Tokyo, 6 November 2013 - CDP, formerly known as Carbon Disclosure Project, released the “CDP Japan 500 Climate Change Report 2013” on 6 November 2013, based on a survey conducted from February to September 2013 targeting 500 major Japanese companies’ climate change activities. This year 227 companies responded (response rate: 45%）, however, the report is based on the 206 responses received before the deadline.
PricewaterhouseCoopers Aarata, a member firm of PwC who has been a global advisor to CDP for the past 6 years, conducted the scoring of responses and, as with last year, prepared the report.
CDP sent a questionnaire, for the 11th time globally and the 8th time in Japan, to over 5,000 companies around the world on behalf of 722 institutional investors representing US$87 trillion in assets. The 500 Japanese companies (the Japan 500) participating were selected primarily according to total market value.
The results indicate that Japanese companies have improved both in climate change disclosure and performance in 2013. Whilst this is encouraging, many companies still face challenges to incorporate climate change risks and opportunities into their mid-to-long term business strategies, as evidenced by the small number of responses showing very long-term emission reduction targets, such as toward 2050.
In addition, challenges remain with respect to disclosure. In particular, the challenge of convincing stakeholders that the company is achieving good results in addressing both mitigation of emissions and adaptation to climate change.
*The report is available here [PDF 1,953KB], and is also uploaded as “CDP Japan 500 Climate Change Report 2013” in: https://www.cdproject.net/en-US/Results/Pages/All-Investor-Reports.aspx
45% of the Japan 500 companies responded. This is a small decrease from the previous year’s response rate (47%). The average disclosure score was 73; an increase of 6 points from the previous year. The most frequent performance band was B; an improvement from C of the previous year.
94% of respondents reported emissions reduction targets, either absolute or intensity based. Many companies set emissions reduction targets toward 2020 in line with the Keidanren’s (Japan Business Federation’s) Commitment to a Low Carbon Society. Only 8 companies have set long-term targets to 2050 or beyond.
42% of respondents reported that the total of Scope 1 and 2 emissions*1 decreased from the previous year. There are two main reasons for this. Firstly, in 2011, Japanese companies significantly cut down their power consumption beyond the usual scope of normal energy and electricity saving measures in response to energy usage restrictions after the Great East Japan Earthquake resulted in what could be called an “emergency situation.” Many companies, however, increased their power usage from the previous year when energy supply picked up again in 2012. Secondly, the increase in the ratio of thermal power generation due to the shutdown of nuclear energy plants across the nation resulted in a higher emissions factor for electricity generation in Japan. This was the main driver for calculated GHG emissions to increase even as electricity usage remained the same.
As for scope 3 emissions*1, companies calculated and reported on average 3.9 categories out of 15. This shows that many companies are now trying to measure emissions beyond their own corporate operations and from now on companies will be expected to understand the categories of emission sources that have the most impact on the entire value chain of the company.
As a result of the questionnaire responses, CDP selected a total of 36 companies from the Japan 500 to be included in either the Climate Disclosure Leaders Index (CDLI*2) or the Climate Performance Leadership Index (CPLI*2). The companies selected are listed in the Appendix on page 6 of this release. In 2013, 8 companies were selected as both CDLI and CPLI; doubling from 4 companies in 2012.
Paul Simpson, Chief Executive Officer at CDP says: "Many countries are demonstrating signs of recovery following the global economic downturn. However, clear scientific evidence and increasingly severe weather events are sending strong signals that we must pursue routes to economic prosperity whilst reducing emissions of greenhouse gases. It is imperative that big emitters improve their performance in this regard and governments provide more incentives to make this happen. This report is written for businesses, investors and policy makers that want a clear understanding of how the world’s largest listed companies can transform themselves in order to protect our natural capital."
“To effectively manage climate change risks it is vital to comprehensively evaluate business activities across a wider range of indicators, including environmental, social, and economic impacts, from an ultra-long term point of view,” says Masataka Mitsuhashi, Partner at PricewaterhouseCoopers Aarata, “Only then are business leaders able to make decisions that will create sustainable corporate value.”
Scott Williams, Director at PricewaterhouseCoopers Aarata adds: "The recent Intergovernment Panel on Climate Change 5th Assessment Report was unambiguous, the time to act is now. What we can see from the Japan 500 responses in 2013 is that the leading companies have already commenced their journey to embed low carbon thinking and action into the DNA of their organizations so that their future value creation and risk management strategies are compatible with the clear scientific case for action. It is now time for others to follow their lead."
CDP continues to encourage companies who take action to mitigate climate change by promoting dialogue between investors and companies. PricewaterhouseCoopers Aarata provides various services, such as creating sustainable value by helping companies to identify and manage risks and opportunities related to climate change across a company’s value chain and offering our total impact measurement and management framework in cooperation with our global network.
Scope 1 emissions: direct GHG emissions
Scope 2 emissions: indirect GHG emissions from purchased electricity or heat
Scope 3 emissions: indirect GHG emissions from upstream or downstream value chain
*2 To enter the CDLI, a company must:
To enter the CPLI (Performance Band A), a company must:
*PricewaterhouseCoopers Aarata performed the scoring of companies’ responses and report writing
|Aim:||To promote solutions by providing data needed in business, policy and investment decisions|
|Term:||From February to September 2013|
|Object:||500 companies selected by the UNPRI Japan Network from the FTSE Japan Index|
|Methodology:||Companies respond to the questionnaire using the Online Reporting System. The responses are then assessed using the global CDP standardised scoring methodology approach.|
|Response:||227 companies (response rate: 45%）, report is based on the 206 responses received before the deadline|
|Questionnaire:||Consists of 3 sections: Management, Risks & Opportunities and Emissions. 14 questions covering a wide range of issues related to climate change. Companies are required to provide answers to demonstrate their actual disclosure and activities in line with the intent of each question.|
||Governance; Strategy; Targets & Initiatives; Communications|
|Climate change risks; climate change opportunities|
|・Emissions:||Emissions methodology; Emission Data; Scope 1/2/3 emissions
breakdown; Energy; Emissions performance; Emissions trading; Engagement with value chain
|Assessment:||The responses are assessed for both disclosure and performance. Disclosure score is shown by relative score out of a hundred. Performance is grouped in six bands: A, A-, B, C, D and E.|
*This report is available here [PDF 1,953KB] and is also uploaded as “CDP Japan 500 Climate Change Report 2013” in: https://www.cdproject.net/en-US/Results/Pages/All-Investor-Reports.aspx