CNBC European Business

THE TOP 50 LOW-CARBON PIONEERS

Because climate change affects everyone, so too will the low-carbon economy. The companies that are addressing the issues ahead of regulators are already beginning to outperform their peers, while those who are actively pursuing opportunities thrown up by global warming stand to profit. That is why James Murdoch, the 34-year-old chief executive of broadcaster BSkyB, fills the top spot in CNBC European Business’s first-ever list of low-carbon climate pioneers. In a short space of time, Murdoch has taken measures to scale back BSkyB’s carbon footprint while establishing himself as an impressive and persuasive corporate leader on the subject.

The rest of our list falls roughly into two halves, the first consisting of larger corporations, the second moving towards the mid-size and entrepreneurial sector, including a rash of recent AIM listings, confirming London as the centre of the emergent low-carbon economy. Despite its inevitable limits, the list throws up some unexpectedly useful findings, such as the fact that 21 out of 31 companies for whom full data was available outperformed the major indices in the period 1 November 2005–1 November 2006, and often on a remarkable scale. Pegged to 100 on 1 November, 2005, the FTSE 100 stood at 115.1 a year later; the DAX30 at 127.8. On the same basis, Clipper Windpower shares stood at 300.5; Impax Group shares at 225.7; ABB Group at 188.3 and Suzlon Energy at 184.

Of course, there are individual narratives in each case, and it is just as important to note that the number one company in our list, BSkyB, slightly underper-formed the index during the same period for multiple reasons other than its take on climate change. Markets and the straw poll nature of valuations are too crude to tell the whole story. Similarly Murdoch’s next challenge is to decide how much to allow his company’s stance to influence programming watched by millions. Nevertheless, the same consistently outperforming progressive companies are more likely to take a proactive stance on big issues such as climate change.

The research for our list – which was begun before the publication of Sir Nicholas Stern’s report on the economics of climate change – convinced us that we are in the early stages of an emerging market of vast scope and future. The scale and intricacies of such a market cannot yet be imagined but whether viewed in terms of geography or sector, it will certainly surpass all previous emerging markets. In fact, it may have to.

METHODOLOGY
The list was researched between June and December 2006, and an extensive shortlist of companies built up through multiple interviews with leaders in both the non-profit and for-profit low-carbon sectors – an extended form of peer review. Constituents of the Dow Jones Sustainability Index, FTSE4Good and Impax ET50 index of pure play “clean tech” companies were also taken into account, as was the Fourth Carbon Disclosure Project (2006); Sir Nicholas Stern’s Report on the Economics of Climate Change (2006) and Climate Change: Followers and Leaders (the Carbon Neutral Company, June 2006).

The final list was decided on the basis of the degree to which the company had taken a courageous or ground-breaking stance on climate change during the past decade (typically larger corporations), or that it had raced to prominence on the basis of a low-carbon entrepreneurial opportunity (typically a smaller SME or recently listed public company). In either case, the company had to have consciously and explicitly connected climate change to their bottom line. The Carbon Neutral Company’s definition of excellence in this field was borne in mind, involving “integration of climate change policy entailing an extensive discussion of climate change impacts, concrete examples of efforts to mitigate those impacts and an assessment of the company’s performance in relation to industry performance, and national and international efforts to tackle climate change.”
Help at the final stage of selection was kindly provided by Innovest Strategic Value Advisors, who would have gone in the list themselves but for the appearance of a conflict of interest. Innovest was founded by Matthew Kiernan in 1995 in order to integrate sustainability and finance by identifying non-traditional sources of risk and value potential for investors. All valuation and index re-basing was performed by Thomson Financial, to whom grateful thanks is given.

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(Excerpt) Number 49 NEW EARTH SOLUTIONS
LOCATION WIMBORNE, UK
OWNERSHIP PRIVATE
INDUSTRY SECTOR WASTE MANAGEMENT
PRESENT CEO BILL RIDDLE
VALUE 1 Nov, 2005 N/A
VALUE 1 Nov, 2006 N/A
COMPANY INFORMATION Bill Riddle is a serial entrepreneur who has developed an innovative waste recycling and composting plant on an industrial scale, founding his company in 2002 and recently raising a capital base of over €6m to fund expansion premised on EU and UK government laws.