Environmental Disclosure Tied to Higher Financial Performance

Read the full story from Environmental Leader.

Superior transparency on climate engagement is associated with higher financial performance, according to a report released today by CDP and Sustainable Insight Capital Management.

Linking Climate Engagement to Financial Performance: An Investor’s Perspective analyzes the CDP disclosure scores of 702 companies covered in CDP’s Global 500 climate change reports from 2008 to 2012. Using peer-to-peer comparisons, companies were ranked by industry and split into quintiles by their CDP disclosure score, then examined against various metrics of financial profitability. The analysis shows that industry leaders in the first quintile based on their relative CDP scores provide a higher return on equity (+5.2 percent), more stable cash flow generation (+18.1 percent) and higher dividend growth (+1.6 percent).

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