CDP S&P 500 Report 2011 Strategic Advantage … S&P 500 Report 2011 Strategic Advantage Through...

CDP S&P 500 Report 2011Strategic Advantage Through Climate Change Action

On behalf of 551 investors with assets of US$71 trillion

Report written for Carbon Disclosure Project by:

Carbon Disclosure Projectwww.cdproject.net+1 212 378 [email protected]

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ABRAPP - Associação Brasileira das Entidades Fechadas de Previdência ComplementarAEGON N.V.AKBANK T.A.S. Allianz Global Investors Kapitalanlagegesellschaft mbHATP GroupAviva InvestorsBank of America Merrill LynchBlackRockBP Investment Management LimitedCalifornia Public Employees’ Retirement SystemCalifornia State Teachers’ Retirement SystemCalvert Asset Management Company,

Inc.Catholic SuperCCLA Investment Management LtdEthos FoundationGeneration Investment ManagementHSBC Holdings plcINGKB Kookmin BankKLPLegg Mason, Inc.London Pensions Fund AuthorityMitsubishi UFJ Financial Group (MUFG)Morgan Stanley National Australia BankNEI InvestmentsNeuberger BermanNewton Investment Management Limited

Nordea Investment Management

CDP works with investors globally to advance the investment opportunities and reduce the risks posed by climate change by asking almost 6,000 of the world’s largest companies to report on their climate strategies, GHG emissions and energy use in the standardized Investor CDP format. To learn more about CDP’s member offering and becoming a member, please contact us or visit the CDP Investor Member section at www.cdproject.net/investormembers

2011 Carbon Disclosure Project Investor Members

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Carbon Disclosure Project 2011 551 financial institutions with assets of US$71 trillion were signatories to the CDP 2011 information request dated February 1st, 2011 Aberdeen Asset ManagersAberdeen Immobilien KAG mbHABRAPP - Associação Brasileira das Entidades Fechadas de Previdência ComplementarActive Earth Investment ManagementAcuity Investment ManagementAddenda Capital Inc.Advanced Investment PartnersAdvantage Asset Managers (Pty) LtdAEGON Magyarország Befektetési Alapkezelo Zrt.AEGON N.V.AEGON-INDUSTRIAL Fund Management Co., LtdAFP IntegraAIG Asset ManagementAk Asset Management AKBANK T.A.S.Alberta Investment Management Corporation (AIMCo)Alberta Teachers Retirement FundAlcyone FinanceAllianz Elementar Versicherungs-AGAllianz GroupAltira GroupAmalgamated BankAMP Capital InvestorsAmpegaGerling Investment GmbHAmundi AMANBIMA – Associação Brasileira das Entidades dos Mercados Financeiro e de CapitaisAntera Gestão de Recursos S.A.APG GroupAprionisAquila CapitalARIA (Australian Reward Investment Alliance)Arisaig Partners Asia Pte LtdARK Investment Advisors Inc.Arma Portföy Yönetimi A.S.ASB Community TrustASM Administradora de Recursos S.A.ASN BankAssicurazioni Generali SpaATP GroupAustralia and New Zealand Banking Group LimitedAustralian Central Credit Union incorporating Savings & Loans Credit UnionAustralian Ethical Investment LimitedAustralianSuperAvivaAviva InvestorsAXA GroupBaillie Gifford & Co.Bakers Investment Group (Australia) Pty LtdBanco Bradesco S/ABanco de Credito del Peru BCPBanco de Galicia y Buenos Aires S.A.Banco do Brasil S/ABanco Nacional de Desenvolvimento Econômico e Social - BNDESBanco SantanderBanesprev – Fundo Banespa de Seguridade SocialBanesto (Banco Español de Crédito S.A.)Bank of America Merrill LynchBank of MontrealBank Sarasin & Cie AGBank VontobelBankhaus Schelhammer & Schattera Kapitalanlagegesellschaft m.b.H.BANKINTER S.A.BankInvestBanque DegroofBarclays

Baumann and Partners S.A.BAWAG P.S.K. INVEST GmbHBayern LBBayernInvest Kapitalanlagegesellschaft mbHBBC Pension Trust LtdBBVABedfordshire Pension FundBentall KennedyBeutel Goodman and Co. LtdBioFinance Administração de Recursos de Terceiros LtdaBlackRockBlumenthal FoundationBNP Paribas Investment PartnersBNY MellonBNY Mellon Service Kapitalanlage GesellschaftBoston Common Asset Management, LLCBP Investment Management LimitedBrasilprev Seguros e Previdência S/A.British Columbia Investment Management Corporation (bcIMC)BT Investment ManagementBusan BankCAAT Pension PlanCadiz Holdings LimitedCaisse de dépôt et placement du QuébecCaisse des DépôtsCaixa Beneficente dos Empregados da Companhia Siderurgica Nacional - CBSCaixa de Previdência dos Funcionários do Banco do Nordeste do Brasil (CAPEF)Caixa Econômica FederalCaixa Geral de DepositosCaja de Ahorros de Valencia, Castellón y Valencia, BANCAJACaja NavarraCalifornia Public Employees’ Retirement SystemCalifornia State Teachers’ Retirement SystemCalifornia State TreasurerCalvert Asset Management Company, IncCanada Pension Plan Investment BoardCanadian Friends Service Committee (Quakers)Canadian Imperial Bank of Commerce (CIBC)CAPESESPCapital Innovations, LLCCARE Super Pty LtdCarlson Investment ManagementCarmignac GestionCatherine Donnelly FoundationCatholic SuperCbus Superannuation FundCCLA Investment Management LtdCeleste Funds Management LimitedCentral Finance Board of the Methodist ChurchCeresChristian SuperChristopher Reynolds FoundationChurch Commissioners for EnglandChurch of England Pensions BoardCI Mutual Funds’ Signature Global AdvisorsClean Yield Group, Inc.Cleantech Invest AGClearBridge AdvisorsClimate Change Capital Group LtdCM-CIC Asset ManagementColonial First State Global Asset ManagementComerica IncorporatedComite syndical national de retraite BâtirenteCommerzbank AGCommInsureCommonwealth Bank of AustraliaCompton Foundation, Inc.Concordia VersicherungsgruppeConnecticut Retirement Plans and Trust FundsCo-operative Financial Services (CFS)Corston-Smith Asset Management Sdn. Bhd.CRD AnalyticsCrédit AgricoleCredit SuisseGruppo Credito ValtellineseDaegu BankDaiwa Securities Group Inc.

