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Corporate governance and climate change: making the connection

This report is the first comprehensive examination of how 100 of the world's largest corporations are positioning themselves to compete in a carbon-constrained world. With the launch of the Kyoto Protocoll in 2005, managing greenhouse gas emissions is now a routine part of doing business in key global trading markets. As the United States moves to join the international effort to combat global warming, climate governance practices will assume an increasingly central role in corporate and investment planning. Eventually, nothing short of an energy and technology revolution will be needed to stem rising greenhouse gas emissions across the globe. Faced with record warmth, unprecedented hurricane activity and rapid shrinking of polar ice caps, industry opposition to confronting climate change is diminishing. Sceptics no longer question whether human activity is warming the globe, but how fast. Companies at the vanguard no longer question how much it will cost to reduce greenhouse gas emissions, but how much money they can make doing it. Financial markets are starting to reward companies that are moving ahead on climate change, while those lagging behind are being assigned more risk. Ultimately, effective corporate responses to climate change must be built on well-functioning environmental management systems and properly focused governance practices. Shareholders and financial analysts will increasingly assign value to companies that prepare for and capitalise on business opportunities posed by climate change— whether from greenhouse gas regulations, direct physical impacts or changes in corporate reputation. This report is designed to be used as a benchmarking tool by institutional investors and corporations that are ready to seize on these trends. It employs a 'Climate Change Governance Checklist' to evaluate how 76 U.S. companies and 24 non-U.S. companies are addressing climate change through board oversight, management execution, public disclosure, emissions accounting and strategic planning. Information was gathered and synthesised over the past nine months from securities filings, company reports, company websites and third-party questionnaires. Each of the 100 companies in this report was given an opportunity to comment on the draft profiles, 84 companies returned comments.

http://www.ceres.org/pub/docs/Ceres_corp_gov_and_climate_c hange 0306.pdf

Cogan, D.G., 2006: Corporate governance and climate change: making the connection. Ceres and Investor Responsibility Research Centre, 300 pp.

Anticipating long-term climate change

Strong link made by authors

Strong link made by authors

Climatic episode

Global

Large number

effectiveness

Operational

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