IT systems are a major energy consumer within companies and present a significant energy cost. In an era of rising energy costs and fears over energy security, companies are increasingly seeking more efficient ways of managing and controlling these costs as well as reducing data centre demands. Parallel to this is a growing public scrutiny of the environmental impact of IT systems, both in the amount of power they use and the disposal of redundant equipment. Ethical investors have also put pressure on companies to assess the environmental impact of their technologies.

The IT sector’s CO2 emissions account for 1.3% of global emissions. Data centres meanwhile are expected to account for up to 50% of IT budgets for some companies resulting in cost pressures, according to Societe Generale. Overall, such pressures have encouraged companies to place greater importance on the environmental performance and impact of their IT systems and to deliver business advantage.

Green IT makes good business sense resulting in big cost savings for companies reliant on data centres with around every $1 in energy savings driving up to $2-$6 in operational savings. Those companies with green data centres therefore should be a major beneficiary. The key challenge is to develop and implement methodologies to measure quantitative environmental improvements and with such measures in place IT companies can play a crucial role as enablers for other sectors, particularly in the building, logistics, power and transport sectors.

Leading European companies with a total market capitalisation of €1.2 trillion are failing to address the climate change risks to which they are exposed, according to a major new report from EIRIS the responsible investment research specialists.

Climate change has the potential to seriously impact shareholder value and affects businesses across all sectors of the economy.

The EIRIS 2010 European Climate Change Tracker, focuses on key parameters enabling investors to understand the extent to which efforts to tackle climate change are embedded within a company's culture. These parameters include product impacts, long-term targets, executive remuneration and disclosure.

The report highlights a number of key findings:

• A third of Europe's biggest 300 companies are having significant climate change impact, of these around two-thirds are inadequately managing the climate change risks they face. Moreover corporate responses to climate change vary between European countries. The best performers are from the most economically powerful European countries - the UK, Germany and France.
• Although 97% of those European companies with potential product impact have a product policy committment, only 10% have these targets in place to address impacts arising from products.
• Performance-based compensation can incentivise company leaders to improve corporate climate change performance - 62% of high climate change impact companies are already linking performance-based remuneration with emissions reduction initiatives.
• Long-term targets are a key to effective climate change management - 55% of large climate change impact companies in the FTSE Eurofirst 300 have long-term targets in place.
• High impact industries like oil & gas and electricity contain the lowest proportion of companies with long-term climate targets in place.

"We urge investors to exert their influence and engage for long-term targets, identify and respond to portfolio risk, encourage companies to consider product strategies and their product impact on climate change and increase their investment in climate change solutions," said Peter Webster, Executive Director at EIRIS.

There are some improvements though with evidence that regulation and the increasing engagement activity of investors on climate change is driving companies to focus more attention on the climate change risks and opportunities they face.

For further information visit: www.eiris.org

Amongst leading emerging market economies, China, Egypt and Vietnam performed the worst in terms of ESG indicators.

The 2010 version of the EIRIS Country Sustainability Profiles for investors in sovereign wealth bonds includes a comparison of those emerging market countries that will play a key role in driving global economic development over the coming decades - Brazil, China, Egypt, India, Indonesia, Mexico, Pakistan, Philippines, Russia, South Korea, Turkey and Vietnam.

The three best performers were South Korea, Brazil and Mexico. Both Mexico and Brazil scored higher on environmental indicators than Canada and the USA, showing it is possible for emerging markets to experience rapid growth and to mitigate ESG risks.

Of all 68 countries surveyed on the 49 ESG indicators, the three best perfromers were Sweden, Austria and Switzerland.

"The poor performance of China, particularly in the area of governance but also scoring low on environmental indicators, should be of particular concern to investors given that its economy is due to overtake the USA's as the world's largest over the next 20 years," commented Carlota Garcia-Manas, Co-Head of Research at EIRIS.

For more information visit: www.eiris.org

The European Federation of Financial Analysts Societies (EFFAS) has published for public comment, an exposure draft of key performance indicators (KPIs) for ESG 3.0, the reporting framework for corporate reporting of ESG data and integration into investment analysis.

Developed by DVFA German Society of Investment Professionals in collaboration with EFFAS Commission on ESG, the framework addresses deficiencies in current corporate ESG disclosure by proposing to reporting entitities that they:

• report EFFAS KPIs and not only in sustainability or CSR reports but to integrate them into quarterly/annual reports, websites, management accounts and analyst presentations for example; and
• provide contexts, explanations and account as to the relation between ESG and financial performance data to enable investment professionals to understand corporate risk and opportunity profile functions.

"Corporates need guidance as to which aspects and in which format investment professionals require ESG data to enable them to a better company valuation. Until recently, ESG was predominately understood as reflecting corporate risk. Our analysis shows that corporates need to understand which opportunities arise from good management of environmental, social and governance aspects. KPIs for ESG 3.0 reflect both risks and opportunities," said Giampaolo Trasi, Chairman of EFFAS introducing the draft.

EFFAS and its ESG working group will undertake further outreach during the comment period to ensure the views of interested parties are taken into account. The exposure draft KPIs for ESG is open for comment until 30 June 2010 and can be accessed via www.effas-esg.com