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GE, Ford, Intel Ranked Top Climate Innovators
April 24th, 2012
Risk analysis company Maplecroft published its latest Climate Innovation Indexes (CIIs) studying the 360 largest US multinational companies and how they manage and adapt to climate change, with a special focus on innovation.
Maplecroft rated each company against more than 100 criteria, including: technological innovation and new working practices to combat climate change impacts; management of climate-related issues; adaption to physical climate-related risks, such as flooding or extreme weather events throughout the supply chain; and, the reduction of GHG emissions.
The study revealed GE, Alcoa, Johnson Controls, Ford, Intel, Hess, Air Products, Praxair, United Technologies and Autodesk as leaders in the innovation of clean-tech solutions and new products.
The third release of the CIIs includes an extra 37 companies since the study was initiated in 2009; as more companies pass the pre-screening process, indicating an increase by US business in their engagement with climate related initiatives.
General Electric (GE) has topped the list of best performers for each of the three CII cycles. Maplecroft puts its continuing strong performance down to a number of factors. The company has a dedicated sustainable business research strategy – 'ecomagination' – in which it has invested $5 billion in clean tech R&D over five years. These investments, which have focused increasingly on solutions to address climate challenges, have generated $100 billion in revenues and are performing twice as well as other parts of the organization. Innovations include: waste-to-value solutions; smart-grid technologies; wind turbines; and other alternative energy innovations. The company has also recorded substantial reductions in greenhouse gas emissions since 2006 and has saved $140 million from its own energy bill.
Alcoa, Johnson Controls and Ford maintain their places in the top five from last year, while Intel climbed three places to feature as the fifth best performing company. Each of the top five was also the best scoring company in their sector, along with Hess (6th) for oil and gas, Air Products (7th) for chemicals, Covanta (11th) for energy, PG&E (12th) for utilities, and Goldman Sachs (13th) in the financial sector.
According to Maplecroft, the CIIs will enable investors to identify the most resilient and innovative companies with the best long-term growth prospects. They do so by highlighting firms that are innovating products, services, processes or partnerships in order to re-shape markets and position themselves to succeed in the climate-changed, low-carbon environment of the future.
“Climate change will affect business in unexpected ways, such as altering demand for existing products based on their climate-related impacts and by driving the demand for innovative sourcing, manufacturing, logistics, usage and recycling,” states Maplecroft Director, Dr Kevin Franklin. “With growing legislation and regulation in the US around emissions and climate change disclosure, companies must innovate or be left behind. The CIIs favour front-runners that are engaging proactively to shape the future growth environment, that have clear and efficient business processes and robust governance / business models.”
According to Maplecroft, emerging trends in climate innovation include technological advances in alternative fuels, equipment and emissions monitoring, managing exposures to the impacts of climate change and creating efficiencies in energy use, business processes and transportation. The full report of the results and findings, available with the launch of the CIIs, includes many case studies illustrating these innovations.
Leading companies also are innovating through cross-industry collaborations, employee incentives and unique ways of embedding innovation as part of their core business.
The CII results also identified lifecycle analysis (LCA) as a key / emerging area of innovation for the best performing companies, with 75% of the leading 100 using related techniques. According to Maplecroft, the systematic process of assessing the cradle-to-grave environmental impacts, associated with all stages of a product or service, plays a vital role in identifying opportunities for innovation. Leaders on LCA include Apple, (which scored 100%), Alcoa (75%) and Ford (68.5%).
Second placed aluminium producer, Alcoa, is held up as a prime example of how companies should incorporate lifecycle analysis into their business. Alcoa increasingly uses life cycle assessments to inform decisions for the improvement of its products and processes and in 2010 the company established the Life Cycle Center of Excellence to drive its work in this area forward.
Adaptation to physical climate change risks emerged as the most improved overall area for the rated companies in the CIIs. Oil company Hess, was one of the most improved companies in the index, moving up 78 places to sixth. Although this primarily relates to the company’s increased engagement with the CII process, it also performed particularly well for climate adaptation. The company has developed physical risk vulnerability maps for its U.S. assets located in coastal zones, based on weather event and sea-level rise scenarios, which estimate damages, economic loss and social impacts that may arise from climate change.
“Organizations increasingly understand the likelihood of material negative impacts on their business operations and continuity as a result of sea level rises, storm, flooding, drought, temperature changes, and related food and water security,” added Dr Franklin. “CII leaders in adaptation take a long term view of physical climate change risks. This means assessing and managing the extent to which business and supply chain functions may be affected and implementing effective risk mitigation strategies. It is an approach all companies should replicate.”
However, as Maplecroft CEO, Alyson Warhurst says, “It also means that the leaders are looking at climate adaptation as an opportunity for innovating new products, new processes and developing new markets.”
Bart King is a PR consultant and principal of Cleantech Communications.