Top Brands Lack Leadership On Climate Change

Two-thirds of the world’s top 100 brands lack adequate policies,
management systems and reporting on climate change, according to latest research from responsible investment
research firm EIRIS.

The report Cool
Brands versus Hot Brands? focuses on the world’s leading 100 brands,
as identified by Interbrand, and finds
that 69% of those are failing in their efforts to address their climate change impact.

Companies risk eroding brand value by failing to respond
to the climate change concerns and expectations of customers, investors, NGOs
and other key stakeholder groups. EIRIS said. The firm’s analysis reveals
surprising differences in the way efforts to tackle climate change are embedded
within a company’s culture-from product impacts, long-term targets, executive
remuneration and disclosure.

Leader of the pack?

Gillette (ranked 3rd in Interbrand’s top 100) achieved the
highest overall climate change rating in EIRIS’ analysis. The brand has
established long-term targets on emissions reduction and displayed strong
reporting against those targets.

Porsche (PAH3.DE), on the other hand, (ranked 72nd in Interbrand’s
top 100) achieved one of the lowest climate change scores in EIRIS’ climate
change analysis. This contrasts with other leading brands in the automobile and
parts sector such as Toyota.

Apple vs Dell

Big differences exist in the extent to which leading
technology brands are tackling climate change. Dell (Nasdaq: DELL) (Interband rank 42) has
linked executive remuneration to climate change performance, established both
long and short-term targets and has improved product-related climate change emissions.

However, Apple (Nasdaq: AAPL) (Interbrand rank 17) has failed to
implement any of these measures. On the other hand, Apple has shown an
improvement in reducing its GHG emissions whilst Dell’s GHG gas emissions have
increased. However, it should be noted that other factors such as new business
acquisitions, fluctuations in turnover, etc, can account for
increases/decreases in GHG emissions.

Pepsi challenged?

Coca-Cola (NYSE: KO) is at the top of the Interbrand 100 list, while
PepsiCo is positioned at number 23. However, when looking at their relative
responses to climate change a different picture emerges, EIRIS said. While
Coca-Cola has an assessment of ‘intermediate’, with a number of unidentified or
unmanaged risks, PepsiCo (NYSE: PEP) scores ‘good’ according to EIRIS’ methodology. Unlike
Coca-cola, PepsiCo is therefore considered to have adequately managed its
climate change risks.

The Cool Brands versus Hot Brands report forms part of a
EIRIS’ wider annual climate change tracker report which analyses the
performance of the world’s biggest 300 companies in tackling climate change.
This year’s analysis of the world’s 300 largest companies finds that:

  • 33%
    of companies have a significant climate change impact. Of this 33%, only 27%
    are adequately managing the climate change risks they face. In 2008, only 16%
    adequately managed climate change risks
  • 60%
    have now established short-term targets (48% in 2008), but only 46% have set
    long-term targets (25% in 2008), leaving significant room for improvement
  • In
    2010, 31% of significant impact companies linked executive remuneration to
    carbon emissions, up from 14% in 2008

"The potential reputational damage to brand value
associated with a failure to respond to the risks from climate change can have
a direct impact on a company’s profitability. A lack of mitigation measures can
also lead to the loss of business productivity and business interruption"
said Carlota Garcia-Manas, Head of Research at EIRIS.

"In the face of increased regulation, growing consumer
expectations and greater investor awareness, climate change and other
sustainability issues will become increasingly important factors in the
determination of brand value. Investors in top brands need to consider the
extent to which companies are safeguarding their brands by addressing both
current and future climate change risks" she continued.

The report is available at the link below.

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