de Pury Pictet Turrettini & Cie S.A.DekaBank Deutsche GirozentraleDeutsche Asset Management Investmentgesellschaft mbHDeutsche Bank AGDeutsche Postbank Vermögensmanagement S.A.Development Bank of Japan Inc.Development Bank of the Philippines (DBP)Dexia Asset ManagementDexus Property GroupDnB NOR ASADomini Social Investments LLCDongbu InsuranceDWS Investment GmbHEarth Capital Partners LLPEast Sussex Pension FundEcclesiastical Investment ManagementEcofi Investissements - Groupe Credit CooperatifEdward W. Hazen FoundationEEA Group LtdElan Capital PartnersElement Investment ManagersELETRA - Fundação Celg de Seguros e PrevidênciaEnvironment Agency Active Pension fundEpworth Investment ManagementEquilibrium Capital GroupErste Asset ManagementErste Group BankEssex Investment Management Company, LLCESSSuperEthos FoundationEureko B.V.Eurizon Capital SGREvangelical Lutheran Church in Canada Pension Plan for Clergy and Lay WorkersEvli Bank PlcF&C Management Ltd FAELCE – Fundacao Coelce de Seguridade SocialFAPERS- Fundação Assistencial e Previdenciária da Extensão Rural do Rio Grande do SulFASERN - Fundação COSERN de Previdência ComplementarFédéris Gestion d’ActifsFIDURA Capital Consult GmbHFIM Asset Management LtdFIPECq - Fundação de Previdência Complementar dos Empregados e Servidores da FINEP, do IPEA, do CNPqFIRA. - Banco de MexicoFirst Affirmative Financial Network, LLCFirst Swedish National Pension Fund (AP1)Firstrand LimitedFive Oceans Asset Management Pty LimitedFlorida State Board of Administration (SBA)FolketrygdfondetFolksamFondaction CSNFondation de LuxembourgFondiaria-SAIFonds de Réserve pour les Retraites – FRRFourth Swedish National Pension Fund (AP4)FRANKFURT-TRUST Investment-Gesellschaft mbHFukoku Capital Management IncFUNCEF - Fundação dos Economiários FederaisFundação AMPLA de Seguridade Social - BrasiletrosFundação Atlântico de Seguridade SocialFundação Attilio Francisco Xavier FontanaFundação Banrisul de Seguridade SocialFundação de Assistência e Previdência Social do BNDES - FAPESFUNDAÇÃO ELETROBRÁS DE SEGURIDADE SOCIAL - ELETROSFundação Forluminas de Seguridade Social - FORLUZFUNDAÇÃO ITAUBANCOFundação Itaúsa IndustrialFundação Promon de Previdência SocialFundação Vale do Rio Doce de Seguridade Social - VALIAFundação Rede Ferroviaria de Seguridade Social – ReferFundação Sistel de Seguridade Social (Sistel)FUNDIÁGUA - FUNDAÇÃO DE PREVIDENCIA COMPLEMENTAR DA CAESBFuturegrowth Asset ManagementGartmore Investment Management LtdGEAP Fundação de Seguridade SocialGenerali Deutschland Holding AG

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2011 Carbon Disclosure Project Investor Signatories

CDP S&P 500 Report 2011 – Strategic Advantage Through Climate Change Action

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Generation Investment ManagementGenus Capital ManagementGjensidige Forsikring ASAGLS Gemeinschaftsbank eGGoldman Sachs Group Inc.GOOD GROWTH INSTITUT für globale Vermögensentwicklung mbHGovernance for OwnersGovernment Employees Pension Fund (“GEPF”), Republic of South AfricaGreen Cay Asset ManagementGreen Century Capital ManagementGroupe Crédit CoopératifGroupe Investissement Responsable Inc.GROUPE OFI AMGrupo Banco PopularGrupo Santander BrasilGruppo Credito ValtellineseGruppo MontepaschiGuardian Ethical Management IncGuardians of New Zealand SuperannuationGuosen Securities Co., LTD.Hang Seng BankHarbourmaster CapitalHarrington Investments, IncHauck & Aufhäuser Asset Management GmbHHazel Capital LLPHDFC Bank LtdHealth Super FundHealthcare of Ontario Pension Plan (HOOPP)Henderson Global InvestorsHermes Fund ManagersHESTA SuperHSBC Global Asset Management (Deutschland) GmbHHSBC Holdings plcHSBC INKA Internationale Kapitalanlagegesellschaft mbHHyundai Marine & Fire Insurance. Co., Ltd.Hyundai Securities Co., Ltd.Ibgeana Society of Assistance and Security SIAS / Sociedade Ibgeana de Assistência e Seguridade (SIAS)IDBI Bank LtdIlmarinen Mutual Pension Insurance CompanyImpax Group plcIndusInd Bank LimitedIndustrial Bank (A)Industrial Bank of KoreaIndustry Funds ManagementInfrastructure Development Finance CompanyINGInsight Investment Management (Global) LtdInstituto de Seguridade Social dos Correios e Telégrafos- PostalisInstituto Infraero de Seguridade Social - INFRAPREVInstituto Sebrae De Seguridade Social - SEBRAEPREVInsurance Australia GroupInvestec Asset ManagementIrish Life Investment ManagersItau Asset ManagementItaú Unibanco Holding S AJanus Capital Group Inc.Jarislowsky Fraser LimitedJPMorgan Chase & Co.Jubitz Family FoundationJupiter Asset ManagementKaiser Ritter Partner (Schweiz) AGKB asset ManagementKB Kookmin BankKBC Asset Management NVKDB Asset Management Co., Ltd.KEPLER-FONDS Kapitalanlagegesellschaft m. b. H.KfW BankengruppeKlimaINVESTKLPKorea Investment Management Co., Ltd.The Korea Teachers Pension (KTP)Korea Technology Finance Corporation (KOTEC)KPA PensionLa Banque Postale Asset ManagementLa Financiere ResponsableLampe Asset Management GmbH

Landsorganisationen i SverigeLBBW - Landesbank Baden-WürttembergLBBW Asset Management Investmentgesellschaft mbHLD Lønmodtagernes DyrtidsfondLegal & General Investment ManagementLegg Mason, Inc.LGT Capital Management Ltd.LIG Insurance Co., LtdLight Green Advisors, LLCLiving Planet Fund Management Company S.A.Local Authority Pension Fund ForumLocal Government SuperLocal SuperLombard Odier Darier Hentsch & CieLondon Pensions Fund AuthorityLothian Pension FundLupus alpha Asset Management GmbHMacif GestionMacquarie Group LimitedMAMA Sustainable Incubation AGManMaple-Brown Abbott LimitedMarc J. Lane Investment Management, Inc.Maryland State TreasurerMatrix Asset ManagementMcLean BuddenMEAG MUNICH ERGO Asset Management GmbHMeeschaert Gestion PrivéeMeiji Yasuda Life Insurance CompanyMendesprev Sociedade PrevidenciáriaMerck Family FundMeritas Mutual FundsMetallRente GmbHMetrus – Instituto de Seguridade SocialMetzler Investment GmbhMFS Investment ManagementMidas International Asset ManagementMiller/Howard InvestmentsMirae Asset Global Investments Co. Ltd.Mirae Asset Securities Co., Ltd.Missionary Oblates of Mary ImmaculateMistra, Foundation for Strategic Environmental ResearchMitsubishi UFJ Financial Group (MUFG)Mizuho Financial Group, Inc.Mn ServicesMonega Kapitalanlagegesellschaft mbHMorgan StanleyMotor Trades Association of Australia Superannuation Fund Pty LtdMutual Insurance Company Pension-FenniaNatcan Investment ManagementNathan Cummings Foundation, TheNational Australia BankNational Bank of CanadaNational Grid Electricity Group of the Electricity Supply Pension SchemeNational Grid UK Pension SchemeNational Pensions Reserve Fund of IrelandNational Union of Public and General Employees (NUPGE)NATIXISNedbank LimitedNeedmor FundNEI InvestmentsNelson Capital Management, LLCNest SammelstiftungNeuberger BermanNew Amsterdam Partners LLCNew Mexico State TreasurerNew York City Employees Retirement SystemNew York City Teachers Retirement SystemNew York State Common Retirement Fund (NYSCRF)New Zealand Earthquake CommissionNewton Investment Management LimitedNGS SuperNH-CA Asset ManagementNikko Asset Management Co., Ltd.Nikko Cordial SecuritiesNissay Asset Management CorporationNORD/LB Kapitalanlagegesellschaft AGNordea Investment Management

