ASrIA - Strategic Response

Until last year only a few Asian companies were represented in the Carbon Disclosure Project (CDP). In 2006, however, CDP, with the help of Asian partners led by ASrIA, extended the information request to over 160 Asian companies excluding Japan. Consequently, for the first time, investors had an opportunity to gauge the performance of a unique sample of large Asia ex-Japan corporates in managing carbon risk.

Responding to the CDP information request is voluntary; however the request for disclosure comes from over 315 institutional investors who hold stakes in a large number of the companies written to by CDP.

More and more companies are seeing the benefits of responding to the questionnaire because:

Climate change presents strategic risks and opportunities to most companies.
Going through the process of answering the CDP questionnaire enables companies to begin the process of measuring their carbon emissions: this is the first step towards being able to then manage these emissions.
Answering CDP provides a high level of visibility and accountability to all stakeholders including institutional investors.
The questionnaire contains quantitative as well as qualitative information and thus it enables companies to take a holistic look at climate related risks, opportunities and management strategies. (India CDP Report 2007)

Companies that are successful in facing the challenge of reporting on (Greenhouse Gas)GHG or carbon emissions can develop comprehensive climate change strategies that can have the following products:

Financial connections between climate change and their businesses. Companies with significant greenhouse gas emissions or high-energy use can assess their exposure from new regulations and develop strategies to mitigate those risks. Companies vulnerable to the direct physical risks can also take stock of their assets and supply chains.
Action plan development and implementation to manage climate risks and seize new market opportunities. These plans can include new corporate policies and procedures for reducing and mitigating risk, setting absolute GHG reduction targets and energy efficiency goals, and developing or purchasing new clean energy technologies.
Engagement with carbon trading and the Clean Development Mechanism. This mechanism allows mitigation project creation in cooperation with companies in Annex 1 (industrialized) countries that need to reduce their established carbon emissions targets.
Climate strategy dialogues with investors, analysts and other stakeholders. Companies can also disclose their assessments and implementation plans in annual financial reports and corporate responsibility reports.
Most important, corporate leaders can overcome a tendency toward short-term thinking and emphasizing long thinking to implement climate strategies successfully—emphasizing long- term financial results and building long-term shareholder value.

Developing strategies constitutes an enormous challenge. But in light of existing investor interest and rapidly developing government initiatives, it is important for the corporate community to develop core tools to evaluate company-level climate impacts.