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CDP released its annual top environmental leaders, here’s who made the ‘A list’

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CDP released its 2020 ‘A list’ of environmental leaders. CDP North America Managing Director Ateli Iyalla joins Yahoo Finance Live to discuss.

Video Transcript

ZACK GUZMAN: We're just ahead of the five-year anniversary of the Paris Climate Accord. Environmental nonprofit CDP is unveiling its top-rated companies when it comes to environmental transparency and action, and a lot more companies are getting As this year. The rise of companies disclosing their respective footprint is largely in line with what we've seen in terms of increasing pressure to focus on sustainability.

And here with more on that is our next guest here. CDP North America Managing Director Ateli Iyalla joins us now. Ateli, thanks for taking the time here. It's an interesting report because you guys did show a very large improvement in the number of companies that you guys put on your A list here. What are those companies, and why do you think that is?

ATELI IYALLA: Yes, absolutely. And so, you know, each year CDP scores thousands of companies on how they're measuring and managing environmental issues in their organization. And so, you know, the best-performing companies get placed on our annual A list.

We're really seeing the surge in A-list companies this year, you know, even in a historically challenging year due to COVID due to the record-breaking number of companies disclosing. We had a 14% increase in disclosure this year with 9,600 companies disclosing through CDP in 2020.

North American companies actually represent nearly 20% of that global A list. So this includes, you know, major, major companies across all industries such as Alphabet, Walmart, Moody's, Levi Strauss, and Ford, just to name a few.

AKIKO FUJITA: And Ateli, when you look at the companies that are now disclosing their climate footprint, you've seen a big jump on that front as well, about 14%. We all like to believe that these companies are doing it because they're concerned about climate, but as you know, there is a financial risk that is increasingly there as well. What do you think is driving this kind of disclosure? Is it about the increasing demand from shareholders who are saying we need to know what the financial risks are? Are they seeing internal numbers that point to the burden they're likely to face if they don't act now? I mean, can you give us a little more insight on what you're hearing from the companies?

ATELI IYALLA: Absolutely, and that's a great question. You know, really, I think what we're seeing is that environmental action is now being mainstreamed in companies. It's being seen as really essential to big business and not a nice to have.

So you touched on that market aspect. You know, the market demand for this information on corporate environmental transparency and action is only getting louder.

CDP has actually 515 investors with $106 trillion in assets that actually support this, our request for information to companies. We also have 150 large purchasing companies representing $4 trillion in buying power requesting companies in their supply chain.

So all this to say, you know, this massive request and this market demand for information is driving companies to disclose, and now we're actually seeing a transition into the market actually not only asking companies to disclose but also to set targets, to improve, and to engage with their value chains.

ZACK GUZMAN: And when we look at this globally too, I mean, a lot of the big change, I guess, would be coming here in the US as we see administrations turn over, and obviously sustainability and climate change is a top-- as it has been top of mind for President-elect Joe Biden there.

But when you back up and look at other countries leading the way or regions, I should say, it seems like most of the companies here on your A list come from Europe, Asia, and then North America. How do you see that changing moving forward depending on maybe how some of these regions put some stresses on companies to make some changes?

ATELI IYALLA: Absolutely. So, you know, it's a great point. I think the US is actually the country with the second most A list companies with 58, but Japan actually is the country with the most A list companies. This is actually solidifying a trend where Japan actually overtook the US in 2019 in terms of the A list.

And what we're seeing is, you know, for a country like Japan, we're seeing this is being driven by the government's continued support for the task force for climate-related financial disclosure, their guidelines and reporting, which is, you know, requesting companies to do scenario analysis, to set science-based targets. And so the momentum is only increasing. And so, you know, what we're seeing is that this importance of ambitious government action and reinforcing the corporate action creating this kind of ambition loop.

AKIKO FUJITA: We've also seen some aggressive moves from the EU on that front. There's been a debate here about whether to increase its target on emission cuts. Right now it's at 40% by 2030. They're looking at bringing it into 55% by 2030.

What kind of risk does that create for American companies that are operating in a place like Europe? I mean, increasingly it feels like these companies are seeing the regulatory risk that may come from aggressive action from governments on climate goals.

ATELI IYALLA: Yes, that is very true. I think, you know, many US companies are global organizations, and so they're looking to all the different changes in the marketplaces in which they're operating and trying to understand, you know, what's happening. But I think that we're seeing a significant, you know, kind of shift in the narrative where before it was really compliance based, but I think you're now seeing North American companies really, really trying to get ahead of the curve, really trying to prepare themselves for these changes.

So, you know, now you're seeing a company such as, you know, Levi Strauss that is actively engaging with their value chain across 10 to 15 countries to actually put in place renewable energy projects and water-security projects as well.

So, you know, all this to say I think these companies now-- companies are actually trending towards trying to, you know, get ahead of the curve, trying to find a way to understand the obligations put in place, but they're also setting science-based targets for themselves at a global level which will allow them to manage this portfolio of actions that they need to take to make sure that they can, you know, have the viable business models moving forward.

AKIKO FUJITA: Ateli Iyalla, the North America managing director at CDP, it's good to talk to you today.

ATELI IYALLA: Thank you so much.