next five years. Today, there are approximately 300,000 kilometres of transmission cable in EU countries. A further 42,000 kilometres of cable will be needed by year 2020. The EU is investing in innovation and energy within the framework of its 2020 strategy, Innoenergy. In the period to 2014 Sweden, along with other EU member states, will be responsible for the development of smart grids and electricity storage. In total, €600 million are available for the countries participating in the project, which is a response to investments in energy research and development in the US, China and Japan.
16
Renewable energy sources Renewable energy sources, such as wind and wave power, require new and updated infrastructure. New investments in the old primary power grids are needed, as well as new technology in which smart grids and sensor nets play a major role. A large number of wind power farms are currently being built across Europe and this will result in major pressure on the existing grids. The most recent European statistics suggest that offshore wind farms, not just in the North Sea but around all European coasts, will increase 25 times within the next five years. The Nordic countries The situation is significantly better in the Nordic region than in the rest of Europe. Cooperation has been in place for many years within NORDEL and there have been major investments in infrastructure both within and between the countries. Important issues include the way in which the connection from the Nordic region to Europe should be implemented and whether this will have negative consequences on electricity prices. Just as importantly, will the Nordic countries benefit from a connection between our relatively modern electricity net and Europe’s outdated one? The Nordic region also has a need for investment in power grids and in cables, both between and within the Nordic countries, and to Europe. Investments in the Nordic power grids have increased to more than €500 million per year, more than double compared to earlier years.
Energy supply for industry Heavy industry’s approach to the energy issue is pragmatic but it is understood that major development must take place when it comes to electricity transmission. In order to provide employment and growth, the industry needs carbon-dioxide free and competitively priced electricity, regardless of where it comes from. The industry understands the serious implications of increased energy costs and of how important it is that plans proceed towards action in order to secure energy supplies. The most interesting alternative, this far, is nuclear energy, which has proven to be a competitive alternative, according to a new study produced by PricewaterhouseCoopers. Other solutions of interest include 1000 wind turbines. But increased capacity in the power grids is not enough on its own; greater efficiency in the grids is also essential, both from a cost and climate perspective.
Smart grids and sensors The situation today is that the consumers do not know when electricity is cheapest. Electricity companies do not know when the electricity is required. Nor do the net companies know where the electricity is required. Smart grids handle the transmission and storage of energy, as well as balancing production and consumption. Smart grids are a means of enhancing the efficiency of energy consumption. In the future, small-scale electricity production will be connected into larger scale distribution networks. According to the Organisation for Economic Cooperation and Development (OECD), a major increase in the use of sensor nets in the new type of smart grids would lead to more efficient energy consumption and improved efficiency in industry, transportation and agriculture. In order to build the new smart networks collaboration between the energy industry and the telecoms and electronics sector must rapidly increase and improve. The introduction of sensors implies, in theory, that energy producers can start an industrial process or a dishwasher at the point in time at which it is most efficient – both pricewise and in terms of consumption levels. Sensors and fuel cells are not new innovations. What is new is the introduction of new standards making possible mass production of sensors and, consequently, the costs of sensor nets can be drastically reduced. Government policies and initiatives are crucial factors in achieving the positive effects of sensor nets. Politicians can, for
example, increase fuel prices and introduce minimum requirements on energy consumption in buildings in order to put pressure on energy efficiency which will, in turn, drive the introduction of sensor nets. These are important components in a strategy for radical environment improvements. But are there only advantages with the smart grids? Who will control consumption, the consumers or the producers? In a number of countries, the electricity producers have an oligopoly in the market and there is a risk that competition will further decrease. The power producers’ driving force behind investing major amounts in new energy sources, production and a more efficient electricity network is not, on the first hand, economic, rather, there is the ambition to maintain control of the market. Finally, climate and energy issues are principally a matter of three aspects: the securing of energy supplies, the introduction of new technology and the enhancement of efficiency in consumption. We are facing a paradigm shift where our infrastructure must be adapted, for example, to wind and solar energy. This is an enormous technical challenge. The business complexity lies in the question of the commercial opportunities which can be found in this development and how they can be financed. These investments do not need to be government-financed but the manner in which such transactions are to be practically constructed remains uncertain.
17
4 This chapter provides an overview of company strategies for reducing greenhouse gas (GHG) emissions, first for the Nordic 200 as a whole, and then for each of nine key industrial sectors. The sectoral split is based on the Global Industry Classification Standard (GICS), but with four sectors merged into pairs (Energy with Utilities, Telecommunications Services with Information Technology). In addition, Transportation is treated separately from the other GICS Industry Groups in the Industrials sector on account of its relatively high carbon intensity. Thus, in this report, the Industrials sector comprises only Capital Goods and Commercial & Professional Services, and Transportation is referred to as a sector. An effective strategy for reducing emissions and increasing energy and fuel efficiency is likely to have far-reaching implications for many, if not all, of a company’s operations. Success therefore seems more likely if the strategy carries the high-level authority needed to influence key operational and financial decisions and the day-to-day activities of employees. Accordingly, the first question in the CDP 2010 questionnaire asks firms where the highest level of responsibility for climate change lies within their organisation (Figure 3). There has been good progress here over the past year, with 89% of companies reporting that responsibility lies with a Board committee or other executive body, compared with 77% in 2009.2 This also compares favourably with the Global 500 (84%).
2 Please note a minor update in this question from 2009-2010. In 2009, companies were asked “Does a Board Committee or other executive body have overall responsibility for climate change matters?” 77% said “Yes”, 18% “No” and 5% gave no answer.
18
Governance, Strategy and Emissions
Fig. 3: Where is the highest level of responsibility for climate change within your company? (%)
88 7 54
5
1
15
12 8
No individual or committee with overall responsibility Other, lower level departments Board committee or other executive body
Respondents outline various different models of governance on climate change. Chief Executive Officers (CEOs) are often directly involved (including in several cases in the “Other” category in Figure 3), while Chief Financial and/or Technical Officers often sit on an executive committee designated to review climate change strategy. Another common alternative is to nominate an executive (e.g. a Vice President) with day-to-day responsibility for sustainability issues. Sometimes climate change is dealt with as part of corporate social responsibility (CSR) and reviewed in a “sustainability report” or similar, separate from the company’s main annual report. But many respondents have adopted a more integrated approach in the past few years, treating climate change as they would any other strategic challenge, and reporting the results (both internally and externally) alongside financial results.
Board/Executive Board Sub-set of the Board Individual Board Member Committee appointed by the Board Other
Whichever governance model a company chooses, it seems clear from the responses of several firms that simply defining and reviewing a strategy at high level is not a sufficient condition for success. Model answers in this area set out how emissions reduction strategies are implemented throughout the entire management structure, and how the results are monitored and audited. One way to encourage implementation is through the use of incentives to reward attainment of GHG targets. While firms using this method are still in a minority in the Nordic region, it appears to be gaining rapidly in popularity: 44% of respondents say they provide incentives for the management of climate change issues, up from 30% in 2009 (see Figure 4). The 2010 figure for the Global 500 is 63%.
Fig. 4:
Share of companies that provide incentives for management of climate change issues, including the attainment of greenhouse gas targets (%)
56
44
Provide incentives Do not provide incentives
Fig. 5: Share of companies with a current emissions reduction target (%) 11
20
69
Have target No target, but under development No target
When asked how their overall strategy relates to climate change, firms generally answer in one of three ways. Some focus on business strategy and explain how this may also help to meet broader environmental goals. Others focus on why helping to mitigate climate change makes good business sense – for example, in terms of brand differentiation, increased profit margins and cost savings. Most, including the leading performers, explain how climate change is integrated into their business strategy. Many firms make use of environmental management systems, such as ISO 14001 developed by the International Organisation for Standardisation (ISO), in order to ensure that this is done in a systematic manner. An analysis of responses suggests that a comprehensive strategy might comprise the following elements (even if few firms mention all of them): •
initial enterprise-wide review to measure carbon footprint, water use, waste, etc., and to identify areas for improvement and establish monitoring systems
• clear targets for emissions reduction, energy efficiency, renewable energy, recycling, water use, etc. •
action plans to reach these targets and continuous attention to climate change throughout the value chain (including R&D, investment, production, procurement, buildings and vehicles, and employee training)
•
influence over suppliers and customers (e.g. by favouring certified sustainable inputs, or by making customers aware of green options)
•
integrating climate change into enterprise risk management, in part to reduce the risk of adverse impacts caused by the firm
•
transparent reporting on emissions, and engagement more generally with stakeholders, policy makers and the public.
Clear targets are especially useful in assessing the scale of firms’ ambitions to help mitigate climate change. CDP 2010 sharpens the focus on emissions reduction targets compared with CDP 2009 (when respondents were asked about plans and targets for GHG emissions and/or energy reduction). As shown in Figure 5, 69% of respondents have a current target (compared to 70% for the Global 500), while 11% are in the process of developing one. Of the 13 companies who publicly disclosed in 2009 that an emissions or energy reduction plan was not yet in place because it was in the process of being defined, seven have now set targets, five have not, and one has dropped out of the Nordic 200 sample. Engagement with policy makers is seen by many respondents as an important aspect of strategy, and Figure 6 shows that a clear majority are active in this regard – 62%, up three percentage points since last year. The corresponding proportion of Global 500 firms is significantly higher, at 80%, perhaps partly because larger firms have more resources to devote to government relations.
19
Governance, Strategy and Emissions
Fig. 6:
Do you engage with policy makers on possible responses to climate change including taxation, regulation and carbon trading? (%) 4
34
Indeed, some of the larger Nordic 200 firms disclose membership in as many as 50 policy-related organisations – including industry associations, think tanks, round tables and technology platforms hosted by regulators, and international business-led networks such as the World Business Council for Sustainable Development. On the other hand, firms with smaller budgets are still able to engage with policy makers, albeit mainly through industry associations. As in CDP 2009, there is significant variation between sectors in this area. Engagement is highest in some of the sectors most exposed to regulatory and reputational risks (Materials, Consumer Staples, Energy & Utilities, Transportation), and in Telecommunications & IT, which has much to gain from stressing its role in reducing emissions in other sectors (see Figure 7).
62
Yes No No response
Company responses suggest that engagement with policy makers is often largely a question of trying to secure a favourable regulatory and fiscal environment (including a level playing field globally). Advance warning on regulatory risks is another important motivation, as is the pursuit of reputational benefits through visibility in the broader policy debate. But firms also point to several ways in which cooperation with policy makers can lead to more effective action on climate change – for example, through providing regulators with expertise, contributing to standardisation methodologies (including ISO carbon footprint measurements currently under development), and alerting policy makers to potential conflicts between regulatory instruments.
Fig. 7: Share of companies that engage with policy makers on possible responses to climate change, by sector 33%
Consumer Discretionary
Health Care
36%
Other Industrials
50% 61%
Financials
Transportation
71%
Energy & Utilities
75%
Consumer Staples
88%
Telecommunications & IT
91%
Materials
94% 0
20
Percentage of companies
20
40
60
80
100
One indicator of broader engagement with stakeholders and the public is that 92% of Nordic 200 firms have published information about their response to climate change and/ or GHG emissions elsewhere than in their CDP response. The majority of these, as shown in Figure 8, publish information in both annual reports or other mainstream filings and voluntary communications such as CSR reports. Turning now to GHG emissions, Figure 9 provides an overview of Scope 1 and Scope 2 emissions for the average company in each sector. Box 2 outlines the definition of emissions and the different scopes. As the Tables later in the chapter show, there is no such thing as a “typical” company in most sectors, and one or two large firms dominate the averages in some cases (especially Transportation). Nevertheless, as Figure 9 suggests, the main challenge for firms in Transportation and Energy & Utilities lies in controlling direct GHG emissions (Scope 1). In other sectors, the balance between Scope 1 and Scope 2 is more even, and in some cases the main contribution to mitigating climate change is likely to come about through increased energy efficiency.
Where do you publish information about your company’s response to climate change/GHG emissions? (%)
In this report, the term GHG refers to the six greenhouse gases covered by the Kyoto Protocol – carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6). Emissions are weighted by the global warming potential of each of these gases, and expressed in terms of CO2-equivalent (CO2-e), i.e. the global warming potential of one unit of carbon dioxide. The GHG Protocol defines three emissions “scopes” for accounting and reporting purposes. In essence (see http://www.ghgprotocol.org for further details), these are: Scope 1: direct GHG emissions from sources that are owned or controlled by the company (e.g. combustion in the company’s boilers, furnaces or vehicles) Scope 2: indirect GHG emissions from the generation of purchased electricity, heat or steam consumed by the company Scope 3: other indirect emissions due to the activities of the company, but from sources that it does not own or control (e.g. extraction of purchased raw materials, or use of the company’s products and services). Scope 3 emissions are much more difficult to monitor accurately, since this relies on a broad range of information from suppliers and customers, or on estimates. Reporting of Scope 3 emissions is optional under the GHG Protocol.
Fig. 9: Average company emissions, by sector 10
8
8
6
million metric tonnes CO2-e
Fig. 8:
Box 2: GHG Protocol emissions and scopes
Scope 1
Scope 2
23 4
69
2
0
Transportation
Telecommunications & IT
Other Industrials
Materials
Health Care
Financials
Energy & Utilities
Consumer Staples
Consumer Discretionary
Both mainstream filing and voluntary communications Just annual reports or other mainstream filing Just voluntary communications such as CSR
21
Governance, Strategy and Emissions
Fig. 10: Scope 1 emissions by sector (%)
Figure 10 shows the contribution of each sector to total Scope 1 emissions as disclosed, confirming that three sectors – Transportation, Energy & Utilities and Materials – account for over 90% of direct emissions. The Materials sector also accounts for almost two thirds of Scope 2 emissions, as shown in Figure 11.
1 3 3
38
24
31
Transportation Energy & Utilities Materials Other Industrials Consumer Discretionary Other sectors (Consumer Staples, Telecommunications & IT, Financials, Health Care)
Fig. 11: Scope 2 emissions by sector (%)
Analysis of Scope 3 emissions requires a little more caution for several reasons. First, fewer firms disclose Scope 3 emissions (68% of the Nordic 200 compared with 89% for Scope 2 and 93% for Scope 1). Secondly, many of those that do are only able to report a fraction of the total, since Scope 3 emissions are harder to measure. Thirdly, by contrast, some firms disclose much more liberal estimates based on reports of suppliers’ emissions and calculations of energy usage over the lifetime of the firm’s products, as well as own operations such as transportation of goods or employee travel.
2
2
3
13 65
million metric tonnes CO2-e
4
Nonetheless, caution aside, Figure 12 suggests that Scope 3 emissions in the Nordic region are of particular significance in the Industrials and Telecommunications & IT sectors. Indeed, the responses of several firms suggest that their products affect climate change mainly in use, and that increasing the energy efficiency of, for example, an escalator or a mobile phone charger may be among the most effective steps they can take to reduce GHG emissions.
Fig. 12: Average Scope 3 emissions, by sector
3
13
Thus, the differences between sectors shown in Figure 12 may depend as much on different measurement practices as they do on genuine differences in emissions. Readers may also wish to compare with the CDP Global 500 report, where disclosed Scope 3 emissions outweigh Scope 1 and Scope 2 in most sectors, including Consumer Discretionary, Consumer Staples, Energy and Materials.
1
0
Transportation
Telecommunications & IT
Other Industrials
Materials
Health Care
Financials
Energy & Utilities
Consumer Staples
22
Consumer Discretionary
Transportation Energy & Utilities Materials Other Industrials Consumer Discretionary Other sectors (Consumer Staples, Telecommunications & IT, Financials, Health Care)
Overview of emissions and reduction targets The sections below now provide an overview in table form of Scope 1 and 2 emissions and reduction targets for each sector, followed by a broad outline of the actions reported by firms in pursuit of their targets. Box 3 contains some general notes on interpreting the tables. Further examples of actions taken in response to risks and opportunities related to climate change are given in the next chapter.
