What Gets Measured Gets Managed

CDP (formally the Carbon Disclosure Project) is a not-for-profit organization with headquarters in London that is one of the more important advocates for the SRI investors concerned about climate change. For over ten years, CDP has been leveraging market forces to encourage companies to disclose data related to their environmental stewardship.

Despite offering guided support, companies like Pioneer Natural Resources Co (PXD) still do not disclose their carbon footprint along with other pollutants (NOx emmissions, SOx emissions, hazardous spills). Failing to disclose these environmental impacts suggests that either Pioneer Natural Resources Co has something to hide or they don’t care.

Some have come to believe that the only companies that fare well in these ranking systems are companies like Tesla Motors but this isn’t the case at all. Spectra Energy Corp (SE), a natural gas distributor, receives CDP’s highest ratings for disclosure and for their environmental stewardship.

A failure to communicate on material issues leaves investors with unknown environmental risks which all too often have economic consequences. I would like to see the day when the majority of investors refuse to buy stock in companies that fail to disclose material non-financial data.