Norfolk Pension FundNorges Bank Investment Management (NBIM)North Carolina Retirement SystemNorthern Ireland Local Government Officers’ Superannuation Committee (NILGOSC)Northern TrustNykreditOddo & CieOECO Capital Lebensversicherung AGOld Mutual plcOMERS Administration CorporationOntario Teachers’ Pension PlanOP Fund Management Company LtdOppenheim Fonds Trust GmbHOpplysningsvesenets fond (The Norwegian Church Endowment)OPSEU Pension TrustOregon State TreasurerOrion Asset Management LLCParnassus InvestmentsPax World FundsPensioenfonds VervoerPension DenmarkPension Fund for Danish Lawyers and EconomistsPension Protection FundPensionsmyndighetenPETROS - The Fundação Petrobras de Seguridade SocialPFA PensionPGGMPhillips, Hager & North Investment Management Ltd.PhiTrust Active InvestorsPhoenix Asset Management Inc.Pictet Asset Management SAPKAPluris Sustainable Investments SAPNC Financial Services Group, Inc.Pohjola Asset Management LtdPortfolio 21 InvestmentsPorto Seguro S.A.PREVHAB PREVIDÊNCIA COMPLEMENTARPREVI Caixa de Previdência dos Funcionários do Banco do BrasilPREVIG Sociedade de Previdência ComplementarProvinzial Rheinland HoldingPrudential Investment ManagementPsagot Investment House LtdPSP InvestmentsPSS - Seguridade SocialQ Capital Partners Co. LtdQBE Insurance GroupRabobankRaiffeisen SchweizRailpen InvestmentsRathbones / Rathbone Greenbank InvestmentsReal Grandeza Fundação de Previdência e Assistência SocialRei SuperReliance Capital LtdResolutionResona Bank, LimitedReynders McVeigh Capital ManagementRLAMRobecoRockefeller Financial Rose Foundation for Communities and the EnvironmentRoyal Bank of CanadaRoyal Bank of Scotland GroupRREEF Investment GmbHSAM GroupSAMPENSION KP LIVSFORSIKRING A/SSAMSUNG FIRE & MARINE INSURANCESamsung SecuritiesSanlamSanta Fé Portfolios LtdaSAS Trustee CorporationSauren Finanzdienstleistungen GmbH & Co. KGSchrodersScotiabankScottish Widows Investment PartnershipSEBSEB Asset Management AGSecond Swedish National Pension Fund (AP2)

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CDP Signatories

SEIU Master TrustSeligson & Co Fund Management PlcSentinel InvestmentsSERPROS - Fundo MultipatrocinadoSeventh Swedish National Pension Fund (AP7)Shinhan BankShinhan BNP Paribas Investment Trust Management Co., LtdShinkin Asset Management Co., LtdSiemens Kapitalanlagegesellschaft mbHSignet Capital Management LtdSMBC Friend Securities Co., LTDSmith Pierce, LLCSNS Asset ManagementSocial(k)Sociedade de Previdencia Complementar da Dataprev - PrevdataSolaris Investment Management LimitedSompo Japan Insurance Inc.Sopher Investment ManagementSPF Beheer bvSprucegrove Investment Management LtdStandard CharteredStandard Chartered Korea LimitedStandard Life InvestmentsState Bank of IndiaState Street CorporationStatewideSuperStoreBrand ASAStrathclyde Pension FundStratus GroupSumitomo Mitsui Banking CorporationSumitomo Mitsui Card Company, LimitedSumitomo Mitsui Finance & Leasing Co., LtdSumitomo Mitsui Financial GroupThe Sumitomo Trust & Banking Co., Ltd.Sun Life Financial Inc.Superfund Asset Management GmbHSUSI Partners AGSustainable CapitalSvenska Kyrkan, Church of SwedenSwedbank ABSwiss ReSwisscanto Holding AGSyntrus Achmea Asset ManagementT. Rowe PriceT. SINAI KALKINMA BANKASI A.S.T.GARANTI BANKASI A.S.Tata Capital Limited TD Asset Management Inc. and TDAM USA Inc.Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF)Telluride AssociationTempis Asset Management Co. LtdTerra Forvaltning ASTerraVerde Capital Management LLCThe Brainerd FoundationThe Bullitt FoundationThe Central Church Fund of FinlandThe Collins FoundationThe Co-operative Asset ManagementThe Co-operators Group LtdThe Daly FoundationThe GPT GroupThe Hartford Financial Services Group, Inc.The Japan Research Institute, LimitedThe Joseph Rowntree Charitable TrustThe Local Government Pensions InstitutionThe Pension Plan For Employees of the Public Service Alliance of CanadaThe Pinch GroupThe Presbyterian Church in CanadaThe Russell Family FoundationThe Shiga Bank, Ltd.The Standard Bank GroupThe United Church of Canada - General CouncilThe University of Edinburgh Endowment FundThe Wellcome TrustThird Swedish National Pension Fund (AP3)Threadneedle Asset ManagementTokio Marine & Nichido Fire Insurance Co., Ltd.