Box 3: Guide to the emissions and reduction targets tables The tables below are intended to provide a broad overview of targets and emissions in each sector. Readers interested in any one company’s targets are advised to consult the full CDP 2010 results, since there may be further important details (e.g. adjustment of emissions data to reflect acquisitions and divestments, additional targets in other areas). Company: full company names and industry groups are given in the lists for each sector in the next chapter. CDP 2010 Scope 1+2: latest global Scope 1 + Scope 2 emissions in metric tonnes CO2-e as disclosed in CDP 2010. These are usually for the calendar year 2009, though in some cases a different reporting year is used and in a few cases figures are from 2008. 2: Target, based on the response to the question “Do you have a current emissions reduction target?” Ç = “Yes”, l = “No”, , = “No, but we are developing one” Specification: Where firms disclose multiple targets, the most comprehensive and/or concrete (preferably in terms of CO2-e) is selected. In some cases, targets have been combined (indicated in italics). Units for emissions are metric tonnes of CO2-e unless otherwise stated. Timescale: base year to target year. Baseline: as reported by companies for the base year, in terms of emissions except where a concrete unit of intensity is defined (in the Specification column). n/a indicates “not applicable” (where no target is defined) or “not available” (where no information is provided). The CDP questionnaire does not ask companies to say whether they are on track to meet targets, or to report a current figure for the targeted quantity. Caution should be exercised in interpreting the difference between “CDP 2010 Scope 1+2” and “Baseline” as a measure of progress. In particular, the relevant scopes are not always identical, and targets are often defined in terms of intensity, i.e. emissions relative to some measure of size such as production or sales.
23
Governance, Strategy and Emissions
Materials It is encouraging that almost all firms in this key sector (apart from the two with the lowest emissions) have set reduction targets or will do so by the end of 2010. Not all targets are fully specified, and some cover only a limited subset of the firm’s activities. Nevertheless, others (particularly Yara International’s and Norske Skog’s) are ambitious, implying substantial reductions in emissions irrespective of growth in sales. Most targets are expressed in terms of emissions intensity, which makes it difficult to assess the scale of ambition for the sector as a whole. Rapid economic recovery, for example, might mean an increase in overall emissions even if emissions per unit of production fall as targeted. On the other hand, progress cannot be judged in relation to current targets alone. UPM-Kymmene argues that, since it has already achieved a 40% reduction in CO2 emissions since 1990, a further 10% by 2020 seems reasonable. Broadly speaking, the main actions reported by firms in this sector are: energy-saving programmes including a multitude of individual projects; reductions in process emissions; substitution of fossil and other fuels for renewable fuels; and improved transport logistics. The key to the remarkable reduction in Scope 1 emissions reported by Yara (Fertilizers & Agricultural Chemicals) is the installation and further improvement of “de-N2O” catalyst technology to reduce nitrous oxide emissions in the production of nitric acid, saving 2 million tonnes of CO2-e annually. Other highlights include Holmen’s SEK2.3 billion3 investment in a soda recovery boiler and turbine system at one of its pulp and paper mills. Holmen reports that this will reduce direct emissions, eliminate the use of fossil fuels, and allow the mill to produce all of its own electricity – with total annual savings of 288,000 tonnes of CO2-e.
Table 3: Emissions and reduction targets in Materials Company
CDP 2010 Scope 1+2
2
Specification / why no target
Timescale
Baseline
Ahlstrom
881,384
Ç
Reduce Scope 1 emissions to 510 kg of CO2 per tonne of product
2002–13
901
Boliden
847,800
Ç
Reduce Scope 1 + 2 emissions from three facilities by 9% (weighted average)
2007–13
265,000
Holmen
572,400
Ç
Absolute reduction in Scope 1 emissions from Swedish facilities
2005–20
284,000
Kemira
186,0001
l
Emissions reduced by over 90% and expected to remain low over next 5 years
n/a
n/a
M-Real
1,344,340
Ç
Rolling 1% reduction per year in heat, electricity and energy usage per unit of product
2008–09
1,199,262
Norsk Hydro
10,309,158
Ç
Reduce emissions from electrolysis process to 1.52 per tonne of aluminium
2009–13
1.85
Norske Skog
2,370,751
Ç
25% reduction in Scope 1 + 2 emissions
2006–20
2,910,000
Novozymes
431,000
Ç
25% reduction in emissions intensity (Scope 1 + 2)
2005–10
377,000
Outokumpu
776,479
Ç
20% reduction in emissions intensity (Scope 1 + 2 + 3)
20082–20
1,201,411
SCA
4,350,000
Ç
20% reduction in Scope 1 + 2 emissions relative to production level
2005–20
4,206,000
SSAB
4,700,993
Ç
Reduce Scope 1 emissions intensity for blast furnace steel in Sweden by 2%
2008–12
6,154,966
Stora Enso
5,271,000
Ç
20% reduction in emissions intensity (Scope 1 + 2)
2006–20
7,590,000
Talvivaara
59,064
l
Still constructing facilities; targets cannot be set until operations have begun.
n/a
n/a
UPMKymmene
5,080,000
,
Due by end 2010. Expected ca. 10% reduction in Scope 1 + 2 emissions per unit of production.
2008–20
n/a
Yara
12,500,0001
Ç
45% reduction in Scope 1 emissions
2004–13
23,200,000
Notes: 1 Kemira and Yara report only Scope 1 emissions 2 Baseline is the average for 2007–2009 3 “Billion” in this report means “thousand million”
“The actual emission reductions for 2009 achieved from our customers’ application of our products were estimated to be 27 million tonnes.” Novozymes
24
Energy & Utilities While some firms (e.g. Hafslund) set out ambitious targets, overall there is a lack of clarity on reduction plans for the bulk of emissions in this sector. Again, this might be partly down to past performance; Fortum’s 80g CO2-e per kWh target for electricity generation, for example, builds on emission levels that are already low in comparison with competitors’. Nevertheless, it would be difficult to conclude – on the basis of information disclosed in CDP 2010 – that the Energy & Utilities sector as a whole has its sights set on further major reductions in GHG emissions over the next decade. Construction, modernisation and fuel conversion of power plants and vessels are among the main measures reported by respondents in this sector, along with energy efficiency programmes more generally.
Table 4: Emissions and reduction targets in Energy & Utilities Company
CDP 2010 Scope 1+2
2
Specification / why no target
Timescale
Baseline
Fortum
22,286,000
Ç
In heat production, at least 10% reduction in Scope 1 emissions per kWh in each EU country1
2006–20
4,941,000
Hafslund
296,765
Ç
41 g CO2 per kWh (Scope 1 + 2) in district heating (which accounts for ca. 90% of emissions)
2009–16
106
Lundin
223,411
,
Reduction target for oil field production in Tunisia dropped owing to short remaining field life
n/a
n/a
Neste Oil
3,996,000
Ç
5% reduction in energy consumption
2007–16
3,166,050
Statoil
13,100,0002
Ç
Running target for tonnes of CO2 per kilotonne oil equivalent. Amounts unspecified.
n/a
n/a
Teekay Petrojarl
709,7812
l
Need to improve understanding of emissions and how these can be monitored day-to-day and reduced.
n/a
n/a
Notes: 1 Fortum also reports a cap for Scope 1 emissions from electricity generation of 80g CO2-e per kWh by 2020, but does not give a Baseline figure 2 Statoil and Teekay report only Scope 1 emissions
By far the most significant action in terms of reported emissions reduction is Fortum’s modernisation of its nuclear power plants, with anticipated savings of some 2 million tonnes of CO2-e a year.
25
Governance, Strategy and Emissions
Transportation The Transportation sector is dominated by A.P. Moller - Maersk, the world’s largest container shipping and supply vessel company, and one of the largest companies in the Nordic 200. Moller - Maersk reports that the substantial fall in emissions between 2008 and 2009 (ca. 3.4 million tonnes CO2-e) was due partly to the downturn in the global economy and the resulting fall in demand for shipping services, but also partly to measures taken in pursuit of the group’s emissions intensity target. One obvious advantage of intensity targets is that they focus attention on climate change performance even in a declining market. The risk, of course, is that some of the recent reduction in absolute emissions will be undone if demand for transport services picks up sharply with economic recovery. In shipping, Moller - Maersk says there are hundreds of efficiency projects ongoing within the group at any one time – too many to report in detail. Norden mentions a range of measures – from propeller polishing to computer monitoring of speed to maximise fuel efficiency – which add up to substantial annual CO2-e savings (close to 13,000 tonnes) in relation to Norden’s emissions. Finnair reports annual savings of almost 50,000 tonnes of CO2 thanks to various projects to improve aircraft fuel efficiency and reduce energy consumption in the group’s properties. In cooperation with Finnish air traffic control, Finnair has started work on Continuous Descent Approach landing, designed in part to increase fuel efficiency compared to the traditional “stair-step” approach.
26
Table 5: Emissions and reduction targets in Transportation Company
CDP 2010 Scope 1+2
2
Specification / why no target
Timescale
Baseline
Moller -Maersk
44,888,318
Ç
10% reduction in emissions intensity (Scope 1 + 2)
2007–12
53,352,000
Norden
90,097
Ç
3.5% reduction in Scope 1 emissions
2009–10
88,900
DSV
2,973,490
,
Due by 2010 CSR report
n/a
n/a
Finnair
2,266,000
Ç
41% reduction in Scope 1 emissions per seat per 100 km
1999–2017
n/a
Copenhagen Airports A/S
29,490
Ç
21% reduction in Scope 1 + 2 emissions
1990–2012
45,973
SAS1
3,784,000
Ç
20% reduction in emissions
to 2020
n/a
TORM
1,819,829
Ç
20% reduction in CO2 emissions: (1) per tonne-kilometre of cargo and (2) from office electricity/ energy use per employee
2008–20
1,877,314
Notes: 1 Only Scope 1 reported; target from SAS Annual Report, base year/amount not given
Industrials It is encouraging to note that all publicly disclosing firms in the Industrials sector report both Scope 1 and Scope 2 emissions in CDP 2010, even if there may be room for further improvement when it comes to setting targets. Some firms report that they are unable to set central emissions reduction targets because their operations are highly decentralised. Others, such as machinery manufacturer Alfa Laval, note that environmental management systems enable them to keep track of “benchmark” energy-saving projects across many different sites. Another reason given for not setting targets is fluctuating or rapidly rising levels of production, which presumably entails a risk of missing absolute emissions targets. Emissions intensity targets might be an option worth considering in these cases.
Rockwool’s main target – and by far the biggest number in all of the tables in this chapter – is that a year’s production of insulation should, during its lifetime, avoid CO2-e emissions of 360 million tonnes. While no baseline figure is given, answers to other parts of the questionnaire suggest that the current estimate is in the region of 200 million tonnes. This raises important issues for all sectors whose products help others to reduce their emissions. How much credit is due to the manufacturers, and how much to the users (including construction companies who also claim reduced Scope 3 emissions from improved insulation)? And will lifecycle analysis of this kind draw attention away from the much smaller, but still far from trivial, potential for reducing a company’s own Scope 1 and 2 emissions? Bearings, seals and lubricants maker SKF sets one of the most ambitious targets for reducing emissions in its own operations – a rolling absolute reduction of 5% per year (which if sustained over a whole decade would mean a reduction of nearly 63%). SKF notes that Scope 1 and 2 emissions fell by 27% from 2006 to 2009, partly on account of a 12% decline in production due to the financial crisis.
Key actions in this sector involve systematic efforts to cut emissions and energy-intensity on production lines as well as in heating, ventilation, lighting, etc., and in goods transport and business travel. Several firms with many sites in different countries say that individual measures are far too numerous to report in detail. Engineering group Trelleborg’s perspective on global growth prospects is of interest. Its “Energy Excellence” programme has led to a 2.2% decline from 2008 to 2009 in energy consumption relative to sales. However, while CO2-e emissions have fallen in absolute terms, they have increased by 7% relative to sales – due in part to low sales, but also to a changing geographical mix, and in particular more carbon intensive energy sources in high-growth regions such as China. Other firms besides Rockwool cite use of their products as the main driver of reductions in emissions. Kone, for example, reports anticipated annual savings of 649,000 tonnes of CO2-e through use of its energy-efficient elevators and escalators. The firm also mentions actions within its own operations, such as reducing air travel and using low-emissions company cars, although the numbers here are small in comparison.
27
Governance, Strategy and Emissions
Table 6: Emissions and reduction targets in Industrials Company
CDP 2010 Scope 1+2
2
Specification / why no target
Timescale
Baseline
Alfa Laval
48,252
Ç
Various intensity targets (% not given) for manufacturing, transport and travel (Scope 1 + 2 + 3)
2007–11
80,214
Assa Abloy
184,060
Ç
15% reduction in Scope 1 + 2 emissions relative to turnover
2006–12
n/a
Atlas Copco
99,000
Ç
10% reduction in Scope 1 + 2 emissions relative to the cost of goods sold
2008–13
120,000
FLSmidth
73,000
l
Local managers make reduction plans; overall emissions will vary with level of activity
n/a
n/a
Gunnebo
31,693
Ç
15% reduction in Scope 1 + 2 emissions relative to turnover
2009–12
31,694
JM
4,160
Ç
30% reduction in Scope 1 + 2 + 3 emissions
1990–2020
n/a
Kone
137,627
Ç
5% reduction in Scope 1 + 2 + 3 emissions
2009–10
222,000
Lindab
29,169
Ç
20% reduction in Scope 1 + 2 emissions
2008–20
24,160
Metso
249,813
Ç
20% reduction in emissions intensity (Scope 1 + 2)
20071–20
257,849
NCC
216,675
l
Recently completed first measurement of carbon footprint, no targets yet
n/a
n/a
NKT
113,073
Ç
12% reduction in emissions intensity (tonnes Scope 1 + 2 per €million sales)
2008–11
66.4
Orkla
2,680,716
,
Targets to be announced end 2010 or start 2011
n/a
n/a
Outotec
8,592
l
Limited direct emissions; energysaving targets are more relevant
n/a
n/a
Rockwool
1,283,905
Ç
360 million tonnes in emissions (Scope 1 + 2 + 3) to be saved in the lifetime of a year’s production of insulation
2009–20
n/a
SAAB
36,259
Ç
20 percent reduction in Scope 1 + 2 + 3 emissions relative to sales
2007–20
59,412
Sandvik
479,000
Ç
10% reduction in Scope 1 + 2 emissions relative to sales volume
2008–12
566,000
Scania
61,610
l
Scania’s philosophy focuses on methods rather than results; target setting and evaluation done locally
n/a
n/a
Skanska
366,250
l
Highly decentralised and projectfocused, so difficult to forecast overall emissions and set targets
n/a
n/a
SKF
528,555
Ç
5% per year reduction in Scope 1 + 2 emissions
from 2006
n/a
Subsea 7
240,569
l
Currently developing reporting of emissions
n/a
n/a
Tomra Systems
30,180
Ç
25% reduction in emissions intensity (Scope 1 + 2)
2009–15
30,200
Trelleborg
368,858
Ç
15% reduction in Scope 1 + 2 emissions relative to sales
2008–15
405,000
Veidekke
72,950
l
Scope 1 emissions likely to increase over the next few years as economy picks up
n/a
n/a
Vestas Wind Systems
118,981
Ç
90% renewable energy and 55% renewable electricity; expected savings of 35,000 tonnes CO2-e (Scope 1 + 2)
2006–10
66,609
Wärtsilä
158,960
Ç
47GWh annual energy savings, with benefits for Scope 1 + 2
2005–16
n/a
Notes: 1 Base year 2005–09 average
Telecommunications & IT Continuing on a similar theme, the most striking aspect of Table 7 below is the difference that including Scope 3 emissions may make to the baseline for emissions reduction targets. In particular, Ericsson’s Scope 3 emissions disclosed in CDP 2010 include an estimated 19 million tonnes of total lifetime emissions from products supplied in 2009. A lifetime of 10 years is assumed for radio base stations, and 15 years for other products. Similarly, Nokia discloses a total of over 9.3 million tonnes of Scope 3 emissions, based partly on a similar lifecycle analysis of usage (for example, energy used by mobile phone chargers), though these are not covered by the firm’s target. Telecoms operator Telenor, while its Scope 3 emissions appear to be on the conservative side, is thinking along similar lines to Rockwool (see the previous section), citing estimates that the information and communications technology industry could contribute to reducing global CO2 emissions by as much as 15% by 2020.
