Publication / 29 Jan 2007

Carbon Disclosure Project Report 2006: Electric Utilities 265

Trucost research reveals that less than half of the world’s largest electric utilities disclose their carbon emissions to investors.

The Carbon Disclosure Project (CDP) is a global initiative aimed at informing investors of the risks and opportunities presented by climate change, and informing company management of the views of their shareowners regarding climate change.

The Electric Utility sector is the most carbon intensive sector and therefore one of the first to the effects of environmental regulations and carbon pricing. The analysis carried out by Trucost for this CDP report highlights that, using a conservative estimate of the cost of reducing carbon dioxide emissions, costs equivalent to 7% of revenue could be at risk for the largest emitting Electric Utility companies if nothing is done to mitigate emissions. As a consequence, investors have a legitimate interest in comparing the emissions of the Electric Utility companies they invest in.

Response rates to survey were low considering the contribution of the Electric Utility sector to carbon emissions. The Electric Utility sector is the most carbon intensive sector of the MSCI All World Developed Index – the sector is responsible for nearly a quarter of greenhouse gas emissions globally. Only 42% of Electric Utilities responded to the CDP questionnaire. The CDP has had a cumulative effect on the responsiveness of FT500 Electric Utilities surveyed in previous years. The response rate has increased from 71% to 96%.

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