Toronto Atmospheric FundTrillium Asset Management CorporationTriodos Investment ManagementTrygUBSUniCredit GroupUnion Asset Management Holding AGUnipensionUNISON staff pension schemeUniSuperUnitarian Universalist AssociationUnited Methodist Church General Board of Pension and Health BenefitsUnited Nations FoundationUniversities Superannuation Scheme (USS)Vancity Group of CompaniesVCH Vermögensverwaltung AGVeris Wealth PartnersVeritas Investment Trust GmbHVermont State TreasurerVexiom Capital, L.P.VicSuper Pty LtdVictorian Funds Management CorporationVietNam Holding Ltd.Vision SuperVOLKSBANK INVESTMENTSWaikato Community Trust IncWalden Asset Management, a division of Boston Trust & Investment Management CompanyWARBURG - HENDERSON Kapitalanlagegesellschaft für Immobilien mbHWARBURG INVEST KAPITALANLAGEGESELLSCHAFT MBHWells Fargo & CompanyWest Yorkshire Pension FundWestLB Mellon Asset Management (WMAM)Westpac Banking CorporationWhite Owl Capital AGWinslow Management, A Brown Advisory Investment GroupWoori BankWoori Investment & Securities Co., Ltd.YES BANK LimitedYork University Pension FundYouville Provident Fund Inc.Zegora Investment ManagementZevin Asset ManagementZurich Cantonal Bank

Figure A: 2011 Signatory Investor Breakdown

Asset ManagersAsset OwnersBanksInsuranceOther

1% 37%

5%23%

34%

Figure B: CDP Investor Signatories & Assets over time

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CEO Foreword Corporations, investors and governments today are faced with a choice: to compete aggressively for finite resources, or to advance towards a low-carbon economy that enables sustainable, profitable growth, whilst reducing reliance on increasingly scarce materials.

Last year global energy-related carbon dioxide emissions reached a record high. The International Energy Agency estimates made for bleak reading but compounded the necessity to take bold and decisive action if we are to have any chance of limiting temperature increase to the 2°C level agreed by world leaders to protect against catastrophic climate change.

What’s more, rising energy demands are competing for a limited supply of fossil fuels. The competition for increasingly scarce natural resources is putting pressure on commodity prices and having a growing impact both socially and economically. It is clear that today, more than ever, we must build momentum to decouple economic growth from emissions.

Managing carbon emissions and protecting the business from climate change impacts is fundamental to achieving sustainable and strong shareholder returns. Earlier this year, investment consultancy Mercer released a report concluding that the best way for institutional investors to manage portfolio risk associated with climate change may be to shift 40% of their portfolios into climate-sensitive assets with an emphasis on those that can adapt to a low-carbon environment.

An important part of an investor’s strategy should be to engage with the companies in which they invest to encourage performance improvement. Carbon Action is a new initiative launched by CDP this year. It is driven by a leading group of investors to encourage their portfolio companies to reduce emissions by investing in emissions reducing activities with a satisfactory payback period. Carbon Action reflects a growing recognition that there is a huge range of carbon reducing activities that companies can undertake that have a very clear business case. It is therefore in the interests of all investors and not just the more active owners of investments to ensure these actions are taken.

As the management of carbon continues to move into companies’ core business strategies and mainstream investment thinking, demand for primary corporate climate change information grows around the world. As well as working on behalf of 551 institutional investors to gather relevant information from large corporations around the world, CDP is also working with global businesses and governments to strengthen the resilience and sustainability of their supply chains through the CDP Supply Chain program. CDP Cities has launched to help the world’s major cities reduce climate change risk and bolster economic growth; and CDP Water Disclosure is now in its second year of working with major global companies to improve water management. A key part of CDP’s strategy is to ensure the effective use of data collected. To assist with this companies are able to obtain tools that help them to measure, report and manage carbon more effectively, through CDP Reporter Services.

It is through partnerships that CDP can achieve the largest impact. We are delighted to be working again this year with PwC, our Global Advisor, as well as with Accenture, Microsoft, SAP and Bloomberg. These and our other partners around the world are integral to the acceleration of CDP’s mission.

Whilst we wait patiently for much needed global regulation, business must continue to forge ahead, innovate and seek out opportunities by doing more with less. The decisions that perpetuate a legitimate, low-carbon and high growth economy will bring considerable value to those that have the foresight to make them. The information contained in this report and the companies’ responses assist in illuminating that path.

Paul SimpsonCEOCarbon Disclosure Project

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Contents CEO Foreword 05 Executive Summary 07

2011 Themes and Highlights 08

Risk managementOperational effectivenessBusiness opportunityStrategic advantage

Commentary: Jack Ehnes, Chief Executive Officer, CalSTRS 16

Commentary: Douglas J. Kangos, Partner, PwC 20

2011 Leaders 21

The 2011 Carbon Disclosure Leadership Index (CDLI) 22

The 2011 Carbon Performance Leadership Index (CPLI) 25

Appendix 1: Selected data from the 2011 CDP questionnaire results 28

Appendix 2: Table of emissions, scores and sector information by company 31

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Executive Summary

The Carbon Disclosure Project (CDP) sent its 2011 questionnaire to the S&P 500 companies on behalf of 551 signatory institutional investors representing $71 trillion of assets. The corporations were asked to measure and disclose their climate change related-activities. The responses indicate that US corporations are integrating greenhouse gas (GHG) management into their near- and long-term business strategies.

Specifically:

• 87% (292) of S&P 500 respondents reported board or senior executive oversight of their company’s climate change programs, up from 68% (226) in 2010. With two-thirds of the S&P 500 index participating in this year’s questionnaire, this translates to at least 58% of the index viewing climate change as a mission-critical issue.

• 65% (219) of respondents reported that climate change issues are integrated into their overall business strategy, up from 35% (116) in 2010.

• 54% (183) of respondents provided monetary incentives for managing climate change issues, up from 35% (116) in 2010.

• 91% (306) of 2011 S&P 500 respondents disclosed GHG emissions, up from 88% (294) in 2010. Responses show a marked improvement in GHG emissions measurement and reporting.

• 64% (214) of 2011 respondents disclosed absolute and/or intensity emissions reduction targets, up from 51% (170) in 2010.

• 72% (242) of the 2011 S&P 500 respondents identified risks and 69% (233) identified opportunities that have the potential to substantively impact business operations. Responses indicate that a growing number of S&P 500 companies see a path forward from risk management and operational effectiveness to significant business opportunities and actionable, long-term strategic advantage.

• Over 60% (667) of emissions reduction projects reported by the 2011 S&P 500 respondents have a payback period of three years or less. Companies reported a higher number of opportunities to reduce emissions and those reflect increasingly innovative and creative approaches to GHG emissions reductions.

As the management of carbon continues to move into companies’ core business strategies and mainstream investment thinking, demand for primary corporate climate change information grows around the world. Paul Simpson, CEO CDP

Finding strategic advantage through climate change action

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2011 Themes and Highlights

From risk management to strategic advantage

Corporate sustainability efforts evolve over time. This journey is often undertaken initially to address imminent compliance and risk management concerns, such as regulatory, operational or reputational risk. As companies become more sophisticated regarding the business implications of climate change, their efforts often lead to increased efficiency, effectiveness, lower costs, and improved brand image, thereby gaining the attention of senior management. Once these benefits are recognized, many companies begin to consider how sustainability can be

incorporated into the overall business strategy to protect enterprise value and generate strategic advantage.

