ICF Consulting Analyses New Carbon Disclosure Project Report on Climate Change

Last week’s release of The Third Carbon Disclosure Report (CDP3) provided some insights into how companies in the Financial Times Global 500 (FT500)—the world’s 500 largest companies by market capitalisation—are managing greenhouse gases (GHG). ICF Consulting has a unique vantage point from which to comment on CDP3’s findings through the valuable insights it has gained advising more than 50 of the FT500 in the design and implementation of their strategies to manage GHGs.

“CDP3, supported by investors with assets of US$21 trillion, has successfully increased the participation of both the investment community and respondent companies among the FT500. This is a tremendous achievement. In the year that has passed from CDP2 to CDP3, global carbon markets have rapidly matured and clearer signals have emerged about the price of carbon. As carbon constraints become more financially material, however, there may be diminishing returns from future CDP efforts in obtaining meaningful insights through an investor survey approach,” says Craig Ebert, an ICF Consulting Executive Vice President who manages the firm’s global climate change services.

“One of the limits of CDP is that informed investor decisions must be predicated on a much more rigorous analysis of each company’s individual portfolio of operations, product markets, marginal costs of abatement, and ability to pass on carbon costs. For example, one of the early lessons of the European Union Emissions Trading Scheme (EU ETS) is that there is not a correlation between carbon intensity and the level of financial exposure, yet many financial analysts continue to use this metric as a key indicator,” says Abyd Karmali, an ICF Consulting Senior Vice President who leads the firm’s climate strategy services in Europe.

“From our experience, the financial benefits realised by companies that have developed and introduced to market low-carbon technologies or products are often much more financially material than costs of individual operations’ exposure to carbon constraints,” says Mr. Karmali. “Each company’s overall approach to carbon management is increasingly becoming a distinct source of competitive advantage—akin to key decisions that it makes on selecting geographic markets, managing its supply chain, or investing in technology. We detect a trend in CDP3 for companies to shy away from revealing their strategies. This is appropriate given the opportunities for companies to derive significant financial returns from taking innovative approaches to carbon management.”

About ICF Consulting
ICF Consulting (http://www.icfconsulting.com) is a leading management, technology, and policy consulting firm. Drawing upon extensive industry knowledge, distinguished professionals, and innovative analytics, the firm develops solutions to complex defense, homeland security, energy, environment, social program, and transportation issues. ICF Consulting’s approach to these issues is strengthened by its expertise in information technology, organisational improvement, program management, and communications. Since 1969, ICF Consulting has been serving major corporations, government at all levels, and multinational institutions. More than 1,200 employees serve these clients from key business centers in the Americas, Europe, and Asia.