SA business committed to decrease carbon emissions, report finds

The CDP surveys more than 5000 companies worldwide on behalf of 655 institutional investors (CDP signatories) representing USD78 trillion in assets. This is the sixth annual CDP report for the South African business sector with 78 leading companies responding, with an encouraging increase of 13 companies responding voluntarily to the CDP questionnaire, despite falling outside the JSE 100 sample.

The CDP in South Africa is a long-standing partnership between the London-based CDP and the National Business Initiative (NBI). The South African CDP is supported by KPMG as the lead sponsor, Element Investment Management, the Industrial Development Corporation and the South African Post Office. Analysis of questionnaires sent to companies and compilation of the CDP report was undertaken by Incite Sustainability with input from the NBI.

The CDP requires companies to disclose information relating to their management of strategy, risks and opportunity, data management and performance with reference to climate change. Each company is given a score for transparency of disclosure (0 to 100) and performance (a band A to E). "In this way we are able to gauge how seriously SA companies consider climate change, how they express this in public communication and the effectiveness of their action."

A material reduction

The report shows there has been "a material reduction" in the reported greenhouse gas emissions of South Africa's top companies. Total reported direct (scope 1) emissions for 2012 decreased from 137 million tons of carbon dioxide equivalent (tCO2e) in 2011 to 132 million tCO2e in 2012, while indirect (scope 2) emissions reduced from 98.4 million tCO2e in 2011 to 86.6 million tCO2e in 2012.

The report further notes that "building on previous years, the results of CDP South Africa 2012 reflects the trend of increasing engagement by the South African business sector in anticipating and responding to climate change issues". The average carbon disclosure score of all publicly responding companies is 82, up from 76 in 2011, 74 in 2010, and 62 in 2009. This compares favourably with the average disclosure score of 77 for the Global 500 (the CDP survey of the world's 500 largest companies).

This acknowledgement and management of climate change as a genuine business risk and the opportunities it brings reflects positively on South African companies, reassuring investors.

Investor confidence in South Africa is under pressure

Joanne Yawitch, CEO of the NBI said: "in a context in which investor confidence in South Africa is under pressure, South African transparency and performance in what is an investor-led initiative is a shining light. It would appear that South African businesses have also entered an implementation phase and have been focusing on practical steps to improve disclosure, and are also addressing performance."

While climate change is one critical aspect of sustainable business and society it cannot be considered done, commented Yawitch. "Although climate change is an important issue, if there is one thing 2012 has taught us, our collective consideration of implementation needs to extend to the subtle interactions between economic, social and environmental issues. We need a holistic, participative approach as we consider how to transition to a green and sustainable economy."

The CDP ranks companies on two levels. A Carbon Disclosure Leadership Index (CDLI) rates companies in terms of the levels of transparency and quality of disclosure of their GHG emissions. A Carbon Performance Leadership Index (CPLI) ranks the companies in terms of their emissions reduction targets and progress in meeting them.

Twelve companies qualified for this year's CDLI. In a South African first with 100 normalised points is the overall leader Exxaro Resources, followed by Gold Fields with 99 and Harmony Gold Mining with 98. Gold Fields was last year's highest scorer with 98. As a sector, Energy and Materials achieved the highest average disclosure score, followed closely by Industrials and Health Care.

There has been a general increase in rating in terms of carbon performance bands, accompanied by an increase in the number of companies qualifying for the CPLI. This year six companies qualified for the CPLI: Anglo American, Barloworld, FirstRand, Gold Fields, Mondi and Woolworths Holdings (listed alphabetically), up from two companies in 2011 (British American Tobacco and Gold Fields).

Leaders in disclosure and performance

Addressing SA business leaders at the results release ceremony, Paul Dickenson, founding CEO and current chairman of CDP in the UK, commended local business for being leaders in disclosure and performance over the past few years. "SA's disclosure rate is second to the UK, which shows the leadership of your industry. You have great scientists and experience in the power of collective action to solve problems; this allows us to learn from you on many initiatives such as corporate governance."

The number of companies with greenhouse gas (GHG) emissions reduction targets continues to increase, 43 companies this year compared to 40 in 2011. The report advises that "this improvement is commendable".

Neil Morris, director of climate change and sustainability services of KPMG said: "Whilst a global deal on climate change at the forthcoming COP18 at Doha remains worth fighting for, the real momentum for action on climate change comes from the increasing groundswell of corporate initiatives reflected in this year's CDP results. In the context of challenging economic conditions and weak political resolve in international negotiations, we can take a lot of heart from the leadership shown by South African companies in driving positive action on climate change."

This comes as a few carbon-intensive companies continue to dominate South Africa's direct GHG emissions. The data highlights the continuing predominant contribution of a few large emitters, notably:

• Sasol (with reported annual scope 1 emissions of 61.4 million tCO2e)
  
• Arcelor Mittal South Africa (10.9 million tCO2e)
  
• BHP Billiton (3.2 million tCO2e)
  
• Anglo American (3 million tCO2e)
  
• Sappi (2.8 million tCO2e)

Placing this in context, Eskom's publicly reported calculated emissions of carbon dioxide for the year ending March 2012, is 231.9 million tCO2e. Additionally, Transnet's total GHG emissions for 2011/2012 were reported at 4.3 million tCO2e. Taken together with Eskom, the responding companies in the JSE account for more than 64% of the country's total estimate emissions of approximately 521 million tCO2e.

South Africa's participation in CDP 2012 compares positively to that of other developing region samples such as Brazil 80 (65%), China 100 (23%), India 200 (26%) and Russia 50 (8%). The report further notes "the comparative leadership being demonstrated by South African business parallels the leading role that it is seen to be playing internationally on issues such as corporate governance standards, sustainability and integrated reporting."

Download the full 2012 CDP report and executive summary at www.nbi.org.za.

For further information on the CDP project, including all global and regional reports, go to www.cdproject.net.