According to the results of the questionnaire, climate change has become an operational, fiscal, and strategic imperative for the S&P 500 companies, resulting in greater senior executive attention and focus. As illustrated in Figure 2, nearly 90% (292) of S&P 500 respondents indicated board or senior management oversight, indicating that climate change is viewed as a strategic imperative. This shift has been triggered by both external and internal factors.

A growing number of companies believe sustainability offers significant first-mover advantages, such as reduced operating costs, improved brand image, and greater market responsiveness.

This trend is reflected in the number of companies reporting integration of climate change into their overall business strategies and by those companies reporting monetary and other incentives for meeting certain emissions reduction targets. As shown in Figure 3, 54% (183) reported the use of monetary incentives related to climate change and 65% (219) of respondents reported integrated strategy. This equates to a year over year increase of 85% in respondents reporting integration of climate change into their overall business strategies.

In

crea

sing E

nterprise Value and Investor Recognition

Risk Management • Investor/Public Pressure• Operational Risk • Reputational Risk• Regulatory Compliance

Operational Effectiveness• Operational Efficiency • Emissions Reduction• Product Efficiency

Business Opportunity • Brand Enhancement• Market Leading • Product Innovation

StrategicAdvantage

Figure 1: The Sustainability Enterprise Value Continuum: Leading companies are gaining strategic advantage by embedding climate change action throughout their overall business strategies


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Figure 3: S&P 500 respondents reporting monetary incentives and an integration of climate change into their overall business strategy

0 50 100 150 200 250

Number of companies

Monetary incentives

183 (54%)

116 (35%)

Integrated strategy

116 (35%)

219 (65%)

2010 2011

Figure 4: S&P 500 respondents disclosing GHG emissions and absolute and/or intensity emissions reduction targets

0 50 100 150 200 250 300 350

Number of companies

Disclose GHG emissions

294 (88%)

262 (80%)

2009 2010 2011

306 (91%)

Disclose emissions reduction targets

170 (51%)

169 (52%)

214 (64%)

Figure 2: S&P 500 respondents reporting board or senior management oversight of climate change

0 50 100 150 200 250 300 350

Number of companies

226 (68%)

222 (68%)

292 (87%)

2009 2010 2011

S&P 500 leaders gave sustainability board-level attention and firmly embedded climate change risks and opportunities into their broader strategies and objectives. Companies that embraced this integrated approach were more likely to establish emissions reduction targets.

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Companies that embraced the integrated approach to climate change were also more likely to disclose both their GHG emissions and emissions reduction targets, reflecting the principle that emissions measurement can result in strategic emissions management. As indicated in Figure 4, 91% (306) of respondents have disclosed their GHG emissions and 64% (214) have disclosed absolute and/or intensity emissions reduction targets.

I. Risk management Companies generally enter the enterprise value continuum from a risk perspective, depending on their industry and sector. The foremost risk is national and international pressure from both governmental and non-governmental organizations to meet new emission and reporting standards. This has occurred despite the lack of political and policy consensus in many countries, including the US. In addition, there are new pressures from investors, customers, banks, insurers, and global business partners to contain GHG emissions.As companies move along the continuum from risk management toward strategic advantage, the results indicate they are becoming conversant in the risks posed by regulation and the physical effects of climate change (see Figure 5). Some emerging risks are more challenging to quantify, such as those relating to reputation and consumer behavior.

Policy drivers and the internationalization of riskMultinational companies are exposed to a variety of different policies regulating GHG emissions in markets where they operate. Companies are adjusting business practices across their operations to reflect environmental regulations, cap and trade schemes and carbon taxes that occur by jurisdiction.

• Europe. The European Union (EU) has longstanding mandatory reductions in greenhouse gases. In 2007 EU leaders endorsed an integrated approach to climate and energy policy and committed to transforming Europe into a highly energy-efficient, low carbon economy. They made a unilateral commitment that Europe would cut its emissions by at least 20% of 1990 levels by 2020 through a cap and trade regime. This commitment is being implemented through a package of binding legislation. The EU has also offered to increase its emissions reduction to 30% by 2020, on condition that other major emitting countries in the developed and developing worlds commit to do their fair share under a future global climate agreement.1

To implement its climate change

regulation, the EU operates the European Union Emissions Trading Scheme (EU ETS), which covers the Utilities sector and most industrial emissions in EU states. The price of carbon allowances in the EU ETS in 2011 has ranged from e11.46 to e20.80, an inherent cost of doing business in the EU to which companies operating there have had to adjust.2

• Asia-Pacific. China’s new 12th Five Year Plan aims to build sustainable development practices into Chinese industries. The new targets intend to lower energy intensity by 16% over the next five years, to cut CO2 emissions by 17%, and to increase alternative energy use from 8% to 14%.3

Figure 5: Risks identified by S&P 500 respondents

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1. http://ec.europa.eu/clima/policies/brief/eu/index_en.htm2. www.theice.com/marketdata/reports/ReportCenter.

shtml?reportId=833. http://deltabridges.com/news/prd-news/12th-five-year-plan-

hailed-‘greenest-fyp-china’s-history’


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In July 2011, the Australian government announced a comprehensive plan that includes putting a price on carbon emissions, promoting innovation and investment in renewable energy, improving energy efficiency, and creating opportunities in the land sector to cut pollution. Under the plan, Australia estimates that it can cut 159 million tons a year of carbon pollution by 2020.4 Some Australian companies are also mandated to undergo energy efficiency assessments and report publicly on opportunities that exist for projects with a financial payback of up to four years.5 New Zealand recently passed new regulations for emissions trading and India is expected to soon follow suit.

• North America. In the US, the Securities and Exchange Commission issued interpretative guidance in early 2010 highlighting climate change disclosures that should be considered by registrants. Several federal and local programs already require the reporting of GHG emissions information, including the Environmental Protection Agency’s mandatory GHG reporting rule for large emitters. In addition, California’s Global Warming Solutions Act of 2006 will require certain facilities in California to reduce GHG emissions to 1990 levels by 2020. In the Northeast, the Regional Greenhouse Gas Initiative also requires reductions among utilities.

Physical risks Businesses face growing risks from the physical impacts of climate change, including the increased intensity and frequency of severe weather events such as prolonged droughts, floods, storms and sea level rise. According to the National Oceanic and Atmospheric Administration (NOAA), the year 2011

already represents the highest damage cost-to-date (US$32 billion) in the US since 1980, the year NOAA began tracking disasters. The April tornadoes in the Midwest alone were responsible for approximately half of the losses and over 500 deaths.6

In general, industrial companies —especially in the Utilities and Energy sectors (see Figure 6) — were most concerned with regulatory and weather-related risks.