Table 7: Emissions and reduction targets in Telecommunications & IT Company
CDP 2010 Scope 1+2
2
Specification / why no target
Timescale
Baseline
Atea
8,798
Ç
25% reduction in Scope 1 + 2 emissions per full-time-equivalent employee
2007–15
2.5
Ericsson
201,000
Ç
40% reduction in emissions intensity (Scope 1 + 2 + 3)
2008–13
24,800,0001
Nokia
299,300
Ç
18% reduction in Scope 1 + 2 facilityrelated emissions, excluding Scope 1 for mobile sources
2006–10
255,300
TDC
140,144
Ç
5% reduction in Scope 1 + 2 emissions
2007–14
151,000
Tele2
9,283
Ç
Absolute reduction in CO2 emissions
2009–13
11,252
Telenor
810,252
Ç
40% reduction in emissions intensity (Scope 1 + 2 + 3)
2008–17
749,000
TeliaSonera
205,838
Ç
5% reduction per year in Scope 1 + 2 + 3 emissions for part of Swedish operations2
from 2010
n/a
Tieto
22,784
Ç
Annual absolute reduction in Scope 1 + 2 + 3 emissions
2009–13
51,111
Vaisala
7,370
Ç
Decrease use of energy (Scope 2) by 9%
2008–16
n/a
Notes: 1 Ericsson reports Scope 3 emissions of 19,355,225 metric tonnes CO2-e 2 Accounting for ca. 18% of reported GHG emissions; other targets are reported for broadband operations and/or office paper use in Sweden, Finland, Denmark and Lithuania
As in other sectors, firms report a range of energy-saving measures, with a particular focus here on innovative cooling of data servers, or (in the case of IT service provider Tieto) re-using heat from servers to provide heating for offices. Both Ericsson and Nokia also report substantial Scope 3 reductions through reduced air transport and travel. Ericsson reports annual savings of 190,000 tonnes of CO2-e through greater reliance on surface transport, while Nokia reports savings of over 52,000 tonnes a year by avoiding unnecessary meetings and making greater use of videoconferencing. Among other notable steps are Telenor’s use of solar power for mobile base stations in Pakistan and Bangladesh, and its decision to introduce “sustainable procurement” in all business units by 2011.
29
Governance, Strategy and Emissions
Financials All but one of the publicly disclosing respondents in Financials have set reduction targets (even though some, as in other sectors, target energy efficiency rather than emissions as such). Key measures in this sector include improving energy efficiency in branches, offices and client properties; reducing and/or “greening” business travel, for example through videoconferencing and electric car pools; and reducing paper consumption through greater use of electronic documents. While few of these measures on their own result in headline-grabbing emissions reductions, the cumulative effect may still be significant. Property developer Fabege, for instance, reports that it has been able to reduce energy use by 5% a year since 2002 through systematic optimisation and investments. Storebrand (Life & Health Insurance) reports that it achieved its target of becoming carbon neutral in 2008. The largest reported reductions in emissions arise from switching to renewable energy sources. SEB (Commercial Banks), for example, discloses annual savings of over 16,000 tonnes of CO2-e at its offices in Germany, Estonia and the UK.
Table 8: Emissions and reduction targets in Financials Company
CDP 2010 Scope 1+2
2
Specification / why no target
Timescale
Baseline
Atrium Ljungberg
5,659
l
More efficient to work with specific targets for specific projects
n/a
n/a
Castellum
18,216
Ç
At least 25% reduction in CO2 emissions per square metre (Scope 1 + 2)
2007–17
n/a
Citycon
25,652
Ç
20% reduction in Scope 1 + 2 + 3 emissions
2009–20
31,801
Danske Bank
41,446
Ç
Reduce energy consumption by 10% in Danish operations1
2008–13
n/a
DnB NOR
12,849
Ç
20% reduction in Scope 1 + 2 emissions per full-time-equivalent employee
2009–14
19,557
Fabege
4,689
Ç
20% reduction in energy use while maintaining indoor climate
2009–14
4,689
Kinnevik
150,159
Ç
25% reduction in Scope 1 emissions per tonne of product
2007–20
n/a
Kungsleden
66,413
Ç
5% reduction in Scope 1 + 2 emissions
2008–12
10,110
Nordea Bank
51,519
Ç
Reductions of 15 to 50% in energy consumption, travel and paper use per employee or customer
2008–16
n/a
SEB
29,000
Ç
45% reduction in Scope 1 + 2 + 3 emissions
2008–15
51,000
StoreBrand
1,926
Ç
20% reduction in Scope 1 + 2 + 3 emissions
2008–10
2,828
Swedbank
2,790
Ç
10% reduction in Scope 3 emissions
2009–10
3,838
Topdanmark
6,414
Ç
Cap on Scope 1 + 2 emissions
2008–12
8,626
TrygVesta
3,814
Ç
10% reduction in Scope 1 + 2 + 3 emissions
2007–10
7,744
Wihlborgs Fastigheter
n/a
Ç
Reduce energy consumption by 3% per year
2009–11
n/a
Notes: 1 Overall group target due in 2010; several targets for energy use in other countries and air travel also reported
30
Health Care Even though emissions in Health Care are among the lowest of all sectors, all respondents report both Scope 1 and 2 emissions, and most have adopted concrete plans for reducing these. Novo Nordisk (Pharmaceuticals) gives an example of how an absolute emissions reduction target may, in the presence of rapid growth, prove more ambitious than it first appears. The company’s 10% reduction target (see Table 9) for 2014 seems to have been attained already. But in the light of projected increases in production capacity (including a new factory opening in China in 2011), the firm expects that meeting this target will require a reduction in emissions intensity of around 65%. As in other sectors, key measures include energy efficiency programmes and a shift towards renewable energy sources where economical. Novo Nordisk, for example, reports substantial reductions in emissions through its involvement in an offshore wind farm in Denmark and from a biomass boiler at a plant in Brazil.
Table 9: Emissions and reduction targets in Health Care Company
CDP 2010 Scope 1+2
2
Specification / why no target
Timescale
Baseline
Coloplast
77,247
,
Emissions intensity target expected in 2010 when sufficient measuring and reporting tools available
n/a
n/a
Getinge
30,530
Ç
10% reduction in emissions intensity (Scope 1 + 2)
2010–15
n/a
Lundbeck
36,209
Ç
Cap on Scope 1 + 2 emissions (new target to be determined in 2010)
2006–16
43,510
Meda
21,828
Ç
Reduction of Scope 1 + 2 + 3 emissions relative to company growth
n/a
n/a
Novo Nordisk
184,202
Ç
10% reduction in Scope 1 + 2 emissions
2004–14
210,000
Orion
26,003
l
Emission limits defined in environmental permits for plants in Finland are strict enough
n/a
n/a
Pronova
10,951
Ç
10% reduction in Scope 1 emissions
2008–10
9,260
Q-Med
106
Ç
10% reduction in Scope 2 emissions (electricity only)
2007–10
130
William Demant
9,634
l
Energy consumption and emissions analysed, but limited potential for setting systematic reduction targets.
n/a
n/a
Coloplast (Health Care Supplies) and Getinge (Health Care Equipment) both cite consolidation of production into fewer, larger sites as an important step towards greater energy efficiency.
“Showing leadership on climate change can contribute to differentiating our company and creating company and product preference in key markets.” Novo Nordisk
31
Governance, Strategy and Emissions
Consumer Discretionary While only half of the firms in this sector have set targets, these include the three with the highest emissions, and some of the targets are far-reaching. Appliances manufacturer Electrolux outlines a comprehensive strategy for hitting its relatively ambitious target. More than 100 plants, warehouses and offices adopt a detailed Energy Action Plan, with monthly follow-ups, sharing of best practice and a “suggest and win” campaign whereby employees keep a share of the profits resulting from useful suggestions. Royal Caribbean International focuses on optimisation of itineraries, ship technology and energy use onboard. The firm is also researching long-term cleaner power options. Search and directory services provider Eniro adopts a no-nonsense approach to meeting its highly ambitious target. As part of its overall aim of reducing emissions by 70%, the company aims to switch to 100% renewable energy and 100% reliance on biofuels or electric cars for transport by 2018. Home improvement retailer Clas Ohlson also targets a 20% reduction in emissions from transport, and a phasing out of fossil fuels for heating in its 100,000 m2 head office and warehouse.
32
Table 10: Emissions and reduction targets in Consumer Discretionaries Company
CDP 2010 Scope 1+2
2
Specification / why no target
Timescale
Baseline
Alma Media
3,243
,
Climate strategy for new printing and distribution unit under development during 2010
n/a
n/a
Clas Ohlson
1,552
Ç
10% reduction in emissions intensity from truck transport (g CO2 per tonnekm, Scope 3)
2007–12
51.9
Electrolux
413,607
Ç
15% reduction in Scope 1 + 2 emissions
2008–12
489,116
Eniro
5,580
Ç
70% reduction in Scope 1 + 2 + 3 emissions
2008–18
27,900
H&M
250,152
Ç
5% reduction in Scope 1 + 2 + 3 emissions relative to turnover
2009–12
398,160
Modern Times
6,399
,
Analysing first comprehensive climate impact report; targets due later in 2010
n/a
n/a
Nobia
65,922
l
Issue has not been addressed
n/a
n/a
Royal Caribbean
4,143,605
Ç
33.3% reduction in Scope 1 emissions per Available Passenger Cruise Day
2008–15
3,830,689
Sanoma
n/a
l
No common target owing to the decentralised nature of the group
n/a
n/a
Schibsted
5,747
,
Swedish operations being moved into a single building; new climate goals to be determined
n/a
n/a
Consumer Staples All firms in this sector report both Scope 1 and Scope 2 emissions, and all but one have adopted emissions reduction targets. The level of ambition varies – compare, for example, Axfood’s 75% absolute reduction with Danisco’s 20% relative reduction over the same 11-year period. Carlsberg’s target of an 11.5% reduction in emissions per unit of product over four years is also relative. Nevertheless, since this sector is less exposed than others to wild swings in demand, the risk of emissions reductions being undone as the economy recovers is perhaps smaller. In Food Retail, both Axfood and Hakon Invest outline a wide range of measures to improve energy and fuel efficiency in warehouses, stores and transport. Both also cite eco-labelling of food products, carbon offsets for air travel and use of solar and wind power on large roof spaces.
Table 11: Emissions and reduction targets in Consumer Staples Company
CDP 2010 Scope 1+2
2
Specification / why no target
Timescale
Baseline
Axfood
51,565
Ç
75% reduction in Scope 1 + 2 + 3 emissions
2009–20
52,743
Carlsberg
1,106,580
Ç
8.5 kg CO2 (Scope 1 + 2) per 100 litres product
2008–12
9.6
Cermaq
66,084
l
Targets under consideration based on new system for reporting emissions
n/a
n/a
Danisco
780,831
Ç
20% reduction in Scope 1 + 2 emissions relative to revenue
2009–20
780,831
Hakon Invest
275,088
Ç
20% reduction in Scope 1 + 2 + 3 emissions for ICA supermarket group
2006–12
308,000
Oriflame
31,689
Ç
20% reduction in Scope 1 + 2 emissions per unit produced in five manufacturing plants
2010–15
n/a
Swedish Match
57,420
Ç
2% reduction per year in Scope 1 + 2 + 3 emissions
2009–10
70,858
Food ingredients producer Danisco also outlines energy efficiency programmes, optimisation of equipment such as boilers and motors, and a shift from coal to gas or biofuels. As in some other sectors, shifting to cleaner energy sources is the most significant measure in terms of estimated reductions in CO2-e emissions. Swedish Match’s switch to 100% “green electricity” in its Belgian factory is another notable action in this area.
“For 40 years, Oriflame has been reinforcing that what distinguishes the Company from its competitors is the Swedish aspect of the brand, symbolised by the words natural, progressive and ethical.” Oriflame
33
5 The CDP questionnaire asks firms to report on three categories of risks and opportunities associated with climate change: regulatory, physical and “other”. Uppermost in the minds of both risk managers and investors is the question of which risks if any are material – i.e. large or unmanageable enough to pose a threat to the success of the business. The timescale during which risks may transpire is another important consideration. Company responses suggest that the clearest material risks usually stem from regulatory requirements, especially in sectors that have high GHG emissions or are energyintensive. Emissions trading and taxes may affect profits both directly and indirectly, through the cost of energy, raw materials and transport. Higher costs may also result in loss of business to competitors in other regions subject to less stringent regulations (which could in turn lead perversely to an increase in emissions – a phenomenon referred to as “carbon leakage”). Moreover, many of these risks are imminent, with reforms of emissions trading and carbon taxation due in the EU over the next few years, emerging regulations in other jurisdictions, and continuing efforts towards a more comprehensive global climate accord. Most respondents also identify significant physical risks associated with climate change. These are less likely to be regarded as material, though, in part because they are easier to insure against and to manage – for instance, through diversified supply networks and due diligence in selecting locations, which may help to avoid disruption caused by extreme weather events or longer-term trends such as rising sea levels.
34
Risks and Opportunities
In addition, firms see the timescale for physical risks as much less certain, which may make them harder to identify, though not necessarily any the less serious if they do materialise. Dominant in the “other” category are reputational risks. Most respondents recognise the need to be seen, especially by customers and stakeholders, to be making a contribution towards reducing GHG emissions. Many consider that failure to do so would risk damaging key assets such as brands, with potentially material consequences for future sales, profitability and the cost of capital. A near-universal theme in company responses is that there are opportunities as well as risks in all of these areas. Most large firms in the Nordic region regard good performance on climate change as a source of competitive advantage, and consider themselves well placed to benefit from global reductions in emissions. Already subject to tough regulation, they will face lower cost increases than some of their competitors, and may benefit from first-mover advantages in new markets for green technologies and energysaving goods and services. While the vast majority of risks and opportunities identified are said to have financial consequences, very few firms are able to disclose meaningful attempts to quantify these. This is perhaps not surprising given the large degree of uncertainty in all the areas outlined above, including impending changes to the regulatory framework.
Nevertheless, the vast majority of respondents describe systematic arrangements for managing these risks and opportunities. In some cases, climate change is seen as part of corporate social responsibility, and not yet integrated into general enterprise risk management. But there is a discernible trend towards the risks being treated as part of the ordinary operational and strategic risks faced by any business, and the opportunities as an essential consideration in research and development (R&D). Questionnaire responses reveal a good deal about why companies are pursuing the emissions reduction strategies outlined in the previous chapter. On the one hand, they are responding to incentives to cut costs and reduce exposure to regulatory risk. On the other, they are seeking to establish a reputation for climatefriendliness. Both these motivations lie behind real efforts to improve energy efficiency, make greater use of renewable fuels and recycling, participate in eco-labelling schemes, and so on.
Emissions trading schemes One of the key regulatory risks identified in several sectors is the need to purchase emissions allowances. Figure 13 provides an overview of the present situation. Further details are given at the end of the sections for each sector below, and a brief general overview of respondents’ concerns regarding the EU Emissions Trading System (ETS) follows.
The EU ETS accounts for most of the participation reported in Figure 13. In the present Phase 2 (2008–12) of the ETS, many participants have received all or nearly all the allowances they need free of charge (and indeed some have profited by selling surplus allowances). In Phase 3 (2013–20), as the EU’s overall cap on GHG emissions falls in line with commitments, free allowances are to be progressively replaced by auctions. In addition, some industries – notably aviation (from 2012), aluminium and other non-ferrous metals – will fall under the system for the first time.
