This week, the Center for Energy & Environmental Security (CERES), and the Environmental Defense Fund released a new report entitled “Reclaiming Transparency in a Changing Climate: Trends in Climate Risk Disclosure in the S&P 500 since 1995” (PDF). This report takes an in-depth look at how leading companies are addressing the issue of climate change in the annual reports that they prepare for investors.
In spite of the fact that climate change is an issue that will impact the bottom line of almost every major industry, 76.3% of the 2008 annual reports by companies in the Standard & Poor’s 500 (S&P 500) list did not mention climate change even one time in their reports. Only 5.5% of these reports identified a risk posed by climate change and fully articulated a strategy for addressing these risks.
While these numbers are disappointing as a whole, there is reason for encouragement in this report as the number of companies addressing climate change in their annual report is increasing. From 2007 to 2008, the number of companies that did address climate change increased from 13.3% to 23.7% and the number has increased every year since 1999. Much as we have seen an increase in the importance of Corporate Social Responsibility/CSR reporting in the past several years, we are starting to see more companies address the financial impact of climate change on their business. Here is to hoping that the number of companies reporting on this issue continues to grow in 2009.