“Climate change may increase either the frequency or intensity of hurricanes, which could affect our operations. The Gulf of Mexico is of particular importance to our industry because two thirds of imported oil enters the country through this region and it houses many of the oil and gas pipelines that move domestic resources from the Outer Continental Shelf to the rest of the country. Chevron has developed a number of risk management mechanisms that are applied to siting and construction of new facilities as well as the operation of existing ones. These mechanisms help reduce our vulnerability to sea level rise, tropical cyclones, water shortages, and other environmental factors.”Chevron

“As a food producing company, Sara Lee is heavily dependent on globally sourced agricultural production process inputs. Therefore, Sara Lee is exposed to climate change, on a global scale, to impacts and physical risks that vary from region to region.”Sara Lee

Within the services sectors, property and casualty insurers were concerned that climate change could have a profound global impact on insured losses and potentially lead to insurer solvency problems.

“Allstate is engaged in an ongoing evaluation of climate change and natural catastrophes as it relates to Allstate’s future risk exposure and America’s ability to prepare for and manage these catastrophe related risks moving forward. Allstate monitors all significant enterprise risks and opportunities, including those related to climate change on a regular basis, with fluid risk identification processes to reflect a continuously shifting external and internal risk environment.” Allstate

Market risk and the risk of inaction Respondents, led by both the Utilities and Consumer Staples sectors, expressed growing concern over reputational risk, value chain risk, and changing patterns in consumer behavior and expectations. Respondents believe failure to craft and execute a credible climate change strategy could create a risk of inaction and turn the sentiments of stakeholders (including investors, civil society groups, customers and employees) against the company (see Figure 6).

Many companies are beginning to take a proactive approach to addressing these concerns. Procter & Gamble and Wal- Mart Stores recently announced plans to reduce GHG emissions in their global supply chains. In July 2010, the General Services Administration announced plans to give greater preference to vendors that track and reduce GHG emissions. Similarly, an increasing number of questionnaires and requests for proposal now require potential vendors to provide GHG emissions information, as well as plans for reduction.

4. www.cleanenergyfuture.gov.au/government-launches-‘clean-energy-package’/

5. www.ret.gov.au/energy/efficiency/eeo/about/summary/6. www.ncdc.noaa.gov/oa/reports/billionz.html

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“Brand reputation extends beyond customer perception to retention of internal constituents and appeal to potential investors. As climate change awareness increases and consumer behaviors change accordingly, demand for low carbon products will increase as will the backlash against products and their manufacturers perceived to have a negative impact on the environment. This can also negatively impact a company’s ability to attract and retain investors and employees.” Life Technologies

We consider our reputation to act with integrity and accountability and operate responsibly and sustainably to be very important to our business and our customers. The potential financial implications of this risk extend from the ability to access markets to retaining customers to being able to operate within countries and communities. Negative changes in reputation are known to affect brand value. In 2010, Interbrand placed HP’s brand value at US$26.9 billion.” Hewlett-Packard

Sector Regulatory Physical Reputation and

Customer behavior

Energy 100% 59% 41%

Utilities 100% 84% 56%

Materials 76% 62% 43%

Industrials 75% 55% 28%

Information Technology 59% 49% 42%

Financials 58% 69% 37%

Consumer Discretionary 53% 55% 43%

Consumer Staples 49% 62% 49%

Health Care 39% 48% 36%

Telecommunication Services 33% 33% 17%

All sectors 63% 59% 40%

Figure 6: Percentage respondents by sector identifying regulatory, physical, reputation and customer behavior risks related to climate change


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II. Energy efficiency and operational effectiveness

Rising energy prices are expected to impact S&P 500 companies for the foreseeable future. Emerging markets now account for more than half of world demand for oil. In June, the International Energy Agency raised its five-year oil price forecast by US$19 a barrel, citing that oil demand will increase more than previously expected in a supply-constrained market.7 In addition to these higher cost inputs, S&P 500 companies realize that higher energy prices will continue to pinch household discretionary incomes.

Opportunities for reduced costs and increased margins have encouraged S&P 500 companies to move along the enterprise value continuum from risk management toward a greater emphasis on energy efficiency and operational effectiveness. As shown in Figure 7, energy costs represent a significant component of the S&P 500 respondents’ operational spend, making efficiency and effectiveness an ongoing area of focus at the board and management level. To reduce this overhead, S&P 500 companies have been examining their energy or carbon footprints across their global value chains, including how suppliers, internal operations, and consumers use the company’s products and services.

Figure 7: Energy costs as a percentage of operational spend disclosed by S&P 500 respondents8

0% 5% 10% 15% 20% 25% 30%

Utilities

Materials

Financials

Energy

Information Technology

Consumer Staples

Health Care

Consumer Discretionary

Industrials

Telecommunication Services

14%

24%

10%

8%

5%

5%

5%

3%

5%

8%

Energy costs represent a significant component of the S&P 500 respondents’ operational spend, making efficiency and effectiveness an ongoing area of focus at the board and management level.

7. www.marketwatch.com/story/iea-raises-five-year-oil-price-forecast-by-19brl-2011-06-16

8. Energy costs as a percentage of operational spend per the 2011 CDP Information Request is defined as the amount a company spends for energy to operate the company within its organizational boundary as a percentage of total operational spend.

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Over 67% (226) of respondents indicated a variety of reduction activities, with 60% (667) realizing a payback period for increased energy and operational efficiency to be three years or less (see Figure 8). Most respondents report multiple projects in each category which resulted in over 1,000 total projects disclosed. The colors of the bars in the figure portray the percentage of projects reported that fall into each payback category.

“UPS uses more than 95,000 ground vehicles, more than 200 aircraft, and the services of many other transportation companies. Therefore, reducing fuel and energy consumption and implementing low carbon fuels is a business imperative. In 2010, routing technology provided savings of 63.5 million miles or 6.3 million gallons of fuel. The initiative applies to the U.S. Package Delivery Vehicles and reduces Scope 1 emissions (fuel). Idle time reduction saved 103,000 gallons of fuel.”UPS

Figure 8: Emissions reduction activities and payback periods disclosed by S&P 500 respondents

<1 year (% responses) 1-3 years (% responses) >3 years (% responses)

Efficient building services

Efficient processes

Behavioral change

Transportation: fleet

Low carbon energy installation

Efficient building fabric

Transportation: use

Process emissions reductions

Low carbon energy purchase

Product design

21%

Fugitive emissions reductions

Other

44% 36%


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“All of GE’s industrial businesses conducted emissions reduction projects during 2010. 238 projects were completed that saved just over US$7 million with an overall payback period of 1.47 years. An additional 75 projects were identified but are still being explored. The types of projects that were completed ranged from new technologies, to enhancing the efficiency of existing equipment, to engaging employees in energy conservation efforts. Discrete projects included implementing alternative sources of fuel, upgrading or closing buildings, improving electrical distribution efficiency, implementing heat recovery solutions, optimizing industrial gas use, enhancing steam system recovery efforts, installing solar panels, and driving employee engagement and awareness efforts, among many others.”General Electric

