Companies leading on climate change also outperform on stock market, research shows

Organisations were judged on the actions they have taken across three categories: climate change, water security and forests

The best performing companies based on a range of climate change measures are also outperforming the stock market, according to research by CDP, formerly known as Carbon Disclosure Project.

CDP ranked more than 6,800 companies, grading them from A to D-, with just 2 per cent making the A list. The data was released to coincide with the World Economic Forum summit, which is taking place in Davos, Switzerland this week.

Organisations were judged on the actions they have taken across three categories: climate change, water security and forests.

The top scoring firms for climate change include Microsoft and Danone, while Gap and Ford were among the top scorers for water security and Tetra Pak got an A for its efforts to address deforestation.

Firmenich, the world’s largest privately-owned fragrance & flavour company, and French cosmetics company L'Oréal, were the only companies to get As across the board for their actions on climate change, deforestation and water security.

Meanwhile, researchers found that the STOXX Global Climate Change Leaders Index – which is based on the CDP A List - outperformed the STOXX Global 1800, by 5.4 per cent per year from December 2011 to July 2018.

This “demonstrates that the leadership on environmental issues shown by the A List goes hand in hand with being a successful and profitable business”, according to Dexter Galvin, global director at CDP.

He added: “The next decade is crucial in our shift to a sustainable economy, and we believe corporates are at the heart of this transition. By ranking companies, we aim not just to highlight leaders’ best practice, but to inspire all businesses to aim higher and take more action.

Gilbert Ghostine, chief executive of Firmenich, said: “As a family-owned company, with a legacy of responsible growth, I believe that business has a critical role to play to tackle climate change with a sense of urgency. Building on our consistent “A” rankings with CDP, we are very proud of our triple “A” score this year.

“Today, all of our manufacturing sites in the US and Europe are 100 per cent powered by renewable electricity, on our way to reaching our goal of 100 per cent worldwide by 2020.”