THE Nordic report of the Carbon Disclosure Project is published this week, with businesses revealing the level of their greenhouse gas emissions.
Lloyd's List, October 21, 2008 Tuesday - THE Nordic report of the Carbon Disclosure Project is published this week, with businesses revealing the level of their greenhouse gas emissions.
Although a pan-industry study, it reveals the results from a number of shipping, energy and marine technology companies for the first time as the London-based CDP secretariat looks more closely at the supply chain and transport emissions.
Rather than being a green lobby group aiming to promote environmental values, the CDP believes it could be an organisation that has teeth. It is a coalition of institutional investors, some 385 this year, claiming to have the weight of $57trn investment capital.
On an annual basis CDP sends a questionnaire to market listed companies to assess their carbon emissions risk. It covers four areas: management's views on how climate change impacts the business; greenhouse gas emissions accounting; strategies to reduce emissions and corporate governance. This data provides investment groups, which include large pension and investment funds, with information on how their portfolios are reacting to the climate challenges.
According to chief executive Paul Dickinson the initiative is also working with some multinational corporations to collect climate change data from their suppliers, including shipping companies.
"The leverage of both investors and purchasing organisations is key in encouraging companies to measure and disclose their carbon emissions and strategies relating to climate change. Without full disclosure there is a real risk of sub-prime carbon assets going unexposed and leading to impact on the value of companies as regulatory systems increase," he told Lloyd's List.
One of the shipping companies that has taken part in this year's report is Danish tanker and dry bulk owner Norden. Like many others it was reluctant to participate last year, but having assessed the opportunities and how it can submit the data it has been one of a small group of shipowners to begin reporting.
"This is something that we have to participate in. We have nothing to hide," said Norden senior vice-president and head of technology Lars Lundegaard. "The only thing is it takes a lot of time to make sure the data you report into the system is correct, and the methodology you use is verifiable," he added, echoing a concern by some regarding reporting standards and verification
"But these problems are minor compared to the advantages of owners, and industry in a global sense, becoming aware of what they are emitting, and changing their mindset."
Through the reporting process, Norden has been able to see where it can make savings in emissions, and thus financial savings. The company has been active in trialling such ideas as emission-reducing technologies onboard its vessels, including a number reported in Lloyd's List earlier in the year; engine-sliding valves for improved engine combustion; hull condition monitoring systems to detect fouling; lube oil particle detection to detect engine wear and a torque monitor for checking propulsion efficiency.
In 2008 the CDP secretariat brought more shipping companies into the system through an expansion into the transport sector.
"Shipping has come under scrutiny regarding its greenhouse gas emissions and reporting through CDP will provide greater transparency and understanding of emissions within the sector," said Mr Dickinson.
But perhaps the best clout that the CDP can have is from the investment bodies that take strategic ownership in listed companies.
For the pension fund and investment fund managers, the project has the potential to become a useful tool in the risk assessment of their portfolios according, to one of Denmark's largest pension funds.
"This is methodology that everyone is coming around to, and will be the standards for climate information," said Ulrik Weuder, portfolio manager at Danish pension group ATP, one of the early supporters of the Project. "Will this influence our investment decision? In the short term no, these are long-term processes, but the more information we have on companies, the better we can find out what are winners and losers with regard to climate change adaptation and using the opportunities. So this is important information."
Of the transport companies and shipowners approached by CDP, some have been reluctant to quantify their emissions volumes, but both the project and the investors behind it are keen to stress that this is not the point.
"We engage with companies that we have asked to report. Most thought CDP was about how much greenhouse gases they emit. That's not what it is about, it is about the political and physical risks. We also want to see what they are doing to maximise the opportunities out of this," explained Mr Weuder.
The CDP is gradually increasing the number of companies it targets and, with a focus on the transport sector, it hopes to increase the number of companies that fund managers can have information about. To achieve this in the shipping sector it needs to get a better response than this year, when only about 20% of the Nordic region's shipping companies approached responded.
