On Behalf of 767 Investors Representing US$92 Trillion in Assets
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CDP South Africa Climate Change Report 2014 On behalf of 767 investors representing US$92 trillion in assets October 2014 Lead Partner Report writing and scoring partners National Business Initiative Irbaris and Incite Important Notice The contents of this report may be used by anyone providing acknowledgement is given to the National Business Initiative (NBI). This does not represent a license to repackage or resell any of the data reported to CDP or the contributing authors and presented in this report. If you intend to repackage or resell any of the contents of this report, you need to obtain express permission from the NBI before doing so. Incite, Irbaris, NBI and CDP have prepared the data and analysis in this report based on responses to the CDP 2014 information request. No representation or warranty (express or implied) is given by Incite and Irbaris, NBI or CDP as to the accuracy or completeness of the information and opinions contained in this report. You should not act upon the information contained in this publication without obtaining specific professional advice. To the extent permitted by law, Incite, Irbaris, NBI and CDP do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this report or for any decision based on it. All information and views expressed herein by CDP and/or Incite and/or Irbaris and/or NBI is based on their judgment at the time of this report and are subject to change without notice due to economic, political, industry and firm-specific factors. Guest commentaries where included in this report reflect the views of their respective authors; their inclusion is not an endorsement of them. Incite, Irbaris, NBI and CDP and their affiliated member firms or companies, or their respective shareholders, members, partners, principals, directors, officers and/or employees, may have a position in the securities of the companies discussed herein. The securities of the companies mentioned in this document may not be eligible for sale in some states or countries, nor suitable for all types of investors; their value and the income they produce may fluctuate and/or be adversely affected by exchange rates. ‘NBI’ refers to the National Business Initiative © 2014 National Business Initiative. All rights reserved. 1 Contents Minister’s Foreword 2 CDP CEO Foreword 3 NBI CEO Foreword 4 Key messages from 2014 5 Understanding the sample 25 Guest comment: KPMG South Africa 30 Self-selected companies 32 Guest comments: IDC and South African Post Office 33 The climate leaders 2014 34 Explanation 34 Climate Performance Leadership Index 35 Climate Disclosure Leadership Index 36 Key disclosure statistics 40 Sector analysis 44 Consumer Discretionary 46 Consumer Staples 48 Energy & Materials 50 Financials 52 Health Care 54 Industrials 56 IT & Telecoms 58 Appendices 60 Appendix 1 – Global key trends 2014 60 Appendix 2 – Emission reduction targets 62 Appendix 3 – Exclusion and qualifying remarks 72 CDP investor members 2014 74 CDP signatory investors 2014 75 To read 2014 company responses in full please go to https://www.cdp.net/en-US/Results/Pages/responses.aspx 2 Minister’s Foreword We encourage business to set more ambitious targets and drive innovation that challenges the norm of ‘business as usual’. As we launch this year’s South African CDP Climate as a regulator need not be an adversarial one: that Change report, it is both laudable and encouraging to cooperation is both preferable and beneficial. note that South African companies are increasingly taking critical first steps towards climate change mitigation. South African companies have been engaging with climate change strategy, risk and opportunity and Almost half of the JSE100 companies surveyed for this management for many years, and are well positioned year’s CDP scored above 90/100 on disclosure. Given to understand both the need for change as well as the that disclosure is the cornerstone of all future mitigation challenges and opportunities of implementation. There is efforts, these results are to be commended. The average extensive progress in improving energy efficiency across disclosure score for the South African companies all sectors, mostly led by industry. However, translating surveyed for the report is 87 out of 100, up from a recognition of the risk posed by climate change has median of 83 in 2013. to be met with an overall integrated, wide-reaching risk management response. Despite the significant The findings of this year’s report indicate that South improvement in the number of companies achieving net African businesses recognise climate change as a major emission reductions this year (51% up from 41% in 2013), issue- with equally significant impact. That nine local this remains too low to have a significant impact. And companies have made the Global Climate Performance although 76 per cent of companies have set emission