Carbon Disclosure Project Transport Report
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Carbon Disclosure Project Transport Report Analysis based on CDP 2009 data Carbon Disclosure Project www.cdproject.net +1 212 378 2086 [email protected] Carbon Disclosure Transport Report 2010 Transportation and logistics are critical to the global marketplace. The sector’s impact, both financial and environmentally, is evident in every corner of the globe. Transportation is responsible for almost 60% of oil consumption in OECD1 countries and for 13% of all global emissions. The industry also employs millions of people and facilitates the flow of goods and commerce that lead to economic prosperity. In light of this impact, the Carbon Disclosure Project (CDP) has produced its first report on the industry. Worth noting is the broad range of transportation companies that are represented in this report. There are airports, passenger and cargo airlines, railroads, logistics companies, small package delivery companies, surface transportation companies and sea freight companies, to name a few. Each has its own unique challenges to mitigate their carbon footprint, lower emissions and address climate change. And many are doing their best to take action. But the Transport sector is behind other industries in terms of environmental impact reporting and goal-setting. Based on this report’s findings, many transport companies also are struggling with identifying and reporting climate- related risks and complete carbon emissions. As a member of CDP’s Global Carbon Disclosure Leadership Index, we encourage our peers to comprehensively report on their environmental impact, to develop plans to reduce carbon emissions, and to work collaboratively to address climate change. This report offers good information about best practices, emerging standards, market trends and investor expectations. It also highlights the market and financial opportunities that exist for the industry. Our industry indisputably has a responsibility to address its environmental impact. We encourage the companies in our industry to act decisively to ensure a greener planet. Bob Stoffel UPS Senior Vice President Supply Chain, Strategy Engineering and Sustainability 1. Organisation for Economic Co-operation and Development. 2 Introduction The Transportation sector impacts and Methodology The report is divided into six sections: serves the vast majority of the business community. It is also one of the fastest- In 2009 CDP issued its annual global 1) Market Overview – Outlines the growing energy demand sectors. climate change information request to current operating climate for the Transportation plays a crucial and 3,700 companies. This included the Transportation sector in terms of growing role in world energy use and world’s 291 largest publicly traded climate change. The analysis is based is strongly dependent on oil supplies. transportation companies (by market on the data from 291 companies in As a result it is a major contributor to capitalization). The corporate data this sector. greenhouse gas emissions. This has led received in response to CDP’s annual to concerns about its impact on climate requests provides investors with vital 2) Geographical Trends – Provides an change, which have put the sector high information regarding the current and assessment of key geographical on the political agenda. In the coming prospective impacts of climate change trends in the Transportation sector. era of carbon emission constraints, on their portfolios, and represents an The analysis is based on the data transportation companies will have to important resource for investment from 291 companies in the sector. reduce their dependence on fossil fuel decisions. energy. This will require energy to be 3) Risks & Opportunities – Assesses used more efficiently and consumption The CDP questionnaire covers four companies’ analysis of risks and to be switched to low or zero-carbon major areas: opportunities, with particular focus sources2. Regulatory changes and on regulatory, physical and market further investment into research and a) Risks & opportunities that climate related risks. The analysis is based development (R&D) and into alternative change presents to business; on the data from 53 largest fuels by both companies and the transportation companies drawn government will also be required. b) Greenhouse gas emissions from MSCI World Index. accounting; CDP’s first Transportation sector report, 4) Target setting in the Transportation based on data submitted by the world’s c) Management strategy to reduce sector – Provides an analysis of target largest transportation companies to CDP emissions, minimize risk and capitalize setting, based on the data from 53 in 2009, sets out to show the sector’s on opportunity; and transportation companies in the MSCI level of preparation for increased carbon World Index. constraints and the transition to the low d) Corporate governance with regard to carbon economy. The report examines climate change. 5) Strategic Drivers in Setting Reduction geographic trends and how the sector Targets – Looks at internal and is currently positioned in terms of climate CDP drew on two datasets for the external drivers in terms of carbon change. It focuses on climate change analysis. The trend analysis within the management and target setting. The associated risks, opportunities and report focuses on the responses of 291 analysis is based on the data from 53 regulatory drivers. Using primary data, companies in the Transportation sector. companies in the MSCI World Index. it also considers measures adopted The 291 companies are drawn from the and future plans and investments into transportation companies featured in 6) Emission Mitigation Strategies low carbon solutions, as well as the major indices that received the CDP and Investments – Addresses the focusing on the external drivers that 2009 information request. In order to drill strategies adopted by transportation are forcing the sector to adapt towards down into the drivers of behavior and companies to mitigate emissions. more carbon efficient management strategies within the Transportation sub The analysis is also based on the practices in preparation for a carbon sectors, CDP undertook more detailed data from 53 companies in the constrained future. analysis of a smaller group (53) of the MSCI World Index. Investment into world’s largest transportation companies, emissions reductions is also analyzed, drawn from the MSCI World Index 3, based on the 291 companies. submitted to CDP in 2009. These 53 companies are among the largest in the sector in the world. 2. Low or Zero-Carbon Sources Are Crucial for Future Energy Security, Ecology Global Network, April 2010. 3. The MSCI World is a stock market index of over 1500 ‘world’ stocks from developed markets as defined by MSCI. 3 Carbon Disclosure Report 2010 Summary other sectors within the Global 500. 64% of Global 500 companies outline Road transportation generates a regulatory risks and 69% of companies significant share of emissions regulatory opportunities. However, those Splitting the sector broadly into the transportation companies that do report three areas of land, air and sea reveals climate change risks and opportunities that road transportation accounts for show a detailed understanding of the approximately 80% of the Transportation issues. In particular, regulatory risks such sector’s total contribution to CO2 as caps and taxes are most frequently emissions, while rail accounts for just cited. In addition companies cite other 0.5%. Air represents approximately 13% risks such as increased operating costs, of the share of CO2 emissions, with sea increases in extreme weather and transportation at just 7%.4 associated disruption and decrease of high carbon services. South American and European companies lead on putting emission Some companies capitalize on reduction plans in place the opportunities A geographic focus on the full set of Leading companies are also identifying 291 Transportation companies in CDP and developing opportunities in new 2009 reveals that South American and low carbon fuels and advanced European companies demonstrate technology vehicles (such as hybrids the highest levels of setting reduction or hydrogen vehicles). They also report targets.5 In South America, 60% and that competitive advantages can be in Europe 52% of all transportation achieved through carbon efficient companies asked to report through CDP products and cost savings from have set an emissions reduction plan, increased fuel efficiency. compared to 18% in Asia and 47% in the US and Canada. A small minority are reporting significant low carbon investments Transportation companies lag Some companies are reporting behind Global 500 in setting targets significant investments into carbon 36% of the largest 291 transportation reductions and low carbon technologies. companies have set reduction targets, Although carbon investment reporting compared to 51% within of the largest is in its infancy, with just 9% of 291 global companies (Global 500 index of companies reporting data on current companies 6). This shows that many investments and 4% on future more transportation companies need to investments, significant capital is flowing set reduction plans in order to catch up into the development of low carbon with other sectors. solutions in the sector. US$31.93 billion has been invested into low Nearly half of the world’s carbon investments in the sector. New largest transportation companies technologies include installation of have not yet recognized risks renewable energy systems;