Publication / 04 May 2004

Climate Change and the S&P 500

Trucost analysis of S&P 500 constituents on carbon dioxide emissions disclosures. The study shows how abatement costs can be applied to emissions to help forecast which firms could be most financially affected by carbon constraints.

Emissions controls and the concomitant costs are look set to become a reality for business sooner rather than later. This is the reason why Trucost has produced this report.

Firstly, it will enable investors to assess which companies regard the problem as sufficiently serious to disclose current emissions levels. Secondly, it provides estimates of emissions for those companies that do not make a disclosure. Finally, by applying abatement costs to those emissions, investors will be able to forecast which companies will be most financially affected

The report shows that efforts to encourage companies to disclose their CO2 emissions have met with limited success to date. Only 40 companies disclose their emissions, representing 53% of total emissions by the S&P 500 constituents. Utilities and Energy are the largest emitting sectors, but Transport, Materials and Capital Goods also make a large contribution to climate change. CO2 emissions are very concentrated with the top 5 emitters responsible for 27% of emissions. Emissions disclosures are rarely contemporaneous with financial reporting.

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