Investors "disappointed" by energy sector's carbon reporting record

It may arguably be the most important sector in the fight against climate change but, according to new figures to be released today, the majority of the world's largest electricity utilities have no emission reduction targets in place and many are not even providing investors with information on which fuels they are using to generate power.

Based on data requests that were sent by the investor-backed Carbon Disclosure Project (CDP) to the world's 249 energy utilities, the study found that just 16 per cent have set and disclosed absolute emission reduction targets.

Moreover, of the 110 companies that responded to requests for information on their climate change strategy, 41 per cent had no emission reduction plans in place, while under half disclosed information on their current electricity generation capacity and fuel mix.

Paul Simpson, chief operating officer at the CDP, told BusinessGreen.com that the scale of non-disclosure was of considerable concern to investors. "This is arguably the most important sector with regards to climate change and they should be at the top of their game," he said. "Investors are focusing a lot more on climate change as an issue, particularly for high carbon sectors, but they will struggle to make informed decisions if they can't even find out the current fuel mix of the utilities they are investing in."

Jack Ehnes, chief executive of the California State Teachers' Retirement System, which sponsored the research, said the onus was on energy companies to provide more detailed information to investors on their climate change strategy.

"Our members depend on us for their retirement security and we have a financial stake in building the long-term value of the most carbon-intensive sector of our economy," he argued. "Electric utilities must act now to reduce their exposure to greenhouse gas emissions in the coming carbon-regulated economy."

The report also warned that those energy companies that fail to instigate emission reduction initiatives could find their competitiveness compromised in the medium to long term, as cap-and-trade schemes and ever tighter carbon regulations force them to pass higher costs on to customers.

Simpson said that those firms that had made high-profile commitments to cut carbon emissions, such as Vattenfall and Iberdrola, could find themselves enjoying a lower cost base than many of their rivals as legislative moves begin to impose a higher price on carbon emissions.