Investors say Facebook, Tesla and many other companies are hiding climate impact
- More than 700 large companies worldwide have failed to disclose their environmental impact, according to an investor group representing nearly $10 trillion in funds.
- The group says companies such as Amazon, Facebook and Alibaba, as well as fossil-fuel giants Exxon Mobil, BP and Chevron, need to be more transparent about dealing with climate change.
Investors are increasingly focused on the environmental impact of the companies they back — if that can readily be determined.
To that end, a consortium of investors on Monday urged more than 700 companies to detail their plans for dealing with climate change. Nearly 90 banks, pension funds and money managers are calling on the businesses to disclose their level of greenhouse-gas emissions and to explain how they will adjust both to global warming and the transition to a low-carbon economy.
Targets of the campaign include household corporate names such as Berkshire Hathaway, Facebook, Netflix, PayPal and Tesla. Investors are also leaning on fossil-fuel companies, including BP, Chevron and ExxonMobil that formerly disclosed their environmental impact but no longer do.
"Investors are telling companies, 'This disclosure is important to us — please explain why you did not disclose or please disclose your climate change impact,'" said Emily Kreps, global director of investor initiatives at CDP, a nonprofit that provides a platform for corporations to disclose their environmental risks.
The 88 investors behind the campaign manage a total of nearly $10 trillion in funds.
"Climate change, deforestation and water security are critical challenges that require immediate action," Sophia Cheng, chief investment officer at Cathay Financial Holdings, said in a statement. "[T]his campaign should improve corporate transparency and help investors better manage these environmental risks and opportunities."
CDP, formerly known as the Carbon Disclosure Project, pushes corporations and cities to disclose their environmental risks in a standardized format, focusing on risks around climate change, deforestation and water scarcity. It also grades companies based on what they report. A grade of "F" means that a company discloses nothing in CDP's system, while a grade of "A" means a company is well-prepared to transition to a low-carbon world, said Kreps.
"That disclosure is not high-emissions/low-emissions, but it's based on the level of transparency," she added. "What investors are saying is, 'We want to see where you are, how we can evaluate you relative to other companies in the space.'"
Juicing up disclosure
Some of the companies that received a failing grade do issue information on their climate impact. But because it's not in the standardized format CDP asks for, it's harder for investors to parse, CDP argues.
Amazon, which has long drawn fire from some investors for its environmental record, has set a goal of producing zero emissions in the long run. At the same time, the online retailer hasn't specified a deadline to reach that target.
Electric car maker Tesla, whose mission statement calls for "accelerating the world to sustainable energy," publishes figures on how many tons of carbon emission its vehicles have saved. But it hasn't filled out CDP's extensive questionnaire, which asks companies to quantify the carbon emissions along its supply chain and detail how various aspects of their operations could be affected by effects from climate change. For that, CDP gives it an F.
"We would really like to see Tesla disclose, and we think they have a lot of value to demonstrate—they're different than a traditional combustion-engine car," Kreps said. "But an investor evaluating the company would want to know, how do we compare Tesla to, say, Ford?"
Ford, incidentally, gets a grade of A- from CPP. The Detroit automaker lists possible losses over the long term of $77 million if some countries were to impose tighter restrictions on fuel efficiency, as well as more than $350 million in potential damage from severe weather like hurricanes and droughts.