A number of respondents across several sectors report considerable uncertainty over exactly how Phase 3 will work. One of several reasons for this is that the EU has decided that industries at risk of “carbon leakage” may receive additional free allowances pending a more comprehensive global climate accord. However, the precise arrangements will not be decided before 2011. Thus firms are unsure over what part of their emissions they will have to pay for, and over the likely price of allowances. Several also point to the risk of price volatility. On the other hand, some welcome that the amount of free allowances for different products will be determined at EU level rather than by Member States.
Fig. 13 Participation in emissions trading schemes by sector 88% 0%
Materials
42% 8%
Energy & Utilities
14%
Transportation
29% 26%
Other Industrials
3%
22% 0%
Consumer Staples
9%
Health Care
9%
10% 0%
Financials
Telecommunications & IT
9% 0%
Consumer Discretionary
8% 0% 0
20
40
60
80
100
Currently participate in emissions trading scheme(s) Do not currently participate, but anticipate participating within the next two years.
35
Risks and Opportunities
Materials (15) Ahlstrom Corporation (Paper & Forest Products) Boliden Group (Metals & Mining) Holmen (Paper & Forest Products) Kemira Corporation (Chemicals) M-Real Oyj-B (Paper & Forest Products) Norsk Hydro (Metals & Mining) Norske Skog (Paper & Forest Products) Novozymes A/S (Chemicals) Outokumpu Oyj (Metals & Mining) SCA (Paper & Forest Products) SSAB (Metals & Mining) Stora Enso (Paper & Forest Products) Talvivaara Mining Company (Metals & Mining) UPM-Kymmene Corporation (Paper & Forest Products) Yara International ASA (Chemicals) Key findings • Energy-intensive and close to nature, the Materials sector is exposed to substantial risks from climate change regulation in the short to medium term, as well as physical risks that require careful management. • At the same time, respondents see substantial opportunities to be part of the solution to the climate change problem and to improve what they consider to be an undeservedly mixed reputation in this area.
36
Risks and opportunities Most firms in this sector identify the EU ETS as the single biggest regulatory risk they face, whether directly or through increased energy prices (see separate sub-section below). Several other EU policies and regulations, in areas ranging from renewable energy and control of air pollution to ecolabelling and agricultural policy, are also cited. Emerging regulations in other jurisdictions also present risks. Norske Skog cites impending carbon taxes or cap-and-trade schemes in Australia and New Zealand, while uncertainty over the form climate change regulation may take in the US is a common concern. Companies also cite the increasing burden of obligations to monitor and report emissions, including in planning applications. The lack of climate change regulation in other regions is also an issue. Indeed, many firms in this sector appear less worried about regulatory costs per se than about the uneven impact of regulation in highly competitive global markets. Many respondents cite inefficiencies that may result from an unpredictable or inconsistent regulatory framework. UPM-Kymmene says that the variety of different taxes, regulations and voluntary schemes “may create overlapping subsidies and/or constraints that are difficult to manage and optimise”. Norske Skog highlights the constant review and modification of government policies in response to climate change, which it says creates uncertainty in a capital-intensive industry with long-term investments and planning horizons. On the other hand, almost all firms in the sector report that climate change regulation presents significant current and future opportunities. Some (including Holmen and Norsk Hydro) consider the opportunities to outweigh the risks in the longer term. In general, most firms expect increased demand for technologies that will help others to reduce GHG emissions and increase efficiency in the use of energy, water and raw materials.
“We firmly believe that our industry’s sustainable business model will become a major competitive advantage over other materials. The carbon footprint of our products, the potential to build up an additional carbon stock through their usage, the recyclability and the possibility to incinerate them at the end of the life cycle for energy production will make our products the preferred choice of informed customers.” Stora Enso
• In the Chemicals industry, areas of growth include water recycling, biofuels and optimisation of agricultural production (Kemira, Yara International). Biotechnology has a vital role to play in saving energy and reducing waste according to Novozymes.
supply, and transport difficulties. These risks may be at least partly mitigated through upgrading of infrastructure to withstand harsher conditions, maintenance of a global supply network to avoid dependence on sensitive locations, stockpiling of raw materials, and insurance.
• Metals are essential raw materials for solar and wind power infrastructure, energy-efficient buildings and lighter transport. Talvivaara Mining sees benefits in terms of more diverse, and hence stable, demand.
Longer-term risks from rising temperatures and sea levels are also identified. SCA and Stora Enso, for example, mention composition of tree species and insect outbreaks in forests.
• Large forest owners have physical capacity for wind farms, hydropower and wood-based biofuels (although some such as SCA lament increases in the cost of wood for paper manufacturers as a side-effect of biofuel subsidies and regulation). Actions to mitigate regulatory risks and capitalise on opportunities include investment, R&D and strategic alliances throughout the sector with the aim of reducing emissions, switching to renewable energy sources, and increasing energy efficiency and self-sufficiency. Most firms are also engaged in lobbying and continuous monitoring of regulatory developments. Some firms also mention hedging to protect against any increase in volatility of electricity prices due to emissions trading. While several raise the problem of “carbon leakage”, no company discloses any plans to shift activities from the EU to other regions. The physical risks of climate change are of less immediate concern. Some firms consider many of these to be “speculative and uncertain”, since the underlying science is still evolving (Ahlstrom). Others (Boliden, Kemira, Norsk Hydro) take the view that the risks are manageable and/or not material, at least over the next 10–15 years. Nevertheless, many identify current risks associated with extreme weather events and changes in rainfall, and related risks such as bush fires, soil infertility, insecurity of water and energy
On the other hand, Stora Enso refers to studies predicting enhanced tree growth and timber yield in Nordic forests in the coming decades. Indeed, respondents in a range of different sectors point to the relatively favourable projected impact of climate change on the Nordic region. Under “other” risks, a number of respondents air concerns that the Materials sector has an undeservedly poor reputation on climate change among customers, stakeholders and non-governmental organisations (NGOs) among others. Firms in the Paper & Forest Products industry feel that, while they are paying the price for GHG emissions, they are not given credit for their role in carbon absorption through sustainable forest management. Holmen, for example, believes that its operations have a net favourable impact on climate change.
On the other hand, respondents see valuable opportunities in making a strategic shift towards becoming part of the solution to climate change, rather than being seen as part of the problem. Stora Enso is hopeful that standardisation of the measurement of carbon footprints and certification of emission reductions will help to highlight the role of sustainably managed forests as a carbon sink. Firms throughout the sector mention the need for greater use of life-cycle analysis in evaluating carbon footprints. Novozymes stresses the role of biotechnology in reducing clients’ emissions. Paper manufacturers stress the role of paper and wood as a carbon store, which may be recycled several times and finally used as sustainable fuel. Metals manufacturers stress the durability and recyclability of their products. Part of the challenge is to improve dialogue with customers, stakeholders, NGOs and others. Certification (for example of forest management) and eco-labelling schemes are an important part of this effort. But company responses also suggest that reputational risks and opportunities, as well as regulatory risks, are driving efforts to improve energy efficiency and reduce GHG emissions more generally.
Moreover, Chemicals, Metals & Mining and Paper & Forest Products firms believe that the sector’s carbon footprint would be smaller if it were properly measured, taking into account factors such as recycling and contributions towards reducing clients’ emissions. The timescale for reputational risks is generally seen as current or within the next five years, and the potential consequences are far from trivial: damage to key assets such as brands and intellectual property, reduced sales and profits, difficulty in attracting talented employees, and an increase in the cost of capital if potential investors are deterred.
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Risks and Opportunities
Emissions trading schemes All firms in the Materials sector except for Norsk Hydro and Talvivaara currently participate in the EU ETS. Norske Skog also participates in the Greenhouse Gas Reduction Scheme in New South Wales, Australia.
Table 12: EU ETS allowances and verified emissions in Materials, 2009 (metric tonnes CO2-e) Allowances allocated
Allowances purchased
Verified emissions
Ahlstrom
710,899
2,978
464,750
Boliden
78,909
0
78,909
Holmen
622,940
-
301,508
As Table 12 shows, during Phase 2 of the EU ETS (2008–12) most firms in this sector have been allocated enough free allowances to cover their emissions. In Phase 3, all firms in the Materials sector will be covered (including smelters of aluminium and other metals), and most expect to have to pay more for allowances.
M-Real
1,365,875
0
880,764
Norske Skog
518,085
0
398,385
Novozymes
15,193
0
14,000
Outokumpu
1,297,458
-
539,743
SCA
1,800,000
0
1,500,000
SSAB
7,259,447
0
3,635,703
Stora Enso
3,995,258
509,332
2,440,060
The uncertainty outlined in the introduction above makes it difficult to quantify this risk, but M-Real, for example, estimates that the cost increase might amount to several million Euros annually (compared to sales of €2,400 million). In Metals & Mining, Boliden and Outokumpu report that the main regulatory risk is the indirect effect of ETS on electricity prices, although they also anticipate a considerable direct impact. Similarly, in Chemicals (Kemira, Novozymes) the main risk is increased prices for electricity, water and raw materials.
UPM-Kymmene
2,398,862
0
1,578,139
38
Notes: Dash indicates no data reported Kemira reports limited participation for one Swedish site, with a surplus of 2,037 tonnes Yara reports participation with a surplus of 1,170,000 tonnes
“Climate change and the mitigation measures will have complex effects, both first-hand and second-hand. Some of the risks involved with the effects for example on national and international finance, regulation development, business requirements and customer behaviour are difficult to foresee and require continuous reprocessing.” Fortum
Energy & Utilities (6) Fortum Corporation (Electric Utilities) Hafslund ASA (Electric Utilities) Lundin Petroleum (Oil, Gas & Consumable Fuels) Neste Oil Oyj (Oil, Gas & Consumable Fuels) Statoil ASA (Oil, Gas & Consumable Fuels) Teekay Petrojarl ASA (Oil, Gas & Consumable Fuels) Key findings •
Energy & Utilities is the sector most directly exposed to climate change regulation, and one of the most exposed to the physical effects of global warming.
•
But firms are used to managing these risks, and there is a general sense from their responses that they are well placed to benefit from global regulatory tightening.
Risks and opportunities The Energy & Utilities sector faces several direct regulatory risks associated with climate change, including cap and trade schemes, carbon taxes, efficiency standards and mandates for renewable energy. Potential costs include capital expenditure on equipment required to reduce emissions and increase energy efficiency, as well as the direct costs of emissions allowances, taxation and fuel. General uncertainty over the postKyoto climate change regime, including revisions to the EU ETS and the likelihood of new regulations in the US, is a cause for concern. Efforts in the International Maritime Organisation to regulate emissions and fuel efficiency in marine transport are also relevant for Oil, Gas & Consumable Fuels companies (see also Transportation below). As in the Materials sector, companies would prefer a stable, global regulatory framework. Fortum sees potential inefficiencies if multiple regulatory instruments address the same objectives, citing the EU’s revised Renewable Energy Directive. In the same area, Neste Oil calls for
predictability, with no backsliding or easing of targets. Hafslund stresses the importance of stability for its capital-intensive district heating business in Norway. Perspectives vary on the extent to which these risks are material. For Fortum, the price of CO2 allowances is “a major financial risk” (although possibly on the upside – see below on the EU ETS). Fortum’s experience also suggests that any additional costs are passed on to consumers in the form of higher electricity prices. Teekay Petrojarl says new GHG emission restrictions could have “a significant financial and operational impact on our business that we cannot predict with certainty at this time”. At the same time, the firm cites a Danish study which finds that emissions regulations for marine transport would have only a small effect (1%) on the prices of commodities transported by sea. Given the failure to reach a comprehensive agreement at the 2009 UN Climate Change Conference, Lundin Petroleum does not expect changes in the regulatory and fiscal regimes in the EU and Norway to have significant implications, at least in the short term. Many firms in this sector see themselves as being among the world leaders in energy efficiency and low emissions technology, and therefore expect to benefit from stricter regulation on climate change, especially if global agreements are reached. Opportunities include: • rapid growth in the market for biofuels •
tax incentives and subsidies for investments in renewable energy (including offshore wind and wave power) and GHGmitigation technologies
• new opportunities in carbon capture and storage (Statoil, Teekay). The timescale for regulatory risks and opportunities, where indicated, is generally current or within the next five to ten years. Firms are responding by increasing energy efficiency, reducing emissions and switching, where possible, to renewables. Some substantial investments and R&D efforts are reported. Neste 39
Risks and Opportunities
Oil, for example, cites a €1.2 billion investment in two factories to produce its new NExBTL bio-diesel (made from vegetable oils and animal fats). Companies in this sector face a harsh physical operating environment, both onshore and offshore, and most (though not all) identify risks from more frequent extreme weather events and rising sea levels, including the related risks of drought, flooding and insecurity of freshwater supply. In Oil, Gas & Consumable Fuels there are risks of disruption to extraction, storage and transportation, which entails safety risks for employees and higher transport, maintenance and insurance costs. Wastewater treatment in refineries may be at risk from flooding (Neste). Electricity generation and distribution are similarly exposed to wind, rainfall, snowfall, rising temperatures and rising sea levels. Costs here include statutory compensation in the event of power outages (Fortum). Extreme river flooding could have serious consequences for hydropower plants, though the likelihood is considered small (Hafslund). While the industry is accustomed to managing these risks, some firms report that climate change is already having an impact, particularly in coastal areas (Fortum) and overseas locations. Mitigatory measures include improved weather monitoring and day-to-day maintenance, emergency response planning, diversification of production plants and supply chains, stricter engineering standards, and stockpiling (e.g. of crude oil at refineries). Hedging helps to allay financial risks for utilities. Physical opportunities seem less apparent on the whole. Marine shipping companies whose fleets are well adapted to adverse weather see possible benefits. Stronger winds and increased rainfall may facilitate wind and water power generation. Hafslund expects a wetter and milder climate in the North to result in an evening out of river flow throughout the year, which would increase hydropower production.
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Emissions trading schemes
As in the Materials sector, some firms are concerned about the sector’s reputation for environmental management, which Teekay says has not been helped by press articles in recent years. In concrete terms, the risks include a shift in consumer preferences towards other energy sources, and direct public action in the form of protests and boycotts (though Teekay sees that as more likely in the case of firms marketing directly to the public).
Most of the publicly disclosing firms in Energy & Utilities already participate in the EU ETS. Table 13 provides an overview. Uncertainty over precisely how Phase 3 of the ETS (2013–20) will function is a concern. Fortum mentions the possibility of malfunctioning auctions, price spikes and crashes. On the other hand, Fortum also reports significant opportunities here: most of its electricity production is CO2-free, but it will still benefit from the increase in electricity prices due to its competitors having to purchase allowances (“windfall effect”).
According to Fortum, the best way to manage such risks is to lower the carbon intensity of the company’s operations through further investments in carbon-free electricity and heat production. Some firms cite efforts to engage with policy makers and to take part in (for example) national energy efficiency schemes. Statoil notes the importance of open and transparent communication on efforts to reduce GHG emissions. On the whole, though, there is perhaps less emphasis on communication and more on concrete measures. Statoil, for example, cites a US$1.7 billion joint venture with Statkraft, a Norwegian power utility, to build an offshore wind farm off the UK’s Norfolk coast, which is expected to save 500,000 metric tonnes per year in CO2 emissions. Lundin reports an alternative route into renewable energy: it has taken control of Etrion, a solar power company.
Table 13: EU ETS allowances and verified emissions in Energy & Utilities, 2009 (metric tonnes CO2-e) Allowances allocated
Allowances purchased
Verified emissions
Lundin
233,166
0
198,532
Neste Oil
3,226,312
350,000
3,468,966
Fortum
5,500,000
2,200,000
7,700,000
Hafslund
57,655
0
50,694
Notes: Statoil reports participation but does not provide data for commercial and business reasons
Transportation (7)
Risks and opportunities
A.P. Moller - Maersk (Marine)
All Airlines and Marine transport companies report significant risks associated with climate change regulation. DSV, by contrast, expects only limited risks for its international road transport and logistics business, though it does not give detailed reasons.
