Companies Suffer “Huge Missed Opportunity” In Failing To Report Strong Environmental Performance

Companies that fail to report financial value from strong environmental performance suffer “a huge missed opportunity” according to new reports published this week which analyzed environmental performance and financial results.

Specifically, the two new report found that four in ten telecommunications and consumer goods companies which report to CDP (formerly the Carbon Disclosure Project) fail to capture or report any financial value from strong environmental performance. Further, the largest emitters in the global economy — which are responsible for 50% of carbon emissions reported to CDP — account for a cumulative $447 billion in potential growth and savings opportunities thanks to regulatory changes and the physical and related impacts of climate change, but 42% don’t quantify or report the potential value.

“We see this as a huge missed opportunity for companies. Reporting on financial value through environmental performance allows businesses to build investor trust, provide meaningful transparency and help ensure long-term profitability,” said Justin Keeble, Managing Director, Accenture Strategy. “Through this partnership with CDP and Hermes, we’re bringing Accenture Strategy industry-leading insights to help companies focus on sustainability as a means for value creation.”

Published this week by Accenture, CDP, and Hermes Investment Management, the two new reports looked individually at the financial value of environmental performance in consumer goods companies, and in the telecommunications industry. 

The reports also found that climate and environmental risks worth at least $700 billion in impacts are poorly understood and under-quantified, despite increasing pressure from investors in both sectors.

“The bottom line is that environmental performance improvement makes sound business sense,” explained Paul Simpson, CEO at CDP. “By recognizing the tangible business and financial benefits of disclosure and action, companies can drive sustainable economies and secure long-term growth.”

The report subsequently produced three key actions they deem necessary for businesses to undertake if they are to better grapple with environmental performance and their link to strong financial outcomes. They are:

1. Define a suitable framework for understanding how sustainability action can create or protect value. Understand environmental performance and how it impacts your specific business context through lenses of revenues, costs, assets, liabilities and capital.
2. Target sustainable business cases with clear commercial and environmental potential. Build a finance-driven business case, and use early successes to convince the entire organization of the commercial benefits related to of strong environmental action.
3. Confront environmental risk, capture emergent revenue and cost opportunities, and contribute to a more resilient business. In the long term, capabilities for measuring and delivering value creation through sustainability can be applied to strategic decision-making regularly, and for disclosing the value captured or preserved to investors.

“There is no doubt in the positive correlation between sound and progressive environmental performance and how a company performs financially,” said Bruce Duguid, Director, at Hermes Investment Management. “What we’ve found through our own work, which was cemented by this latest analysis, is that the investment community pays increasingly close attention to how a company captures and reports environmental performance and opportunities.”