“Marriott set an aggressive goal in 2007 to reduce energy and water consumption by 25% per available room from 2007 levels by 2017. Since that time, Marriott has implemented linen and towel reuse practices; replaced more than 28,000 PTAC guestroom air conditioning units for a 20% reduction in energy use; replaced more than 1,700 heat pumps with units that are 16% more energy efficient; and installed over 18,000 electronic digital thermostats with motion detection, yielding another 15% in energy use improvement. We also adopted new standards for roof replacements in our full-service hotels that call for extra insulation, thus reducing roof thermal load by at least 25% when a new roof is installed and replaced 450,000 light bulbs with fluorescent lighting.”Marriott International

“In 2009, Praxair voluntarily started collecting environmental key performance indicators (EKPIs) being saved in productivity projects. In 2010, some 8% of projects were tagged “sustainable development” resulting in savings of US$32.9 million, including 278,000 metric tonnes CO2-e (Scopes 1 & 2 GHG savings). Going forward, this process will be embedded in our productivity organization and environmental targets, including Scopes 1 & 2 (direct GHG and energy) reduction targets, established for each business and overall. In addition to reporting these savings, we feel this information will start to add real value in the short and long term as we look for new ways to reduce costs and improve our environmental impact. Moreover, no additional investment was required as this work was accomplished with existing resources.”Praxair

“Our underground refrigerated storage facility is built into the natural limestone caves at Springfield, Missouri. Not only do the naturally cool caves require 65% less energy than conventional storage facilities, their large size and central location enable us to consolidate inventory and transport our products to our customers more efficiently. That’s an annual savings of 680,000 liters (180,000 gallons) of fuel, 1,800 metric tonnes (4 million pounds) of carbon dioxide emissions and more than 1.6 million kilometers (one million miles) of truck travel.”Kraft Foods

To reduce energy costs, S&P 500 companies have been examining their energy or carbon footprints across their global value chains, including how suppliers, internal operations, and consumers use the company’s products and services.

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CalSTRS was one of the first public pension funds in North America to support the efforts of the Carbon Disclosure Project. We recognized the growing risk to our investment portfolio that carbon emissions presented and we realized that managing carbon risk needed to be one of the top priorities of our corporate governance program. We believed that the CDP survey presented an ideal means for us to gauge which companies were and were not paying attention to carbon risk.

Today, climate risk management remains one of the signature issues in CalSTRS corporate governance program. We work hard to improve our portfolio companies’ climate risk awareness and management. Our partnership with CDP remains essential to the CalSTRS corporate governance engagement efforts that seek to boost long-term shareholder value.

We depend on data from CDP surveys to evaluate which companies are and are not adequately disclosing the steps being taken to mitigate climate risk. Earlier this year, to further support the efforts of the CDP, CalSTRS sent letters to all U.S. companies that did not respond to last year’s questionnaire, encouraging them to participate this year. We began dialogues with many of these companies and advised them of the importance of climate risk management and requested that they reconsider their decision to not respond.

CalSTRS supports the growing use of climate-related shareholder resolutions. We strongly believe this is an important tool for investors to use as an engagement strategy, and here again, CDP data is essential to the development and execution of CalSTRS shareholder resolutions.

For the past several years, CalSTRS has filed resolutions at portfolio companies that did not respond to the CDP questionnaire. These proposals asked companies to improve their level of disclosure on their carbon emissions exposure.

In today’s economic environment, there is strategic advantage to addressing climate risk. Complying with CDP initiatives implies you proactively deal with risk factors and that can lead to benefits for both corporations and institutional investors. Companies that measure their carbon emission exposure are better positioned to respond to changing regulatory requirements and to take advantage of efficiency opportunities that can increase shareholder value.

Green is a good brand and it appeals to a new generation of sophisticated investors. Institutional investors look for opportunities to remind companies to recognize and report their climate risks and liabilities. Working together we can lead the way as addressing the challenges of climate change becomes ever more critical to sustainable investment growth.

On behalf of CalSTRS, I thank the CDP for the work that went into producing the 2011 S&P 500 report.

Commentary Jack Ehnes, CEO, CalSTRS


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III. Business opportunity

Many S&P 500 companies have already examined how they might deliver new products and services to meet customer concerns regarding regulatory and physical risks from climate change (see Figure 9). These opportunities are related to carbon and energy taxes, cap and trade, and increased business from mandated activities.

New DemandsAs regulation continues to emerge, leading companies also see this as an opportunity to surpass the competition in handling the new requirements and standing out as a true leader in carbon performance. Nearly 50% (159) of S&P 500 respondents also indicated reputational and customer behavior opportunities from the impact associated with positive perceptions of a company’s carbon performance and changing consumer preferences for more environmentally friendly products and services.

“To the extent that the government implements any of the well-publicized cap and trade schemes, we will likely have an advantage over our competition. A cap and trade scheme would introduce incentives to reduce carbon emissions from operations to earn a financial instrument or carbon offset credit. These carbon offsets, once earned, will have a positive economic value that Dean can hold as an asset or sell for revenue as the price of carbon changes. Also, because we have operations in Europe and the United States, the potential to generate offset credits from internal projects to meet any future regulatory obligations is a unique and distinct advantage.” Dean Foods

“We operate an active carbon market services business that provides risk management, market access and liquidity, and structured finance to a variety of corporate clients looking to

reduce carbon emissions or manage their carbon exposure within the context of mandatory cap and trade schemes. Our Global Carbon Markets business is a top liquidity provider in the EU ETS, the world’s largest carbon market; which accounts for 80% of the value transacted in the global carbon markets and is also an active deal originator in the carbon credits (offsets) segment of the market. To date, we have transacted more than one billion metric tons in the EU ETS. We also participate in the developing carbon markets in California. As individual countries and regions explore the potential for introducing cap and trade schemes, we have the opportunity to advise on how these might be structured, work with clients to take advantage of these new markets; and develop trading and risk management-related solutions for supporting client activity.” Bank of America

“Any tax that puts a price on carbon could drive new markets and/or grow existing ones. However to grow new markets, the cost on carbon would be key. In order to stimulate interest in our CO2 capture technologies, which also require large amounts of oxygen, the carbon price would need to be set high enough to make carbon capture sequestration economical. Carbon taxes could also grow existing markets.”Air Products & Chemicals

Marketplace impact Greater climate change responsiveness was also perceived as providing favorable reputational and marketplace impact. A proactive stance was viewed as offering long-term growth opportunities, appearing more innovative and attractive to customers and providers of capital, and helping companies to attract and retain premier current and future employees. As indicated in Figure 10, perceptions of these opportunities vary by sector, industry, and company.

Figure 9: Opportunities identified by S&P 500 respondents

250

200

150

100

50

0

Num

ber

of c

omp

anie

s

Regulatory Physical Reputation and

Customer behavior

Other

210(62%)

145(43%)

159(47%)

46(14%)

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Companies are increasingly capitalizing on these opportunities to generate revenues while also reducing the impact of their products on the environment.