D/S Norden (Marine) DSV A/S (Road & Rail) Finnair (Airlines) Copenhagen’s Airports (Transportation Infrastructure) SAS (Airlines) TORM (Marine) Key findings • Transportation faces material risks from climate change regulation owing to its heavy and hard-to-avoid consumption of fossil fuels (at least in the short to medium term). • Shipping firms believe the balance of reputational risks and opportunities may favour them over other modes of transport on account of lower CO2-e emissions per tonne of cargo.
For Finnair and SAS, the main issue is the inclusion of aviation in the EU ETS from 2012 (see below). In shipping, A.P. Moller - Maersk regards the lack of international agreement on regulation of GHG emissions – and the consequent prospect of a patchwork of national and regional regulations – as a significant risk. Similarly, firms in the Energy & Utilities sector with interests in oil and gas transportation would welcome a global market-based mechanism under the International Maritime Organisation (IMO), though perspectives on the chances of this vary.4 Moller - Maersk also cites the likelihood of stricter energy efficiency requirements in the near future based on the IMO’s Energy Efficiency Design Index (EEDI) and Ship Energy Efficiency Management Plan (SEEMP). D/S Norden’s chief concern is the likelihood of increased taxes on fuel, and stricter air pollution restrictions limiting the sulphur content of fuel. These risks are manageable up to a point, primarily through efforts to increase energy efficiency. Moller - Maersk cites several concrete measures such as installation of waste heat recovery systems, and use of software to reduce energy consumption for cooling of containers. According to Norden, however, switching to renewable fuels such as biomass will not be possible with today’s engines.
As Finnair points out, safety is the paramount concern in the Airlines industry. This may limit the scope for innovation to increase energy efficiency in the short run, beyond measures such as reducing flight speed. On the other hand, the renewal of Finnair’s fleet is nearing completion, which will mean lower costs for fuel and emissions allowances by the time emissions trading begins. The company also sees potential opportunities in lobbying for a global cap-and-trade agreement for air transport. Likewise, both Norden and Moller - Maersk see opportunities in global regulation of shipping, since this would favour companies with the most fuel-efficient fleets. These firms also identify new market opportunities in the transportation of biomass (Norden) and liquid CO2 from carbon capture and storage (Moller - Maersk). Both Moller - Maersk and Norden report physical risks related to extreme weather conditions, such as damage to vessels and delays due to re-routing. Norden says these challenges are manageable in the foreseeable future, though that may require increased investment in monitoring technology and staff training as well as in the fleet itself. Moller - Maersk also notes the risk that rising sea levels may affect certain ports, while melting polar ice caps may increase the number of icebergs in polar regions. This is also likely to open up new arctic trade routes, which may present significant opportunities. Norden has already benefited from its fleet’s capacity to sail icy waters during last year’s exceptionally cold winter. Finnair reports risks to flight and airport operations from extreme weather phenomena and longer-term shifts in weather patterns. Improved forecasting will be required to manage these risks – an area in which Finnair is playing its part in cooperation with meteorological institutes. In contrast, no significant risks are reported by Copenhagen’s Airports, though the company does not explain this in detail.
4 The IMO’s Marine Environment Protection Committee has set up an expert group to undertake a feasibility study and impact assessment of various proposals for a market-based instrument for international maritime transport. In addition, the committee is working on proposals for mandatory requirements based on an Energy Efficiency Design Index (EEDI) for new vessels and a Ship Energy Efficiency Management Plan (SEEMP) for all ships in operation.
41
Risks and Opportunities
Under “other” risks, Finnair notes that people may elect to fly less as a way to combat climate change. On the other hand there are opportunities in being a responsible airline, since passengers will want to choose the airline and route with the lowest possible emissions. Likewise, Moller - Maersk and Norden report significant reputational risks, the former pointing out that mismanagement of these might result not only in competitive disadvantage but ultimately in the loss of operating licences too. TORM also notes that companies in this sector must be seen to be competent (besides environmentally sustainable) in managing the risks associated with global warming. In the longer term (20 years or more), Moller - Maersk identifies the risk of climate change leading to political and social unrest, which may mean having to avoid certain ports of call, and might also increase the risk of piracy. On the other hand, Norden sees opportunities in the reputation of shipping as the most environmentally sound mode of transport, with the lowest CO2 emissions per tonne of cargo. Both Moller - Maersk and Norden regard a modern, energyefficient fleet as an important source of competitive advantage, not least with customers such as the major oil companies. Several firms in this sector place particular emphasis on the need to manage both regulatory and reputational risks by engaging with policy makers, stakeholders and interest groups. Finnair, for example, aims to be seen as one of the most environmentally responsible airlines by virtue of transparent monitoring, reporting and reduction of emissions and fuel consumption.
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Emissions trading schemes At present, only Moller - Maersk participates in emissions trading (EU ETS) for its activities in oil and gas, where emissions are relatively low compared with the shipping business. SAS purchases carbon credits to offset emissions due to employee air travel, and offers customers the opportunity to do likewise. Aviation will be included in the EU ETS for the first time from 2012. All flights departing from and/or arriving in the EU are to be covered. SAS reports that it does not expect free allowances to cover more than approximately 75% of the allowances it will need for 2012, and is uncertain over how far any additional costs can be passed on to consumers in the form of higher ticket prices. Finnair’s chief concern is the response of competitors and authorities in nonEU countries. Companies whose hubs are outside the EU may be able to gain a competitive advantage by re-routing to minimise traffic to and from EU airports, while there may even be the possibility of a “trade war” if non-EU countries refuse to accept the EU’s emission trading rules.
“New environmental regulations are likely to lead to an increasing requirement for buildings and other infrastructure to meet stricter building codes, incorporate new sustainable materials, emit less carbon and be climate-resilient (e.g. large thermal mass, naturally ventilated, flood-proof).” Skanska
Industrials (25)
Risks and opportunities
Alfa Laval Group (Machinery)
Most firms in the Industrials sector operate in business-to-business markets, and several report that the greatest risk they face is indirect exposure to the risks faced by their customers. Outotec and Metso, for example, provide technology and services to industries such as Mining & Metals, Paper & Forest Products and Oil, Gas & Consumable Fuels, and therefore consider themselves subject to the same kinds of material risks outlined in the sections above on the Materials and Energy sectors.
Assa Abloy (Building Products) Atlas Copco (Machinery) FLSmidth & Co. A/S (Construction & Engineering) Gunnebo (Commercial Services & Supplies) JM AB (Construction & Engineering) Kone Oyj (Machinery) Lindab International (Machinery) Metso (Machinery) NCC (Construction & Engineering) NKT Holding A/S (Machinery) Orkla ASA (Industrial Conglomerates) Outotec Oyj (Construction & Engineering) Rockwool International A/S (Building Products) SAAB (Aerospace & Defense) Sandvik AB (Machinery) Scania (Machinery) Skanska AB (Construction & Engineering) SKF (Machinery) Subsea 7 (Construction & Engineering) Tomra Systems ASA (Commercial Services & Supplies) Trelleborg AB (Machinery) Veidekke ASA (Construction & Engineering) Vestas Wind Systems A/S (Electrical Equipment) Wärtsilä Corporation (Machinery) Key findings • While the Industrials sector is large and diverse, firms’ responses suggest on the whole that they are confident in their ability to manage a wide range of risks related to climate change. • Firms place as much emphasis on the risks faced by customers as on the direct risks to their own operations, and most see substantial opportunities in helping clients to increase energy efficiency and reduce emissions.
In addition, most firms – including manufacturers of machinery and construction products, builders, engineers and service providers – are directly exposed to a raft of regulations and standards on emissions and energy efficiency. Particular challenges in construction include energy efficiency of buildings and emerging regulations on the use of water. As building codes become stricter, contractors depend on their suppliers to deliver reliable and costeffective alternatives that may not yet have been thoroughly tested in the real world. NCC notes a trend for developers to assume greater legal responsibility for finished constructions, making it all the more important for them to identify risks at an early stage. Along similar lines, Outotec underlines the need to take climate change risks into account in the design of process as well as plant, allowing for flexibility in the use of raw materials and water. Machinery manufacturers such as Atlas Copco and Alfa Laval argue that the largest impact on climate change occurs during the use of their products rather than the manufacture. Emissions trading schemes may present material risks in a few cases, but less than one third of companies in the sector participate in such schemes, and many of those only to a limited degree (see below). Thus the risks here are mostly indirect, through the costs of energy, energy-intensive raw materials and transport.
43
Risks and Opportunities
Direct regulatory requirements may well entail material risks if there is a chance of failing to meet them. The worst-case scenario according to Metso would be a sudden, unexpected change in regulation that might render products unfit for purpose or cause a slump in a client industry. Subsea 7 (underwater construction and engineering for the energy sector) also notes the risk of penalties in the form of taxes, fines and public disclosure announcements. However, firms devote considerable resources to minimising such risks by continuously monitoring legislative developments. SKF (bearings, seals and lubricants), Skanska and NCC (both construction and property development) pursue a policy of exceeding regulatory requirements. Veidekke ensures that regulators are aware of new technologies, such as the firm’s low-temperature asphalt for road construction. Many firms in this sector are widely diversified, which also limits the threat that regulatory risks might pose to the success of the company as a whole. Orkla, as a conglomerate with activities in Consumer Discretionaries, Materials, Energy and Financials, faces a portfolio of risks as outlined under the relevant sectors. SAAB reports exposure to the risks faced by the commercial aviation industry, while noting that this accounts for only 6% of SAAB’s turnover. Few respondents disclose details on the significance of rising prices for energy, transport and raw materials for their own operations. SAAB reports that energy accounts for only 0.7% of total costs, while Subsea 7 reports “high” costs on account of vessel fuel consumption of over 80,000 m3 in 2009. NKT Holding reports “significant extra cost”, but notes that competitors are equally affected. Vestas Wind Systems seeks to incorporate commodity price developments into its sales contracts. Most firms report programmes to increase energy efficiency in their own operations, and some invest in renewable generation capacity themselves (e.g. SKF’s 15,000 m2 of solar panels on the roof of its international distribution centre in Germany). Others (such as Outotec and Alfa Laval) appear more focused, at least in the context of regulatory risks, on helping clients.
On the whole, respondents seem confident in their ability to manage regulatory risks. Some, such as NCC and Veidekke, stress the importance of human resources and internal communication in this respect. Although compliance entails significant financial costs (including legal advice and training), firms generally regard being ahead of regulatory requirements as an investment. For instance, heavy-duty vehicle manufacturers such as Scania cite the whole gamut of regulatory risks, from fuel and road taxes to product standards on exhaust emissions and fuel efficiency. But they are used to dealing with stringent legislation, and consider themselves well placed to meet increased demands for fuel efficiency and for vehicles that can run on renewable fuels. Among the many more examples given: • KONE expects its elevators and escalators to benefit from their A rating according to ISO and German energy efficiency standards. • Rockwool cites a long list of countries where stricter building regulations will increase demand for its mineral wool insulation products over the next few years. • FLSmidth & Co. has developed a new kiln burner that will allow alternative rather than fossil fuels to be used in kilns for cement manufacture. • Sandvik manufactures furnaces for the production of silicon-based solar power cells, and has launched a new surfacing material for fuel cells. • Vestas Wind Systems aims to double its turnover by 2015, and cites estimates that wind energy will account for 10% of global energy consumption by 2020, compared to 2% today. • TOMRA saw increased sales of around 15,000 units following the expansion of deposit schemes for beverage containers in Germany.
These opportunities are regarded as current and growing, especially in the EU, with further potential in other regions as regulations tighten globally. Several companies (including Alfa Laval, Skanska and NCC) believe that opportunities outweigh regulatory risks. Many expect to benefit from government incentives – such as subsidies and tax relief for energy efficiency, or green certificates and favourable feed-in tariffs for renewable energy – as well as from increased sales. Firms also report a wide range of physical risks and opportunities linked to climate change. The operational risks are similar, by and large, to those identified in other sectors, with potential consequences for health and safety, production plants, supply chain reliability, raw material prices and customer logistics. Climate change may result in an increase in the cost of managing such risks – through more resilient construction, due diligence in selecting locations, maintenance of global supply networks, insurance, and so on. But again, despite greater uncertainty over the magnitude of and timescale for physical risks, most firms do not regard them as material. Examples of opportunities include: • In northern latitudes, shorter winters with less snow may reduce delays and thus increase productivity in construction (Skanska). • SKF and Trelleborg expect to benefit from their expertise in sealants for flood defence systems. • Advanced sensing technologies in NKT’s cables and pipes will help to prevent power outages and leaks in the event of storms. • Gunnebo and SAAB see growth opportunities in civil security services, including protection of nuclear power plants and protection of sensitive infrastructure. • SAAB also sees opportunities in defence: melting Arctic ice may present the Nordic countries with new security risks by opening up natural gas deposits and new trade routes across the Barents Sea.
“There is no climate related regulatory risk that a product from Scania will be prohibited or has to be withdrawn from the market.” Scania
Although relatively few respondents deal directly with the public, many cite the risk of damage to their brands and reputation as employers if they are not seen to act responsibly on climate change. SKF notes that shareholders, customers and employees increasingly require evidence of action on climate change. NCC reports that consumers are asking for detailed information on how climate change is addressed in construction projects. Skanska stresses the need for continual innovation in order to maintain a leading position, with more and more companies offering green and energyefficient products and services. Several respondents find it impossible to quantify such “other” risks and opportunities. Veidekke cites the risk of damage to its reputation if its buildings or roads turned out to be inadequately specified despite having satisfied all legal requirements. But this is the kind of risk that involves a small probability of serious consequences, and is “close to impossible to set a value for.” Some firms are devoting substantial resources to communication campaigns. Rockwool spent €3 million on its activities (including advertising) surrounding the UN’s 2009 Climate Change Conference (COP15). Skanska is spending around SEK10 million a year on a new Green Construction staff unit and Corporate Green Communications team. Yet these amounts are dwarfed by budgets for R&D, which according to several firms is becoming increasingly focused on reducing emissions and increasing energy and fuel efficiency. It is interesting to note that firms report R&D efforts as a response to both “regulatory” and “other” risks and opportunities. Metso points out that size may be an advantage in this area, as smaller competitors may be unable to match R&D budgets and may lack the same breadth of technical competence.
Emissions trading schemes Seven publicly disclosing firms in the Industrials sector currently participate in the EU ETS. Of these, four (Metso, Scania, SKF and Wärtsilä) indicate that their participation is of limited importance, usually because only one or two facilities are covered. Only Metso has needed to purchase allowances so far. SKF also participates in the UK CRC Energy Efficiency scheme.5 Outotec plans to participate in the ETS within the next two years. Although only two of Sandvik’s Swedish subsidiaries are affected by the ETS, these consumed 44% of the group’s total energy in 2009. Sandvik identifies the associated risk in Phase 3 as material, in part owing to the expected upturn in the economy (which is likely to raise the price of allowances). Rockwool reports that 11 of its factories in Europe are covered under the current ETS Phase 2, and that 14 will be covered under Phase 3 (2013–20), while a further two will implement the same regulations. Rockwool has been active through its European industry association in trying to ensure that the benchmarks for free allowances in Phase 3 are set as fairly as possible. Rockwool also intends to participate in the Western Climate Initiative, a joint initiative between several US states and Canadian provinces that is intended to include a cap-and-trade scheme. Orkla indicates that two of its facilities are covered but does not give figures on allowances allocated or purchased. Subsea 7 reports that “we may be at risk from onshore UK carbon trading costing us £12 per carbon tonne”, though it does not provide further details. Skanska is the only company that reports participation in a carbon credits scheme, offsetting its business flights through a voluntary contribution to The Forest Trust to support a project in Brazil.
