By Kieran Cooke, Climate News NetworkThis piece first appeared at Climate News Network.

LONDON — If corporate America attended climate change college, the report card would read: “Modest progress but has to try much harder.” That’s the conclusion to be drawn from the latest report on US corporate action on environmental sustainability and climate issues.

The report, produced by Ceres and the Sustainalytics group, two organisations specialising in sustainability issues in the business sector, looks at the environmental activities of 613 companies in the US with combined assets of many billions of dollars, together representing nearly 80% of the total market capitalisation of all public companies in the country.

“The scientific and economic realities facing corporations today have shifted substantially from even just a decade ago”, says the report.

“From the risks posed to operations and the supply chain due to a changing climate, to an increasingly resource-constrained world with a growing population, to mounting human rights abuses – finding solutions to these business challenges will require collaboration, innovation and transformation.”

The report does note some progress compared with the findings of a similar survey two years ago. More companies are actively engaging investors – and their employees – on sustainability issues.

Corporate America is also being more pro-active in addressing human rights and other workplace problems, particularly in companies supplying goods to them.

There’s also been a modest improvement, says the report, in corporate commitments to increase renewable energy use, with 37% of companies surveyed having a renewable energy programme in place.

Insufficient progress

Yet, at the same time, very few companies have set specific targets for energy use: at present only 10% of those surveyed receive 5% or more of their energy from renewable sources.

“We are still not seeing the speed of change that is required – or the scale of innovation that is possible”, says the report.

“Incremental progress in tackling global climate change and other sustainability threats is simply not enough.”

As with energy, so too with greenhouse gas emissions (GHG). While more than two-thirds of companies surveyed say they are taking steps to reduce GHG emissions, only 35% have established target dates for achieving such reductions.

The report also found companies reluctant to share details of their GHG reduction policies: more than 80% of those surveyed did not provide enough information to assess whether their GHG emissions were, in fact, declining.

“The bottom line is clear: company efforts to establish comprehensive programmes to reduce GHG emissions through energy efficiency and renewable energy sourcing are lagging far behind what’s needed to avoid the worst impacts of climate change.”

Perhaps not surprisingly the oil, gas and refining sectors are among the worst performers on GHG emissions: the report says only 13% of oil and gas companies (4 of 30) and 9% of energy service companies (2 of 23) have adopted formal, time-bound GHG reduction targets.

Water ‘taken for granted’

Energy companies are also continuing to invest billions in exploiting new reserves of oil, gas and coal. A study by Bloomberg New Energy Finance estimated that 200 of the world’s largest publicly-quoted fossil fuel companies spent $674 billion in 2012 to develop new reserves: less than half that amount was invested in developing clean energy sources over the same year.

Disappointing results were also found when it came to corporate policy on water use.

Water, says the report, is not only becoming an endangered resource in many parts of the world – water scarcity is also becoming a major business and economic risk. Yet relatively few companies are actively engaged in the issue: in the US and Canada large amounts of water are being used by the fracking industry in areas already under severe water stress.

“Prolonged drought conditions in states such as California and Texas should be a wake-up call for any company that takes water for granted.”

The report says companies can profit by pursuing more enlightened policies on such issues as GHG emissions. A recent study by Deutsche Bank found that companies which integrate sustainable practices into their activities achieve a better standing in the market – and have increased access to capital sources.

Frozen assets

Investor groups are becoming more involved in assessing corporate environmental behaviour. Investors might be concerned about the future of the planet – they’re also worried about the value of their share portfolios.

Investors in the energy sector are particularly vulnerable to what’s known as carbon asset risk.

An energy company’s net worth is assessed not only on its performance and turnover but also on the value of assets it might hold underground.

Those assets could become frozen as the world moves to a low carbon future. That, for investors, would mean the value of their shares is under threat.

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