A new report released today by CDP, the global non-profit, provides fresh insight into the impact of investor engagement on companies causing the greatest environmental damage. The report outlines the results of CDP’s 2022 Non-Disclosure Campaign, an initiative which harnesses the power of investors to encourage global companies to report environmental data. The results of the campaign show more investors are onboard than ever – a record 260 financial institutions with nearly $US30 trillion in assets participated. This is a 56% increase over 2021. These institutions – including HSBC, Cathay Financial Holdings, and Schroders – were taken from 30 countries and engaged 1,466 global companies to report on climate change, forests, and water security. 388 of these companies, or 26%, responded.
A key finding from the campaign is that companies were 2.3 times more likely to respond when directly engaged by financial institutions compared to a control group. Companies targeted by financial institutions covered the full breadth of the global economy, ranging from manufacturing to fossil fuels, hospitality to health care. Those disclosing for the first time as a result of investor engagement include some of the world’s biggest brands, such as Mitsubishi Logistics Corporation (disclosed on climate), Costco (disclosed on forests), Honda (disclosed on forests and water), Levi Strauss (disclosed on water), and Samsung SDI (disclosed on water).
Claire Elsdon, CDP’s global director of capital markets, said: “This campaign shows the power of direct engagement. Financial institutions are more aware of their role in tackling the economic threats posed by the climate and nature crises. By pushing companies in their portfolio to disclose – some of which have huge environmental impacts – they can kickstart a fundamental and positive change in how businesses operate.”
The findings show the number of companies asked to report on forests and water security increased substantially in 2022 – 35% and 51% – showing how financial institutions are becoming more aware of the need to address both the climate and nature crises. This led to increased disclosure rates in these areas with companies targeted on forests were 3.2 times more likely to respond and 2.2 times for water security. This is particularly encouraging in the run up to the UN 2023 Water Conference in March. The Non-Disclosure Campaign, first started in 2017, has shown time and again that engagement works, for example, 90% of companies asked to disclose in 2021 for the first time responded again this year. Consistency is key and can drive greater ambition in tackling climate change, deforestation and water security.
The geographical spread of engagement remains weighted towards Europe and the United States, but there are signs of improvement across Latin America, Africa, and Asia. Companies in China, for example, were four times more likely to respond after engagement from shareholders. 26 companies disclosed to CDP for the first time in 2022, including firms with a major environmental footprint, such as Alibaba Group (disclosed on climate), China Merchants Bank (disclosed on climate) and Longi Green Energy Technology (disclosed on water).
Companies targeted in the campaign that did not disclose through CDP in 2022 include Tesla, Exxon Mobil and Berkshire Hathaway.