5 Previously known as the Carbon Reduction Commitment (hence CRC), and renamed to reflect the primary objective of reducing emissions through increased energy efficiency.
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Risks and Opportunities
“While the ICT sector itself, including telecom, represents some 2% of global energy consumption and CO2 emissions, smart use of ICT offers enormous potential to address the other 98%.” Ericsson
Telecommunication Services & Information Technology (Telecommunications & IT) (9) Atea ASA (IT Services) Ericsson (Communications Equipment) Nokia Group (Communications Equipment) TDC A/S (Diversified Telecommunication Services) Tele2 AB (Diversified Telecommunication Services) Telenor Group (Diversified Telecommunication Services) TeliaSonera (Diversified Telecommunication Services) Tieto Oyj (IT Services) Vaisala Oyj (Electronic Equipment, Instruments & Components) Key findings • The Telecommunications & IT sector faces only moderate exposure to regulatory and physical risks associated with climate change. • Firms see substantial opportunities, including reputational benefits, in helping customers to reduce their energy use and emissions.
Risks and opportunities The Telecommunications & IT sector faces relatively few direct regulatory risks linked to climate change. Large network operators and equipment manufacturers are conscious of indirect risks through increased energy and fuel prices, since these firms are moderately large consumers of electricity. TeliaSonera and Vaisala mention the likely tightening of EU directives on Waste Electrical and Electronic Equipment (WEEE) and Restriction of Hazardous Substances (RoHS), but manage these risks by ensuring that specifications more than meet the anticipated minimum requirements. Tieto cites the human resources costs of meeting emissions reporting obligations. All firms in this sector see current and growing opportunities in providing energy-efficient equipment and services, in part to help customers comply with climate change regulation. Examples include: • reducing the need for travel through videoconferencing (Atea, TDC) and remote access to offices (Tele2) • replacing CDs, documents etc. with digital equivalents (Nokia) • reducing fuel and energy consumption through smart solutions for transport logistics and electricity metering (Tieto, TeliaSonera) and through Machine-to-Machine technology (Telenor). Vaisala sees particular potential for growth since it specialises in environmental and industrial measurement equipment and services that will help customers to comply with climate change regulation. Firms in this sector are practising what they preach: TeliaSonera, for example, reports savings of 131 metric tonnes of CO2 and SEK8 million in 2009 by substituting videoconferencing for travel between Gothenburg, Helsinki and Stockholm.
46
Other measures include improvements in the energy efficiency of mobile phone chargers (Nokia) and radio networks (Ericsson), consumer incentives to recycle old equipment (important in the context of the WEEE directive), and sharing of mobile networks with other operators to save energy (Tele2). As regards physical risks due to climate change, some firms cite the possibility of damage to equipment or interruption of service due to extreme weather events and increased rainfall. Prolonged disruption of the electricity supply is a particular risk for network operators. But on the whole these risks are seen as limited or at least manageable (albeit at additional cost) through alternative production facilities and suppliers, back-up electricity systems, stronger construction of network infrastructure and investment in redundant capacity. Risks are seen as low in the Nordic region itself, though somewhat higher in other parts of the world, particularly Asia. Telenor and TeliaSonera both reduce dependence on the electricity grid in some of their overseas operations by making use of alternative energy such as solar and wind power. Relatively few opportunities arising from the physical effects of climate change are cited. Atea and TeliaSonera point, for example, to the important role of telecoms services in the event of disruption to travel due to extreme weather events. Although the Telecommunications & IT sector is not particularly energyintensive, most firms are conscious of reputational risks and opportunities, and hence of the need to document their contribution to mitigating climate change. TDC, as the largest telecoms provider in Denmark, feels the need to show leadership on climate change. Tieto sees value for its brand in becoming a “Green IT” leader.
Here again, firms stress their role in helping customers to reduce their emissions. Telenor highlights its contribution to a report by the GSM Association of mobile operators and related companies, Mobile’s Green Manifesto, which sets out the industry’s plans to lower GHG emissions per connection, and its role in lowering emissions in other sectors. TeliaSonera says that environmental impact has been identified as “one of the most material areas for our CR [corporate responsibility] work”, and calls for a common methodology to calculate energy efficiency within the telecoms industry. Perspectives vary on how material reputational risks may be. On the whole, telecoms operators who deal directly with the public are more conscious of the risks of alienating customers and losing market share – or the opportunity of gaining a competitive edge by establishing a good reputation. Such opportunities are hard to quantify according to Nokia, but they are seen as current and increasing. Emissions trading schemes No company in this sector currently participates in emissions trading on a significant scale, although Nokia expects to do so within the next two years. Nokia already participates in the UK CRC Energy Efficiency scheme, but does not regard this in itself as significant since the UK accounts for less than 5% of the group’s CO2 emissions.
47
Risks and Opportunities
“In general, the climate challenge will be one of the factors that influence society's idea of risk and security, and in this way perhaps influences the population's expectations and wishes of the insurance industry.” Topdanmark
Financials (15)
Risks and opportunities
Atrium Ljungberg AB (Real Estate Management & Development)
In the Financials sector, direct exposure to regulatory risks linked to climate change is mainly confined to the Real Estate Management & Development industry, which is subject to stricter regulations on energy efficiency of buildings. Real estate is also indirectly affected through the prices of raw materials and energy, particularly where firms provide heating services.
Castellum (Real Estate Management & Development) Citycon Oyj (Real Estate Management & Development) Danske Bank A/S (Commercial Banks) DnB NOR ASA (Commercial Banks) Fabege (Real Estate Management & Development) Investment AB Kinnevik (Diversified Financial Services) Kungsleden AB (Real Estate Management & Development) Nordea Bank (Capital Markets) SEB AB (Commercial Banks) StoreBrand ASA (Insurance) Swedbank (Commercial Banks) Topdanmark (Insurance) TrygVesta A/S (Insurance) Wihlborgs Fastigheter AB (Real Estate Management & Development) Key findings • Financials face little direct exposure to climate change regulation except in real estate. • Banks and insurers are systematically assessing their clients’ performance on climate change with a view to limiting their exposure to indirect risks.
48
Kungsleden expects fiscal measures on energy efficiency within the next few years, while Citycon considers that the introduction of emissions trading in real estate is a possibility within the next decade. Atrium Ljungberg and Castellum note, on the other hand, that the bulk of energy cost increases can be passed on to customers, for example in the form of higher rents. Banks and insurance companies face mostly indirect risks through the companies they insure, invest in and lend to. One view (Danske Bank and Nordea) is that indirect exposure is also limited in principle, provided that companies have a sound understanding of the risks faced by their customers – which is, after all, their business. Kinnevik (in the Multi-Sector Holdings sub-industry) reports that some of its holdings, notably a pulp and paper manufacturer, are subject to regulatory risks, though there may also be opportunities in the form of revenue from green (renewable energy) certificates. Banks and insurance companies are evenly split on whether climate change regulation presents significant risks in practice. What is clear is that clients’ performance in this area is being systematically assessed in the context of loans and investment projects (SEB, Nordea, Danske Bank).
Banks identify direct regulatory opportunities in the trading of emissions allowances, and see lending and investment opportunities in new markets such as clean technologies. Companies that are leading the way in adapting to new regulations and adopting new technologies are seen as particularly attractive. Insurance companies report that the physical effects of climate change such as extreme weather events and rising sea levels may well lead to significant increases in claims. Both Storebrand and TrygVesta refer to collective schemes in the Nordic countries intended to cover these risks, such as the Naturskadefondet (Natural Damage Fund) in Norway, established in 1961. Whether there has been a significant increase in these risks in recent years is not disclosed, although insurers take climate change into account in analysing risks and setting premiums (Storebrand). TrygVesta notes the active role played by insurance companies in advising clients and municipalities, for example on how to minimise the risk of flooding. Several real estate firms mention increased rainfall and snowfall as being among the physical risks that might result in damage to property. Kungsleden reports that maintenance costs are already increasing owing to weather conditions. Risks associated with rising temperatures and sea levels are seen as longer-term, and partly mitigable through careful choice of locations and more resilient construction techniques. Banks and investment companies are again divided on the question of whether physical risks are significant. Some – such as DnB NOR, which has interests in energy, offshore industries and seafood – note indirect risks for investments or loan collateral.
Insurers see opportunities in helping customers to reduce their exposure to new risks related to climate change. In real estate, increased demand for “green buildings” and cost savings through energy efficiency are seen as opportunities. Wihlborgs Fastigheter has observed that some of its tenants choose a landlord on the basis of environmental commitment. Under “other” risks, Danske Bank, DnB NOR, Swedbank and Hufvudstaden mention significant reputational risks such as the potential impact on brand value and trust among stakeholders. Storebrand says it will not invest in the worst performers in energy-intensive industries.
Emissions trading schemes Apart from Kinnevik (which owns a paper manufacturer), no firms in this sector participate in the EU ETS. Danske Bank, DnB NOR, SEB, Storebrand and Swedbank all disclose voluntary involvement in carbon credit schemes with a view to offsetting some of their CO2-emitting activities (e.g. company vehicle fleets). Companies generally purchase (from a broker) UN Certified Emission Reductions, which often originate in renewable energy projects elsewhere in the world.
Another general risk mentioned by several companies in different sectors is a long-lasting downturn in the global economy due to climate change or the costs of coping with it. This does not appear to be a widespread concern in the Financials sector, although Swedbank does mention overall portfolio risks. On the whole, respondents devote more attention to the potential opportunities from acting responsibly on climate change. Storebrand, for example, seeks to position itself as Norway's first carbon-neutral finance company. Among the actions reported under “other” opportunities are Fabege’s cutting its energy use by around 5% per year since 2002, SEB’s participation in the World Bank’s inaugural “Green Bond” issue, and Danske Bank’s involvement with the Danish government in “1 tonne less” – a campaign to encourage individuals to reduce their carbon footprints.
49
Risks and Opportunities
Health Care (9)
Risks and opportunities
Coloplast A/S (Health Care Equipment & Supplies)
With low GHG emissions and energy usage, most firms in this sector do not consider themselves subject to significant regulatory risk, and are confident of being able to meet regulatory requirements relating to energy efficiency.
Getinge (Health Care Equipment & Supplies) H Lundbeck A/S (Pharmaceuticals) Meda AB (Pharmaceuticals) Novo Nordisk (Pharmaceuticals) Orion Group (Pharmaceuticals) Pronova BioPharma ASA (Pharmaceuticals) Q-Med AB (Biotechnology) William Demant Holding A/S (Health Care Equipment & Supplies) Key findings • Judging by company responses, Health Care appears to be the sector least exposed to material risks from climate change and related regulation. •
Reputational opportunities therefore appear to be the main driver of emissions reduction strategies.
Some cite increased costs for energy and raw materials. Only Novo Nordisk is subject to emissions trading (see below) and cites the uncertainty surrounding emerging regulation (including in North America, Japan and China) as a concern, though energy costs account for only 3% of production costs. Coloplast sees any global climate agreement as a competitive opportunity, since non-EU companies will face a higher relative increase in taxes on CO2. Several companies mention the physical risks of extreme weather events for production facilities and transport networks, but the vast majority do not rate these as significant. Q-Med cites a potential risk from a nearby river, but notes that its buildings are constructed to withstand high water. Some pharmaceuticals companies see potential opportunities from the physical impact of climate change on human health. Orion, for example, mentions changing patterns of epidemic illnesses and incidence of other diseases, though scenarios remain highly uncertain. Few companies see “other” risks as significant, although several cite reputational risks. Novo Nordisk estimates that reputational risk and the related deficit on its “public trust account” would have a financial cost of less than DKK500 million and is thereby classified as a minor risk.
Most do still see opportunities through establishing a good reputation on climate change. Trust from stakeholders, engagement of employees, and customer preference (including in public tenders) are among the factors mentioned. For example, under “other opportunities”: • Getinge expects increased market share through “green” branding and superior environmental performance. • MEDA is committed to fulfilling the “expectation emerging in society that industry and business communities take the necessary steps and actions to address climate change.” • H Lundbeck aims to be “at the leading edge of new legal requirements and trends”, and adopts a proactive approach to energy saving, even though energy accounts for only 1% of total costs. Emissions trading schemes Only Novo Nordisk currently participates in emissions trading (EU ETS), though MEDA also anticipates doing so within the next two years. Novo Nordisk is one of the very few firms to disclose concrete scenarios relating to regulatory risks in this area, providing some indication of the uncertainty surrounding future CO2 prices. The firm considers the second of the following three scenarios to be the most likely: • “Carbon denial” – a handful of non-binding targets and policies in OECD; CO2 prices from DKK60–240 per metric tonne. • “Carbon constraint” – multiple agreements with binding long-term targets but a collection of intermediate targets and policies; CO2 prices from DKK60–330 per metric tonne. • “Decarbonisation” – broad agreement with tough and binding targets, both long-term and intermediate; CO2 prices from DKK160–450 per metric tonne.
50
“By staying ahead of the competition in regard to energyefficiency and climate-smart product offerings, and actively engaging in the climate debate, Electrolux has an opportunity to build a stronger brand, strengthen our relationships with key stakeholder groups and win market share over members of our industry that have not yet identified the impacts of climate change on consumers.” Electrolux
Consumer Discretionary (10)
Risks and opportunities
Alma Media Corporation (Media)
Around half of the companies in the Consumer Discretionary sector do not consider climate-related regulatory risks to be significant. Among the main issues cited by those that do are:
Clas Ohlson AB (Specialty Retail) Electrolux (Household Durables) Eniro AB (Media) H&M Hennes & Mauritz AB (Specialty Retail) Modern Times Group MTG AB (Media) Nobia (Household Durables) Royal Caribbean International (Hotels, Restaurants & Leisure) Sanoma (Media) Schibsted ASA (Media) Key findings •
As a whole, this sector is not exposed to substantial regulatory or physical risks related to climate change, although some areas of business are more vulnerable.
•
Significant reputational risks and opportunities may arise through close (if not direct) contact with the public.
•
the impact of CO2 regulation and taxes on paper and energy costs in printing and distribution (Alma Media, Schibsted)
• legislation on energy and water efficiency of household appliances (Electrolux) • rising electricity prices in broadcast operations, which are relatively energy-intensive (Modern Times). Royal Caribbean International faces the same kinds of regulatory and physical risks as the Marine transport industry (discussed under Transportation). Perspectives vary on how material regulatory risks may be. Homeimprovement retailer Clas Ohlson’s view is that there is too much uncertainty surrounding climate change regulation to be able to plan for it, but that competitors will in any case be affected too. In the home kitchens business, Nobia describes how it must keep pace with European and local policies to reduce waste and emissions, but does not anticipate significant risks in the near future. On the other hand, Electrolux discloses quantitative indications which suggest that there may be material opportunities in exceeding regulatory requirements. For example, profit margins are higher for the firm’s “Green Range” of household appliances: in 2009, products with the best environmental performance accounted for 21% of units sold and 30% of gross profit.
51
Risks and Opportunities
Electrolux also expects to benefit from government rebate and tax credit schemes in the US and Australia to encourage consumers to switch to more energy-efficient appliances. Clas Ohlson reports that the switch to energy-efficient light bulbs has been good for business. Other firms in the sector see broad advantages in being well prepared to serve new “climatesmart” markets. Various physical risks due to climate change are identified, though not on the whole regarded as material. For example: •
Alma Media, Schibsted and Modern Times note the risk of disruptions to media content production and distribution due to extreme weather events.
•
Major deviations from normal weather patterns would present risks for Hennes & Mauritz and other fashion retailers, particularly at the beginning of fashion seasons.
Companies report a range of measures designed to limit exposure to regulatory and physical risks. For example, H&M has mapped potential water scarcity for nearly 300 overseas suppliers, while Modern Times outlines voluntary industry agreements to improve energy efficiency of TV set-top boxes ahead of any regulation.
