Industry

Over Half of Large Companies Refusing Investor Demands for Data

CDP-led engagement campaign for corporate environmental disclosures makes limited progress.

Fifty-three percent of the world’s largest companies are still not disclosing requested environmental data to investors. Companies which are ignoring requests and follow-up engagement efforts include Australian steel producer Blue Scope Steel and multinational healthcare provider Ramsay Health Care.

This is according to a new report by sustainability disclosure platform CDP, which outlines the 2021 results of its Non-Disclosure Campaign (NDC), first launched in 2017. The campaign allows investors and financial institutions to join CDP in their engagement efforts with companies that do not respond to initial requests to disclose their climate-, deforestation- and/or water security-related performance.

CDP reached out to 7,296 companies globally to request disclosures in 2021, with 3,096 cooperating. The 4,200 non-respondents became eligible for NDC-led engagement. Representing US$29 trillion in market capitalisation and 4.9 billion tonnes of CO2 emissions (tCO2e) a year, 1,317 companies were approached, with 328 responding positively to engagement efforts and filling out at least one questionnaire across the three themes.

Thirty-one Australian companies were targeted for engagement, with eight including the aforementioned Blue Scope Steel and Ramsay Health Care), refusing to disclose for the fifth year in a row.

Of the 126 China-based companies that did not provide climate-related disclosures upon request, five have declined to do so for four years in a row, including tech behemoth Alibaba.

“The data that this disclosure request generates is a vital resource in inputting to and improving the numerous models used throughout the financial service industry,” said Rick Stathers, Climate Change Specialist and Senior ESG Analyst at Aviva Investors. “In 2021, it is disappointing that there continues to be a significant number of companies that do not respond to the initial disclosure request.”

Dragging their feet

2021 has seen increases both in the number of investors taking part in the NDC and the number of companies responding to engagement efforts, said CDP, noting that companies contacted through the campaign are 2.3 times more likely to disclose across these environmental themes.

Investor participation increased by 56% in 2021 from 2020, with 168 investors and financial institutions across 28 countries, managing US$17 trillion in assets, taking part. Due to the increase in investor involvement, the NDC could also target a wider scope of investee companies, reaching out to 29% more compared to 2020.

Investor engagement with companies on climate-related disclosures increased by 21%, and there was a 99% increase for forests and 67% for water security.

As a result of engagement, CDP said that 25% more companies responded to NDC disclosure requests compared to 2020. Further, 85% of companies that were engaged with through the campaign in 2020 have also submitted their disclosures the following year.

A number of companies responded to disclosure requests for the first time since the NDC was launched.

“Large technology firms including Amazon, Facebook and Netflix have finally responded to financial institutions and began disclosing after each of these companies were targeted for the last four to five years through the NDC,” CDP said.

While Facebook disclosed on climate for the first time since the campaign began, Amazon also provided climate-related data, but did not submit the requested information on forests.

“Through CDP’s NDC, we are able to create leverage by joining forces with other large investors, and push for enhanced disclosures related to climate,” said Sandra Metoyer, Head of Responsible Investments at Danish AP Pension (SEK 431,5 billion in assets).

“The disclosed company data also helps us identify leaders and laggards on climate, highlighting where we need to focus our engagement efforts. Subsequently we can encourage companies to take action to create more sustainable business activities where data shows it is most needed. We see the campaign as a good opportunity to enhance transparency, improve our investor reporting and execute on our strategy for responsible investments.”

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