Companies That Care About Climate Change Make More Money

You're reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.

Need more proof that there's a convincing business case for taking action on climate change? CDP, an organization that provides a platform for businesses to disclose environmental data, has come out with that companies who take climate action have higher profitability, stability, and offer stronger dividends to shareholders than their peers.

The report, which tracked S&P 500 companies over three years, found that organizations that are planning for climate change—by disclosing their environmental data through CDP, putting in climate change risk management policies, generating strong greenhouse gas emissions reductions goals, and so on—have an 18% higher return on equity (ROE) than their peers, and a 67% higher ROE than companies that don't disclose climate change-related actions.

These climate change-aware companies, which are the top scorers in CDP's Climate Disclosure Leadership Index and Climate Performance Leadership Index, also have had 50% lower volatility in earnings over the last 10 years and 21% strong dividends to shareholders than companies with less transparency.

So who are the businesses showing the most leadership? CDP lists them all in the report, but they include Best Buy, Microsoft, Apple, Estee Lauder, Boeing, Allstate, Bank of America, and UPS. The report is cautiously hopeful about their accomplishments:

"Given the failure of government regulators to enact binding climate change legislation in the US to date, S&P 500 companies operate in a regulatory vacuum. The fact that 70% choose to voluntarily disclose their carbon emissions, climate change governance and actions to reduce emissions is noteworthy. But it is not enough. If we are to avert the effects of dangerous climate change, a stepchange in the size and scope of emissions reductions is needed as we approach the scientific consensus point of no return at 450 parts per million."

Check out the full report here.

See this article in its entirety on The Venture.

The Venture is a new global social enterprise initiative searching for extraordinary startups and new ideas that use business to create positive change. If you have a GCC-based social enterprise or an idea for a social enterprise, enter The Venture #WinTheRightWay to potentially win your share of US$1 million.