Most firms in the Consumer Discretionary sector report significant reputational effects. Indeed, according to Alma Media, the majority of the risks and opportunities associated with climate change fall into this category. Similarly, Sanoma considers itself prone to changes in consumer attitudes, and Clas Ohlson has observed increasing consumer awareness of sustainability issues. H&M points out that consumers’ perception of the brand is especially important in the fashion industry. The concrete risks include losing not only consumers, but also talented employees, investors and, particularly in the media industry, advertisers. Increasing market share is seen as the main potential benefit. Clas Ohlson also mentions seizing the opportunity to cut costs in logistics and transport. Among the specific actions reported in this area are: • mapping of “carbon hot-spots” to pinpoint further ways to reduce the climate impact of garment manufacture and use (H&M) • advising retail customers on how to make the transition to low-energy alternatives (Clas Ohlson) • shifting towards digital media while at the same time trying to raise awareness about the renewability of paper (various publishers) • engaging 125 million TV viewers in climate change issues, in partnership with the World Wildlife Fund (Modern Times Group).
52
Emissions trading schemes Only H&M participates in emissions trading schemes, as part of the mandatory CRC Energy Efficiency Scheme in the United Kingdom.
“ICA [a Swedish supermarket chain] has a direct impact on climate change through energy consumption in stores and warehouses as well as transports and business travel. The largest direct impact is not goods transports, as many people believe, but energy use in stores.” Hakon Invest
“We believe that the potential impact [of further carbon taxation] will be cascaded through the food value chain in the form of higher raw material pricing, energy costs, transportation costs (fuel tariffs) and operational costs (emissions fees/taxes at our production sites).” Danisco
Consumer Staples (7) Axfood (Food & Staples Retailing) Carlsberg Breweries A/S (Beverages) Cermaq ASA (Food Products) Danisco As (Food Products) Hakon Invest AB (Food & Staples Retailing) Oriflame Cosmetics AB (Personal Products) Swedish Match (Tobacco) Key findings •
This sector is moderately exposed to regulatory and physical risks on account of relatively high energy costs and dependence on road transport and agriculture.
• Heavy scrutiny by consumers entails reputational risks and opportunities. Risks and opportunities All firms in this sector who agreed to public disclosure of their responses consider themselves subject to significant regulatory risks related to climate change. The main concerns relate to emissions trading and CO2 taxes, and in particular the indirect effects on the cost of energy, fuel, raw materials and packaging. Energy costs are the main issue for Carlsberg and Hakon Invest (as regards the ICA supermarket chain). Transport costs are the main issue for Oriflame and Swedish Match, though in the latter case the risk is seen as minor compared with other regulatory challenges faced by the Tobacco industry. Emerging regulations in other areas may also be relevant: the likelihood of taxes on hydrofluorocarbons used in refrigeration (Food & Staples Retailing); a mooted “kilometre tax” on transport in Sweden (Axfood); and the likelihood of penalties on biofuels in the US for “indirect land-use change”, for example when rainforests are cleared for the growth of biofuel crops (Danisco). Cermaq’s main concern is to ensure its ability to report the carbon footprint of its salmon products in advance of any regulatory requirements. It has engaged a consultant to develop a methodology and to advise on reducing emissions.
Other actions include a general shift towards renewable energy and fuels, greater use of natural cooling agents, greater use of rail transport, and energysaving measures in production plants and retail stores. Danisco sees major opportunities for innovation using biotechnology to minimise climate change, for example by using natural enzymes to extend shelf life and reduce food waste. As in other sectors in the Nordic region, most firms report that they see opportunities as well as risks in tighter climate change regulation, in part since they see themselves as being better prepared than their competitors. With the exception of Carlsberg, all of the publicly disclosing firms in this sector also report significant exposure to physical risks such as increased frequency of extreme weather events and more gradual changes in temperature and precipitation patterns. As well as potential disruption to production and transport, there are risks for agriculture which are perhaps slightly less easy to manage than supply chain risks in other sectors. To give two of many examples, drought may lead to shortages and sharp price increases of cereals (Axfood), and gradual climactic changes may have long-term effects on productivity in fish farming (Cermaq). On the other hand, a milder climate in the Nordic region would mean opportunities to grow more local produce (Axfood). Both Oriflame (whose range includes UV protection creams) and Carlsberg see global growth opportunities for their products in a warmer climate. Oriflame points out that firms in this sector are heavily scrutinised by consumers, and several other firms report reputational risks and opportunities similar to those outlined for the Consumer Discretionary sector. Labelling and certification of products is one important measure already in operation – Axfood mentions the Bra miljöval (Good Environmental Choice) scheme in Sweden, for example. Emissions trading schemes Two firms in this sector participate in the EU ETS. Neither has so far had to purchase allowances, although Carlsberg reports a risk of this in the next period, while Danisco is concerned that the industry is not on the European Commission’s list of those potentially affected by “carbon leakage”.
6
Global key trends summary
1
This table outlines some of the key findings from CDP 2010 by geography or industry data-set.2
Sample: geography / number of companies
% of sample answering CDP 20103
% of responders with Board or other executive level responsibility for climate change
% of responders with management incentives
% of responders with emissions reduction targets
% of responders taking actions to reduce emissions
% of responders indicating that their products and services help third parties to avoid GHG emissions
% of responders seeing regulatory risks
% of responders seeing regulatory opportunities
% of responders engaging policymakers on climate issues to encourage mitigation or adaptation
% of responders reporting the company’s response to climate change in mainstream annual filings / CSR reports
% of responders independently verifying any portion of Scope 1 emissions data
% of responders independently verifying any portion of Scope 2 emissions data
Asia ex-JICK 1354
32
80
46
56
73
41
65
70
60
80
48
40
Australia 200
47
83
46
40
73
55
69
76
73
88
43
43
US Bonds 180
82
78
62
70
87
55
60
71
88
91
54
46
Brazil 80
72
68
29
23
57
55
61
78
66
74
28
28
Canada 200
46
72
41
32
63
47
51
65
64
73
28
21
Central & Eastern Europe 100
12
85
57
57
71
43
71
100
85
57
57
57
China 100
11
57
57
57
57
43
71
71
57
86
43
29
Emerging Markets 800
29
77
50
47
74
49
70
84
68
78
39
37
Europe 300
84
94
62
79
87
71
74
87
77
97
68
60
FTSE All-World 800
74
83
61
70
77
65
69
78
85
92
57
49
France 250
30
89
48
69
79
60
72
86
62
93
57
46
Germany 200
61
70
33
47
50
57
43
68
42
66
35
23
Global 500
82
84
63
70
87
66
66
77
80
93
59
52
Global Electric Utilities 250
48
86
47
60
72
75
85
90
88
92
58
31
Global Transport 100
25
88
60
89
72
52
88
72
64
84
44
36
India 200
21
88
33
33
69
39
39
90
63
64
25
19
Ireland 40
50
80
26
60
80
33
66
53
46
80
33
33
Italy 60
35
66
57
76
85
71
76
80
66
90
62
62
Japan 500
41
89
61
91
84
73
81
81
60
94
28
28
Korea 200
42
60
52
46
61
44
70
73
50
56
29
29
Latin America 50
54
72
25
15
50
53
68
84
40
78
31
32
Netherlands 50
66
93
63
70
76
71
66
86
70
97
61
65
New Zealand 50
46
78
21
39
39
16
60
43
60
52
22
22
Nordic 200
65
88
44
69
77
67
68
79
62
93
45
37
Portugal 40
30
83
41
41
83
83
91
91
58
91
67
67
Russia 50
8
50
0
100
50
50
50
50
0
50
0
0
South Africa 100
74
95
50
42
82
42
77
85
80
92
39
41
Spain 85
40
87
53
71
84
72
81
84
62
97
69
63
Switzerland 100
58
77
26
52
59
56
38
63
42
82
40
35
Turkey 50
24
75
87
37
62
0
88
72
37
50
25
25
UK FTSE 600
51
96
49
61
73
48
68
74
59
87
41
39
US S&P 500
70
67
48
53
77
53
50
61
63
80
35
29
1 2 3 4
54
The key trends table provides a snapshot of response trends based on headline data. The numbers in this table are based on the online responses submitted to CDP as of 14 July 2010. They may therefore differ from numbers in the rest of the report which are based on the number of companies which responded by the deadline. For some samples the number of companies included in the table may be lower than the original sample size due to takeovers, mergers, and acquisitions. Includes offline responses to the CDP 2010 questionnaire & indirect answers submitted by parent companies. All other key trend indicators are based on direct & online company responses only. Asia excluding Japan, India, China and Korea.
Scope 1
Scope 2 283013
**
47
-
15586
32666
**
63
C
723
2520*
**
9
-
34
-
39060
145000
X
69
C
4455
4343
AQ
60
C
21000
78000
NR
X
60
D
141
5518
**
NR
X
AQ
AQ
AQ
70
C
15353
36212
**
DP
DP
NR
X
AQ
AQ
AQ
IN
46
-
Se
NR
X
X
X
Se
AQ
AQ
AQ
AQ
66
B
486000
361800
Energy
No
NR
NR
NR
X
Energy
No
NR
NR
DP
X
Cardo
Industrials
Se
NR
X
X
X
Cargotec Corporation
Industrials
Fi
AQ
AQ
AQ
DP
60
C
Carlsberg Breweries
Consumer Staples
Dk
AQ
AQ
AQ
AQ
68
C
781924
324656
Castellum
Financials
Se
AQ
AQ
AQ
AQ
30
-
3058
15158
Cermaq
Consumer Staples
No
AQ
DP
NR
X
63
C
54887
11197
Citycon
Financials
Fi
AQ
DP
NR
X
55
C
0
25652
**
Clas Ohlson
Consumer Discretionary
Se
AQ
AQ
AQ
X
61
C
239
1313*
**
Coloplast
Health Care
Dk
AQ
AQ
AQ
AQ
66
C
30592
46655
**
Copenhagen Airports
1
Industrials
Dk
AQ
AQ
AQ
AQ
33
-
3838
25652
Dampskibsselskabet NORDEN
Industrials1
Dk
AQ
AQ
AQ
DP
79
B
89474
623
**
Danisco
Consumer Staples
Dk
AQ
AQ
AQ
AQ
86
A
303807
477024
**
Danske Bank
Financials
Dk
AQ
AQ
AQ
AQ
66
B
4345
37101
**
DnB NOR
Financials
No
AQ
AQ
AQ
AQ
59
B
2001
10848
**
Industrials1
Dk
AQ
AQ
DP
NR
AarhusKarlshamn
Consumer Staples
Se
DP
X
X
X
Ahlstrom Corporation
Materials
Fi
AQ
AQ
AQ
DP
Aker
Energy
No
NR
NR
AQ
AQ
Aker Solutions
Energy
No
NR
X
X
X
Aktia
Financials
Fi
NR
X
X
X
Alfa Laval Group
Industrials
Se
AQ
AQ
AQ
AQ
Alk-Abelló
Health Care
Dk
NR
X
X
X
Alma Media Corporation
Consumer Discretionary
Fi
AQ
AQ
AQ
X
Amer Sports
Consumer Discretionary
Fi
DP
DP
DP
DP
Arendals Fossekompani
Utilities
No
AQ
X
X
X
Assa Abloy
Industrials
Se
AQ
AQ
AQ
AQ
Atea
Information Technology
No
AQ
AQ
X
Atlas Copco
Industrials
Se
AQ
AQ
AQ
Atrium Ljungberg
Financials
Se
AQ
AQ
Austevoll Seafood
Consumer Staples
No
NR
NR
Axfood
Consumer Staples
Se
AQ
Axis Communications
Information Technology
Se
Bang & Olufsen
Information Technology
Dk
Billerud
Materials
Boliden Group
Materials
Bonheur BW Offshore
NP
NP
NP
Scope 3
Carbon Performance Score
598371
A.P. Moller - Maersk
Non-public
C
2007 Response Status
55
2008 Response Status
886897
2009 Response Status
44001421
2010 Response Status
B
Country
66
Company
GICS Sector
Carbon Disclosure Score
Appendix 1 Company scores
**
**
55
Carbon Performance Score
Scope 1
Scope 2 65223
74
B
119161
294446
**
62
D
AQ
43
-
4088
1492
**
AQ
AQ
72
B
26000
175000
**
AQ
AQ
AQ
54
C
0
4689
X
X
X
AQ
AQ
AQ
AQ
61
B
2250700
15300
NR
DP
DP
X
Dk
AQ
DP
DP
DP
61
C
22000
51000
**
Utilities
Fi
AQ
AQ
AQ
AQ
82
B
22100000
186000*
**
Energy
No
NR
NR
NR
X
Frontline
Industrials1
No
AQ
NR
NR
IN
NP
62
C
F-Secure
Information Technology
Fi
NR
X
X
X
Ganger Rolf
Energy
No
NR
NR
NR
X
Genmab
Health Care
Dk
AQ
AQ
AQ
X
NP
24
-
Getinge
Health Care
Se
AQ
AQ
AQ
AQ
60
C
10180
20350
**
GN Store Nord
Health Care
Dk
NR
AQ
IN
IN
Golden Ocean Management
Industrials1
No
NR
NR
NR
X
Gunnebo
Industrials
Se
AQ
AQ
AQ
AQ
65
C
24700
6993
**
H Lundbeck
Health Care
Dk
AQ
AQ
AQ
AQ
80
B
10374
25835
**
H&M Hennes & Mauritz
Consumer Discretionary
Se
AQ
AQ
AQ
AQ
52
C
11951
238201
**
Hafslund
Utilities
No
AQ
AQ
NR
DP
71
C
78978
217787
**
Hakon Invest
Consumer Staples
Se
AQ
AQ
AQ
X
66
B
55636
219452
**
Hexagon
Industrials
Se
NR
DP
DP
AQ
HKScan
Consumer Staples
Fi
NR
X
X
X
Hoganas
Materials
Se
IN
X
X
X
Holmen
Materials
Se
AQ
AQ
AQ
AQ
60
C
252400
320000
**
Hufvudstaden
Financials
Se
AQ
AQ
AQ
AQ
NP
89
B
Huhtamäki
Materials
Fi
AQ
AQ
AQ
AQ
NP
40
-
Husqvarna
Consumer Discretionary
Se
AQ
AQ
AQ
NR
NP
60
D
Industrivärden
Financials
Se
IN
AQ
AQ
AQ
Indutrade
Industrials
Se
DP
X
X
X
Intrum Justitia
Industrials
Se
DP
AQ
AQ
X
Investment AB Kinnevik
Financials
Se
AQ
AQ
AQ
AQ
52
C
148129
2030
**
Investment AB Öresund
Financials
Se
NR
NR
NR
X
Investor
Financials
Se
AQ
AQ
AQ
IN
59
D
Jeudan
Financials
Dk
NR
X
X
X
JM
Industrials
Se
AQ
AQ
AQ
X
67
C
1603
2557
**
Energy
No
AQ
AQ
AQ
NR
No
NR
X
X
X
Industrials
Dk
AQ
AQ
DP
IN
Consumer Discretionary
No
NR
NR
NR
X
Electrolux
Consumer Discretionary
Se
AQ
AQ
AQ
AQ
Elekta
Health Care
Se
AQ
AQ
DP
IN
Elisa Corporation
Telecommunication Services
Fi
NR
DP
NR
NR
Eniro
Consumer Discretionary
Se
AQ
AQ
AQ
Ericsson
Information Technology
Se
AQ
AQ
Fabege
Financials
Se
AQ
Farstad Shipping
Energy
No
NR
Finnair
Industrials1
Fi
Fiskars Corporation
Consumer Discretionary
Fi
FLSmidth & Co.
