AXA partnership in SBF 120 Carbon Disclosure Project

Climate change: what are the risks, and what are the opportunities for businesses? This was the main topics of a study carried out with the help of the 120 largest companies in France for the Carbon Disclosure Project. The CDP is the most important collaboration by institutional investors world-wide to pin down the consequences of climate change for business activity. AXA, a founding partner of this initiative, welcomed on October 3rd the presentation of the results for 2006.

AXA, as an institutional investor and a business included in the FT500, participated in the previous CDP enquiries, and considers that for essential sectors such as tourism, energy, transport and insurance, climate change constitutes a risk of the same level as exchange or interest rate risk. For this reason the Group is a willing partner of CDP-SBF 120.

What is the Carbon Disclosure Project?
The Carbon Disclosure Project (CDP) was supported by 225 investors world-wide, managing over $31,500 billion of assets. Each year the Carbon Disclosure Project conducts a group study on companies' strategies with respect to climatic change and greenhouse gas emissions - the leading cause of changes to the climate. Its aim is to inform project members of the risks and opportunities for industry represented by CO2 restrictions and climate change. It also aims to improve the quality of the information published by members. The first edition of this study, in 2000, was based on replies from the 500 leading companies world-wide. Since then, the levels of participation have increased regularly.

The CDP-SBF 120 study has achieved a response rate of 45%, comparable to the first year of the original CDP. Among the SBF companies, thirty are also included in the FT500 and have participated in previous CDP studies.

What are the overall results of this survey?
The 2006 results of this first study vary. Effectively, the differences in the quality and the relevance of answers both between and within sectors show that French businesses have not yet sufficiently absorbed what is at stake, neither as regards the direct implications of climate change nor with regard to the improvements that are essential in the quality of information made available to investors.

While the response from certain sectors is satisfactory (for example collective services and energy, both subject to strong CO2 controls), other sectors such as transport, the food industry and industrial goods provided an unsatisfactory level of response, given the increasing weight of the risks that concern them. Other sectors are more pro-active, for example the automobile industry and the IT and telecoms industries.

And more particularly, for companies?
Nevertheless, awareness of the impact of climate change seems to be coming home to business management in general. Of the companies interviewed, 57% perceive the risks that climate change poses for their activities (increased production costs, physical implications for the means of production, loss of markets or positioning of products and services no longer adapted to the market). Parallel to this, 65% of businesses have identified opportunities for development (current products or services that meet a demand linked to climate change, creation of new products or services in response to constraints imposed by climate change, or financial opportunities as a result of the foregoing).

A majority of respondents (63%) say they have instituted a strategy and an action plan to cope with the challenge of climate change, and 37% of those who replied to this questionnaire have set quantitative objectives for reduction of greenhouse gas emissions. The means to be used are many and varied: optimisation of procedures, action on the entire life-cycle of products, or the implementation of flexible working procedures or production processes.