On September 18th, the Global Compact Network Canada partnered with CDP and Baker & McKenzie for an event on “Environmental Risk in the Diversified Chemicals Industry”. The event saw a presentation of key findings and engagement opportunities from CDP’s latest sectorial research report “Back to the Laboratory: Are global chemical companies innovating for a low-carbon future?” at Baker & McKenzie’s office in Bay Street, Toronto.
The event started with introductory words from Jonathan D. Cocker, Partner at Baker & McKenzie LLP and Helle Bank Jorgensen, President of the Global Compact Network Canada. Following this, James Magness, Head of Investor Research at CDP and Cynthia Simon, Senior Manager at CDP highlighted key areas of CDP’s analysis including climate change, water, and risks and opportunities via metrics and assessment of financial impact on earnings.
The research report emphasized six key areas relating to process and energy efficiency, product innovation, supply chain optimization, carbon exposure, carbon regulation readiness, and water risk, all of which are of great relevance to the chemical industry. Included in the study were 18 of the largest and highest-emitting chemical companies which together represent approximately US$530bn in market cap and with fairly diversified activities, leading to numerous end markets, including electronics, automotive, construction, healthcare and crop-sciences. The report also features a Sustainability League Table, in which industry leaders and the laggards are ranked based on a number of different emissions-related and water metrics. When taken in aggregate, the report shows that these metrics could have a material impact on a company’s earnings.
James Magness elaborated about how the report links this potential impact on company’s earnings with all of the six key areas, including process and energy efficiency, where improvement in energy and raw material efficiency can lead to cost savings and thus enhanced ROI. Another example is product innovation with potentially high market growth areas where carbon emission reduction regulations are in place. Here, first movers will benefit while laggards miss out. Additionally, a sustainable supply chain may help companies manage reputational risk, reduce costs, improve quality and ultimately lead to competitive advantage, to name just a few of many potential links of key metrics to company’s earnings.
For more information about the Environmental Risk in the Diversified Chemicals Industry Event please visit https://www.cdp.net/.