Industrials
Fortum Corporation Fred. Olsen Energy
Company DNO International DOF
Energy
DSV Ekornes
56
1
NP
NP
Scope 3
Carbon Disclosure Score
2908267
2007 Response Status
-
2008 Response Status
38
2009 Response Status
-
2010 Response Status
42
Country
NP
GICS Sector
Non-public
Appendix 1 – Company scores
2007 Response Status
DP
DP
Kappahl Holding
Consumer Discretionary
Se
DP
X
X
X
Kemira Corporation
Materials
Fi
AQ
AQ
AQ
AQ
Kesko Corporation
Consumer Staples
Fi
AQ
AQ
AQ
AQ
Kone
Industrials
Fi
AQ
AQ
DP
X
Konecranes
Industrials
Fi
AQ
AQ
NR
AQ
Kongsberg Gruppen
Industrials
No
NR
NR
DP
X
Kungsleden
Financials
Se
AQ
AQ
AQ
NR
Lassila & Tikanoja
Industrials
Fi
AQ
AQ
AQ
X
Lemminkainen Group
Industrials
Fi
NR
DP
DP
X
Lerøy Seafood Group
Consumer Staples
No
NR
NR
X
X
Lindab International
Industrials
Se
AQ
AQ
AQ
X
Loomis
Industrials
Se
NR
X
X
X
Lundbergs
Financials
Se
NR
X
X
X
Lundin Petroleum
Energy
Se
AQ
AQ
AQ
DP
Marine Harvest Group
Consumer Staples
No
NR
DP
NR
AQ
Meda
Health Care
Se
AQ
AQ
AQ
X
Melker Schörling
Financials
Se
NR
DP
AQ
X
Metso
Industrials
Fi
AQ
AQ
AQ
Modern Times Group MTG
Consumer Discretionary
Se
AQ
AQ
DP
M-real Corporation
Materials
Fi
AQ
AQ
NCC
Industrials
Se
AQ
Neste Oil
Energy
Fi
AQ
NIBE Industrier
Industrials
Se
Niscayah Group
Industrials
Se
NKT Holding
Industrials
Nobia
Consumer Discretionary
Nokia Group
NP
38
-
73
C
61
B
71
C
68
C
66
C
62
Scope 3
2008 Response Status
DP
Scope 2
2009 Response Status
NR
Scope 1
2010 Response Status
Dk
Carbon Performance Score
Country
Financials
Carbon Disclosure Score
GICS Sector
Jyske Bank
Non-public
Company
186000 110960
26667
**
27
66386*
**
C
10393
18776
83
B
220600
2811*
**
63
C
14043
7785
**
AQ
61
C
92054
157759
X
62
C
532
5867
AQ
AQ
62
B
952462
391878*
AQ
AQ
AQ
59
C
188057
28618*
AQ
AQ
AQ
64
C
3981000
15000
**
DP
X
X
X
DP
X
X
X
Dk
AQ
AQ
AQ
DP
54
C
33408
79665
**
Se
AQ
AQ
AQ
AQ
46
-
34576
31346
**
Information Technology
Fi
AQ
AQ
AQ
AQ
91
A
18700
280600*
**
Nokian Tyres Group
Consumer Discretionary
Fi
AQ
AQ
NR
X
32
-
Nordea Bank
Financials
Se
AQ
AQ
AQ
NR
50
C
0
51519*
**
Norsk Hydro
Materials
No
AQ
AQ
AQ
AQ
59
B
4759247
5549911
**
Norske Skog
Materials
No
AQ
AQ
AQ
DP
83
B
698793
1671958
**
Norwegian Air Shuttle
Industrials1
No
NR
X
X
X
Norwegian Energy
Energy
No
NR
X
X
X
Norwegian Property
Financials
No
NR
NR
DP
X
Novo Nordisk
Health Care
Dk
AQ
AQ
AQ
AQ
89
A
40883
143319*
**
Novozymes
Materials
Dk
AQ
AQ
AQ
AQ
77
B
44000
387000
**
34
-
65
C
7907
23782
**
58
D
3887
22116
Odfjell SE
Industrials
No
IN
IN
X
X
Olav Thon Eiendomsselskap
Financials
No
NR
NR
DP
X
OP-Pohjola Group
Financials
Fi
AQ
AQ
AQ
AQ
Oriflame
Consumer Staples
Se
AQ
AQ
AQ
AQ
Oriola-KD
Health Care
Fi
NR
X
X
X
Orion Group
Health Care
Fi
AQ
AQ
AQ
AQ
1
NP
NP
NP
NP
**
57
2010 Response Status
2009 Response Status
2008 Response Status
2007 Response Status
Carbon Disclosure Score
Carbon Performance Score
Scope 1
Scope 2
Industrials
No
AQ
AQ
AQ
IN
71
C
1836064
844652
Outokumpu
Materials
Fi
AQ
AQ
AQ
AQ
86
B
573024
203455
**
Outotec
Industrials
Fi
AQ
AQ
NR
X
90
B
1349
7243
**
PA Resources
Energy
Se
AQ
DP
X
X
NP
13
-
Peab
Industrials
Se
AQ
AQ
NR
X
NP
20
-
Petroleum Geo-Services
Energy
No
AQ
AQ
AQ
AQ
NP
71
C
Pöyry
Industrials
Fi
AQ
NR
NR
X
NP
8
-
Pronova BioPharma
Health Care
No
AQ
AQ
DP
X
69
C
9312
1639
**
Q-Med
Health Care
Se
AQ
AQ
AQ
X
52
C
69
37*
**
Raisio
Consumer Staples
Fi
NR
X
X
X
Ramirent
Industrials
Fi
NR
NR
NR
DP
Ratos
Financials
Se
AQ
AQ
AQ
AQ
NP
18
-
Rautaruukki
Materials
Fi
AQ
AQ
AQ
X
NP
61
C
REC Group
Industrials
No
NR
NR
AQ
AQ
Rockwool International
Industrials
Dk
AQ
AQ
NR
X
78
B
1033727
250178
**
Royal Caribbean Cruises
Consumer Discretionary
No
AQ
NR
NR
NR
65
C
4108556
35049
Ruukki Group
Industrials
Fi
NR
NR
NR
X
SAAB
Industrials
Se
AQ
AQ
AQ
AQ
81
B
14633
21626*
**
Salmar
Consumer Staples
No
AQ
AQ
X
X
84
B
Sampo
Financials
Fi
NR
DP
DP
X
Sandvik
Industrials
Se
AQ
AQ
AQ
AQ
63
C
195000
284000
**
Sanoma
Consumer Discretionary
Fi
AQ
AQ
AQ
AQ
24
-
SAS
Industrials1
Se
AQ
AQ
AQ
AQ
25
-
3784000
SCA
Materials
Se
AQ
AQ
AQ
AQ
90
B
2579000
1771000
**
Scania
Industrials
Se
AQ
AQ
AQ
AQ
74
C
25347
36263
**
Schibsted
Consumer Discretionary
No
AQ
NR
NR
AQ
57
D
2883
2864
**
Seadrill Management
Energy
No
AQ
NR
DP
DP
38
-
SEB
Financials
Se
AQ
AQ
AQ
AQ
82
A
0
29000
**
Seco Tools
Industrials
Se
NR
DP
X
X
Securitas
Industrials
Se
DP
DP
DP
DP
Sevan Marine
Energy
No
NR
NR
NR
X
Simcorp
Information Technology
Dk
NR
X
DP
X
Sjælsø Gruppen
Financials
Dk
NR
NR
X
X
Skanska
Industrials
Se
AQ
AQ
AQ
AQ
85
B
258370
107880
**
SKF
Industrials
Se
AQ
AQ
AQ
AQ
71
B
69803
458752*
**
Solstad Offshore
Energy
No
NR
X
X
X
Songa Offshore
Energy
No
NR
X
X
X
Spar Nord Bank
Financials
Dk
NR
NR
DP
X
Sponda
Financials
Fi
NR
NR
AQ
X
SSAB
Materials
Se
AQ
AQ
AQ
DP
78
C
4000000
700993*
**
39
-
13100000
93
A
2931900
Statoil
Energy
No
AQ
AQ
AQ
AQ
Stockmann
Consumer Discretionary
Fi
DP
AQ
AQ
AQ
Stora Enso
Materials
Fi
AQ
AQ
AQ
AQ
58
NP
NP
Scope 3
Country
Orkla
Non-public
Company
GICS Sector
Appendix 1 – Company scores
** 2339100
**
Country
2010 Response Status
2009 Response Status
2008 Response Status
2007 Response Status
Carbon Disclosure Score
Carbon Performance Score
Scope 1
Scope 2
Financials
No
AQ
AQ
AQ
AQ
77
B
536
1390
**
Subsea 7
Industrials
No
AQ
AQ
AQ
X
67
C
230437
10132
**
Svenska Handelsbanken
Financials
Se
AQ
AQ
AQ
AQ
36
-
Sweco
Industrials
Se
NR
X
X
X
Swedbank
Financials
Se
AQ
AQ
AQ
AQ
67
C
0
2790*
**
Swedish Match
Consumer Staples
Se
AQ
AQ
AQ
AQ
45
-
15851
41569
**
Sydbank
Financials
Dk
NR
DP
DP
NR
Talvivaara Mining Company
Materials
Fi
AQ
X
X
X
60
D
34517
24547
**
TDC
Telecommunication Services
Dk
AQ
AQ
AQ
AQ
75
B
17088
123056
**
Teekay Petrojarl
Energy
No
AQ
AQ
AQ
AQ
45
-
709781
Tele2
Telecommunication Services
Se
AQ
AQ
AQ
AQ
70
C
678
8605
**
Telenor Group
Telecommunication Services
No
AQ
AQ
AQ
AQ
63
C
196414
613838
**
TeliaSonera
Telecommunication Services
Se
AQ
AQ
AQ
AQ
80
B
27672
178166*
**
TGS-NOPEC Geophysical Company
Energy
No
NR
NR
DP
NR
Tieto
Information Technology
Fi
AQ
AQ
NR
AQ
65
B
457
22327
**
Tomra Systems
Industrials
No
AQ
AQ
AQ
AQ
64
C
25150
5030*
**
Topdanmark
Financials
Dk
AQ
AQ
DP
NR
62
C
1709
4705
**
NP
Scope 3
GICS Sector
Storebrand
Non-public
Company
TORM
Industrials
Dk
AQ
AQ
AQ
NR
77
B
1819052
777
**
Trelleborg
Industrials
Se
AQ
AQ
AQ
AQ
69
B
115219
253639
**
TrygVesta
Financials
1
Dk
AQ
AQ
AQ
AQ
75
B
1869
1945
**
UPM-Kymmene Corporation Materials
Fi
AQ
AQ
AQ
AQ
90
B
2870000
2210000
**
Uponor Corporation
Industrials
Fi
AQ
NR
NR
DP
60
C
Vacon
Industrials
Fi
DP
X
X
X
Vaisala
Information Technology
Fi
AQ
X
X
X
67
C
1840
5530
**
Veidekke
Industrials
No
AQ
AQ
AQ
X
50
D
66500
6450
**
Vestas Wind Systems
Industrials
Dk
AQ
AQ
AQ
AQ
82
B
50523
68458*
**
Viking Line ABP
Consumer Discretionary
Fi
NR
X
X
X
Volvo
Industrials
Se
AQ
AQ
AQ
AQ
NP
57
C
Wallenstam
Financials
Se
AQ
NR
IN
X
NP
27
-
Wärtsilä Corporation
Industrials
Fi
AQ
AQ
AQ
AQ
69
C
96749
62211
**
Wihlborgs Fastigheter
Financials
Se
AQ
X
X
X
33
-
506
9130 9087
NP
Wilh. Wilhelmsen
Industrials
No
NR
IN
NR
X
William Demant Holding
Health Care
Dk
AQ
AQ
NR
DP
70
D
547
Yara International
Materials
No
AQ
NR
IN
AQ
38
-
12500000
YIT Group
Industrials
Fi
NR
DP
DP
DP
1
Key AQ: Answered questionnaire IN: Information provided DP: Declined to participate NR: No response X: Company not in sample that year NP: Response not made publicly available All emissions data are in metric tonnes CO2-e 1 Company belongs to the 'Transportation' industry group within the 'Industrials' sector. The report analysis addresses this Industry Group separately from the other Industry Groups in the Industrials sector. * Company also disclosed Scope 2 contractual emissions. Please refer to the company's response ** Company disclosed Scope 3 emissions. Please refer to the company's response 59
Appendix 2 Description of disclosure and performance scoring Carbon Disclosure Scores What does a CDP carbon disclosure score represent? The carbon disclosure score is normalized to a 100-point scale. Generally, companies scoring within a particular range suggest levels of commitment to, and experience of, carbon disclosure. Indicative descriptions of these levels are provided below for guidance only; investors should read individual company responses to understand the context for each business. High (>70) A higher score typically indicates one or more of the following: • Strong understanding and management of company-specific exposure to climate-related risks and opportunities • Strategic focus and commitment to understanding the business issues related to climate change, emanating from the top of the organization • Ability to measure and manage the company’s carbon footprint • Regular and relevant disclosure to key corporate stakeholders Midrange (50–70) A midrange score typically indicates one or more of the following: • Growing maturity in understanding and managing company-specific risks and potential opportunities related to climate change • Good evidence of ability to measure and manage carbon footprint across global operations • Commitment to the importance of transparency Low (50). However, they have disclosed limited evidence of actions taken on mitigation or adaptation. Companies in this band may include (1) those that believe that issues regarding climate change are not relevant to them and (2) those that are beginning to take action on climate change. As such, no further assertions can be made about their performance.
Nordic partners
Norway partner
Report partner
Report sponsor
Launch sponsors
Our sincere thanks are extended to the following Confederation of Danish Industry, Electrolux, Finnair and Innovation Norway for hosting our March workshops; Carlsberg, The Central Church Fund of Finland, The Norwegian Finance Ministry, Scandic Hasselbacken for hosting the 2009 launches; Stockholm University Department of Physical Geography and Quartenary Geology; British Embassies in Oslo and Stockholm.
63
CDP Contacts
Paul Simpson Chief Operating Officer
[email protected]
Amanda Haworth Wiklund Director Nordic Region
[email protected]
Zoe Tcholak-Antitch Head of Investor CDP
[email protected]
Emma Henningsson Project Manager Nordic Region
[email protected]
Sue Howells Head of Global Operations
[email protected]
Carbon Disclosure Project 40 Bowling Green Lane London, EC1R 0NE United Kingdom Tel: +44 (0) 20 7970 5660/5667 Fax: +44 (0) 20 7691 7316 www.cdproject.net
[email protected]
Report writers David Young Independent research analyst Rickard Lundgren Research Assistant, Jönköpings International Business School
CDP Board of Trustees Chair: Robert Napier The Met Office Alan Brown Schroders
Christoph Schroeder TVM Capital
James Cameron Climate Change Capital
Jeremy Smith Berkeley Energy
Takejiro Sueyoshi
Tessa Tennant
Report manager: Emma Henningsson Layout: Floda31
Important Notice The contents of this report may be used by anyone providing acknowledgement is given to Carbon Disclosure Project. JIBS and CDP prepared the data and analysis in this report based on responses to the CDP 2010 information request. JIBS and CDP do not guarantee the accuracy or completeness of this information. JIBS and CDP make no representation or warranty, express or implied, concerning the fairness, accuracy, or completeness of the information and opinions contained herein. All opinions expressed herein are based on JIBS and CDP’s judgment at the time of this report and are subject to change without notice due to economic, political, industry and firm-specific factors. Guest commentaries where included in this report reflect the views of their respective authors. JIBS and CDP and their affiliated member firms or companies, or their respective shareholders, directors, officers and/or employees, may have a position in the securities discussed herein. The securities mentioned in this document may not be eligible for sale in some states or countries, nor suitable for all types of investors; their value and the income they produce may fluctuate and/or be adversely affected by exchange rates. ‘Carbon Disclosure Project’ and ‘CDP’ refers to Carbon Disclosure Project, a United Kingdom company limited by guarantee, registered as a United Kingdom charity number 1122330. © 2010 Carbon Disclosure Project.
