Warren Buffett’s Berkshire among CDP’s climate impact disclosure laggards

Warren Buffett’s Berkshire Hathaway has remained alongside oil and mining groups Chevron, ExxonMobil and Glencore among the nearly 17,000 companies graded an “F” after failing to provide any environmental data to CDP, a non-profit group that runs a global disclosure system.

The slow response by the majority of companies in providing full disclosure about their climate change exposure runs counter to the growing number of corporate pledges made ahead of the COP26 UN climate summit to reach net zero greenhouse gas emissions in order to limit global warming.

More than 13,000 companies worldwide reported environmental data to CDP in 2021, though their disclosure standards varied widely. CDP was founded in 2020 as the Carbon Disclosure Project with a mission to provide information on climate impact to investors, companies and governments.

“Almost 17,000 corporates failing to even take the first step and report their environmental data is far too many,” said Dexter Galvin, CDP’s global director of corporations and supply chains. “If they continue with business as usual, they will end up on the wrong side of public opinion, regulation and investor sentiment.”

Investors and regulators worldwide are pressing for urgent improvements in reporting and disclosure standards in response to the growing problem of “greenwashing” where companies make misleading claims about their environmental credentials.

Just 272 companies merited an A score from CDP based on their transparency and performance on climate change or water security or deforestation in its sixth annual assessment of environmental and reporting standards.

Only 14 companies achieved a triple A score for their performance across all three environmental themes in 2021. They included food groups Danone and Unilever, as well as less obvious candidates such as tobacco group Philip Morris, which is aiming to diversify into alternative products.

Galvin said there were signs of improvement in the quality of disclosures, with 509 companies moving up in the ranking from a score of “C” or below in the previous year to “B” in 2021. CDP judges that these companies are now taking action to manage their impact, instead of merely disclosing it.

But more than half of the 13,000 companies that did report to CDP were scored as “C” or “D”, meaning they were only just beginning to recognise their environmental impact.

Carola van Lamoen, head of sustainable investing at Robeco, the Dutch asset manager, said more transparency and comparability of environmental disclosures were needed across the corporate world. “Investor expectations on climate, water, biodiversity and deforestation data have risen drastically in recent years and there is no doubt that this will continue,” she said.

The creation of a new body known as the International Sustainability Standards Board to craft a globally consistent set of environmental reporting standards for companies was announced at the COP26 climate conference in Glasgow last month.

“COP26 highlighted the necessary role that companies will play in driving the real economy changes necessary to tackle the climate change emergency,” said Galvin.

CDP said it also planned to develop its scoring methods to focus on how companies were performing against scientific benchmarks. It also intended to broaden its coverage over the next five years to include biodiversity, oceans, waste and food to help investors make a much more comprehensive assessment of a company’s impact on nature.

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