Leadership Index (CPLI) this year – up from eight in 2013, reduction targets, these do not match either the scale of further demonstrates a commitment to align climate the challenge, or the global emission reduction targets change mitigation efforts with overall business objectives. promised by South Africa. The actions undertaken by the South African companies analysed in this report also go a long way towards The UN Climate Summit in New York on 23 September bolstering South Africa’s role on the global stage. South 2014 demonstrated a growing alignment of world Africa is taking bold steps to reduce greenhouse gas leaders towards taking action on climate change. The emissions – towards our commitment of a 34% and announcements made by heads of government, and 42% deviation from a ‘business as usual’ emissions leaders of industry, combined with pledges to resource the growth trajectory by 2020, and 2025 respectively. Green Climate Fund are positive signals that the world is responding proactively to the global challenge of climate Working with industry, we have done extensive work to change. It is a momentum we hope to sustain ahead of analyse the emission reduction potential in key economic COP21 in Paris next year, when negotiations under the sectors, and to understand the social and economic Durban Platform must be finalised. As we strive towards opportunities and impacts of reducing emissions. This making a fair contribution to the global effort to stabilise work will lead to the establishment of sectoral emission greenhouse gas concentrations, we look forward to reduction outcomes, and carbon budgets for specific working with industry. The companies recognised in this companies, where appropriate. year’s report are to be congratulated and encouraged: their contribution has not gone unnoticed. We encourage Because we know that climate change is a problem that business to set more ambitious targets and drive government cannot solve alone. The findings of CDP innovation that challenges the norm of ‘business as usual.’ South Africa 2014 show business to be a willing and leading partner in this collaboration. They also evidence Mrs B E E Molewa, MP that the relationship between industry and government Minister of Environmental Affairs 3 CDP CEO Foreword One irrefutable fact is filtering through to companies and investors: the bottom line is at risk from environmental crisis. The global economy has bounced back from crisis and a to limit greenhouse gases in the US. In the EU, some cautious optimism is beginning to pervade the markets. 6,000 companies will be required to disclose on specific As we embrace recovery we must remember that levels environmental, social and governance criteria as part of greenhouse gas emissions continue to rise and we of their mainstream reporting to investors. In China face steep financial risk if we do not mitigate them. over 20,000 companies will be required to report their The unprecedented environmental challenges that we greenhouse gas emissions to the government. confront today – reducing greenhouse gas emissions, safeguarding water resources and preventing the There is a palpable sea change in approach by destruction of forests – are also economic problems. companies driven by a growing recognition that One irrefutable fact is filtering through to companies there is a cost associated with the carbon they emit. and investors: the bottom line is at risk from Measurement, transparency and accountability drive environmental crisis. positive change in the world of business and investment. Our experience working with over 4,500 companies The impact of climate events on economies around the shows the multitude of benefits for companies that world has increasingly been splashed across headlines report their environmental impacts, unveiling risks and in the last year, with the worst winter in 30 years suffered previously unseen opportunities. by the USA costing billions of dollars. Australia has experienced its hottest two years on record and the UK We are standing at a juncture in history. With the 1 has had its wettest winter for hundreds of years costing prospect of a global climate deal coming from the the insurance industry over a billion pounds. Over three United Nations process, governments, cities, the private quarters of companies reporting to CDP this year have sector and civil society have a great opportunity to take disclosed a physical risk from climate change. Investing bold actions and build momentum in the run up to the in climate-change-related resilience planning has Paris 2015 meeting. The decisions we make today can become crucial for all corporations. lead us to a profitable and secure future; a future that we can all be proud of. Investor engagement on these issues is increasing. In the USA a record number of shareholder resolutions in the 2014 proxy season led 20 international corporations to commit to reduce levels of greenhouse gas emissions or sustainably source palm oil.