Some of the world’s biggest companies are reducing their emissions at a faster-than-expected pace, in some cases the equivalent of what an entire country can produce in a year. But what does the effort yield to their investors?
Managing the environmental impact of businesses across the world could bring trillions to the global economy in business opportunities, Sherry Madera, CEO of CDP told Euronews’ Hannah Brown in this episode of The Big Question.
CDP, a not-for-profit charity that runs a global disclosure platform for climate and nature data, works with some of the world’s biggest companies, including Walmart and Apple.
Madera cited various projections, with some suggesting that, if businesses manage their emissions effectively, “global GDP should be increasing by 7% by 2030.”
If not addressed, there is a risk of a “20% decrease in GDP over the course of the next 20 years in various parts of the world.”
“Data for data’s sake is actually worth nothing”
According to Sherry, the secret to boosting global GDP lies in companies disclosing “credible data and setting achievable science-based targets. It turned out to bring millions of euros to some major European companies.”
She went on: “In Europe alone, we identified in 2023 through the CDP disclosures, $3.47tn (€3.4tn) worth of opportunity that comes from making changes in order to lean into a sustainable future”, adding that those opportunities cost for the same companies “only $620bn (€607bn) in relation to that $3.47tn”.
Sharing credible data brought €15m worth of benefit to Dutch brewing company Heineken. “They were able to add their disclosure on climate into some of the disclosures that they have to their credit ratings, and this decreased their cost of capital.”
For other companies, the business opportunity can come in the shape of “an R&D opportunity to change the product or the offering that they put into the marketplace in order to be more sustainable,” said Madera.
According to CDP, credible data to proactively lower emissions is something investors are increasingly focusing on and may have a major impact on where private equity migrates.
Over 700 of the world’s largest investors representing $142tn (€138tn) worth of assets are requesting this data through CDP.
It’s increasingly important for the public, too. “Without the information, we may inadvertently put our money into companies that we don’t stand behind, that we don’t believe are the right companies for a sustainable future,” said Madera.
Though Madera focused on the importance of declaring data, she stressed that, without any action, it’s worth nothing.
“Less than 1% of companies that disclose to CDP that they have a transition plan are credible transition targets,” she pointed out.
Disclosing data comes hand in hand with lowering emissions
CDP has been the world’s global disclosure platform for climate and nature data since 2000 and they have more than two thirds of the world’s market capitalisation that report to them.
It’s not just basic carbon accounting that companies disclose, it also includes everything from scope 1, scope 2 and scope 3, which is responsible for ESG, for sustainability and climate metrics within a company, water usage, scarcity, and impacts on nature.
“Once a company discloses to CDP, within two years their emissions go down by 7-10%.”
The Big Questionis a series from Euronews Business where we sit down with industry leaders and experts to discuss some of the most important topics on today’s agenda.
Watch the video above for the full conversation with Sherry Madera, CEO of CDP.
Video editor • Vassilis Glynos