“We view the opportunities presented by emissions reporting obligations and voluntary agreements as a way to demonstrate Campbell’s executional leadership among our peers. We also see these as opportunities to demonstrate our leadership and transparency with stakeholders that include our customers, suppliers, consumers, and policymakers. In order to manage these opportunities we seek to work with our suppliers and take advantage of efficiencies that either they implement or we implement in our transportation and logistics systems. We have also instituted a smart way certification requirement for our shippers and have recently launched a sustainability scorecard across our North American logistics network.”Campbell Soup

“Increasing consumer demand for environmentally friendly products and services has led Best Buy to provide new energy efficient products and a means to recycle old products. We helped our U.S. Best Buy customers purchase over 22 million ENERGY STAR® qualified products in calendar year 2010 and encouraged our vendors to participate in the ENERGY STAR program. In calendar 2010, the U.S. Environmental Protection Agency estimated that our sales of these products resulted in customer savings of 1.12 billion kilowatt hours of energy, generating over US$120 million in electric utility bill savings, while preventing over 1.7 billion pounds of carbon dioxide from entering the atmosphere.”Best Buy

Sector Regulatory Physical Reputation and

Customer behavior

Utilities 96% 68% 60%

Energy 82% 29% 41%

Materials 81% 48% 43%

Industrials 75% 58% 58%

Financials 62% 48% 52%

Information Technology 61% 34% 51%

Consumer Staples 54% 54% 51%

Consumer Discretionary 51% 32% 43%

Telecommunication Services 50% 33% 17%

Health Care 30% 24% 24%

All sectors 62% 43% 47%

Figure 10: Percentage respondents by sector identifying regulatory, physical, reputation and customer behavior opportunities related to climate change

“We are utilizing a number of methods to highlight the potential fuel economy and cost benefits of our transportation products. In 2010, Alcoa Wheel and Transportation Products released an updated version of its online tool called “Calcu-Lighter”; which helps truck fleets and owners instantly calculate their potential fuel and GHG savings and return on investment when comparing wheel options. New Corporate Average Fuel Economy (CAFE) and GHG emissions standards could potentially double the demand for our transportation products by 2015.”Alcoa


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9. www.issgovernance.com/files/ISS2010-2011_PolicySurveyResults.pdf

Toward strategic advantage

The ability to achieve strategic advantage through climate change action is no doubt a work in progress for most, if not all, companies, even those recognized as leaders in the CDP questionnaire results. Most of the leaders are global or regional companies with superior management and the financial strength to plan beyond quarterly results. On the other hand, similar types of companies in the same industries have adapted at a slower rate.

What separates the leaders? To a large extent, it appears to be a matter of perspective and vision. Leaders see managing GHG emissions as meeting a broad array of business challenges and opportunities, now and into the future. Yet others may only see the business case — if at all — as little more than prudent risk management.

This difference in perspective matters a great deal. The more relevant, reliable, and timely a company’s carbon reporting data, the easier it is for management to distill enterprise value from it. The firms that are in possession of such data appear to be using it to achieve cost savings, risk mitigation, brand enhancement, and new product development. By reducing their environmental impact, some companies are also reducing the need for future remediation, regulation and litigation. That has a savings component as well.

A lack of high-quality sustainability data, however, can have the opposite effect. Boards and management with incomplete data are hampered in their ability to respond to regulator and investor demands for information. Squeezing out waste and costs becomes more difficult, leading to a competitive disadvantage. Finally, management is unprepared to research, develop, and market the type of energy efficient products that the market is demanding — not just domestically, but worldwide.

Investor recognitionAn important strategic opportunity cited by respondents is the chance to shape investor perceptions regarding the company’s sustainability posture. They believe investors are increasingly conscious of how the environmental efficiency of an organization may have a financial impact on future corporate earnings, and are looking at both potential risks and opportunities from a long-term investment perspective. Respondents also noted that investors tend to view a company’s sustainability and climate change performance as a proxy for the overall quality of a company’s management and the company’s risk and opportunity management systems.

“We acknowledge the increasing evidence of linkages between share value and environmental performance. As we grow, we believe that our environmental sustainability commitments will become of increasing interest to our shareholders and other stakeholders and that ultimately a failure to effectively respond could negatively impact our share value.”Gilead Sciences

“We believe global climate change will likely have significant long-term financial implications, although impact will vary both across and within economic sectors and geographic regions. Companies that anticipate these developments with stronger environmental business practices will have greater returns of shareholder capital over the long term as compared to peers that are not prepared for climate change actions. State Street and SSgA have joined with their clients and industry peers to raise awareness over the investment implications of global climate change.”State Street

These investor recognition issues were recently borne out by the 2010-11 Institutional Shareholder Services Policy Survey.9 83% of investors said that environmental, social and governance (ESG) factors could have a significant impact on long-term shareholder value and 97% said board oversight of exposure to ESG risks was important to consider in proxy voting decisions.

Companies that understand the advantages are making strides to improve the quality of their sustainability data and also to subject the data to independent, third-party verification and assurance. This approach ultimately serves the long-term interests of investors who want to invest in companies concerned about sustainability and that are building strategic advantage through development of next-generation processes and products.

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Sustainability as competitive advantage

The CDP information request is designed to give S&P 500 companies an opportunity to explain their sustainability performance to investor signatories and the public across a broad range of areas, such as in strategy, governance, and GHG emissions management. The S&P 500 companies that scored the best in the 2011 CDP questionnaire provided responses that revealed possession of superior GHG emissions information and strong understanding of the impact of climate change on their companies.

But in many cases we found the silences just as revealing as the actual responses provided. The companies that scored poorly tended to leave

blank certain fields, such as emissions data. Upon further examination it appeared that these companies simply didn’t have the information to respond effectively.

The S&P 500 2011 CDP leaders, however, had plenty of high-quality data available because, fundamentally, they saw the issue differently. They use sustainability to differentiate themselves in the same way they approach brand quality, product quality, service quality, market share, and so on.

Leaders viewed climate change as a business imperative and responded accordingly. They put in place programs, processes, procedures and controls to generate higher, board-level intelligence necessary to base resource allocation decisions. And they put the right people in charge, incentivized them monetarily, and insisted on actionable business plans that could be integrated into their overall strategies.

The lesson we gleaned from all the data was a simple one. Whether it’s cutting costs and waste, producing new revenues, meeting current and future regulatory requirements in an efficient manner, or responding to investor questions, senior executives must have high-quality data in order to plan and execute accordingly.

The responses of the S&P 500’s 2011 CDP leaders showed some striking differences from the rest of the pack. Leaders exhibited a

thorough integration of managing GHG emissions and increasing shareholder value. Their responses cited specific examples in which they used their superior data and green-product experience to widen the gap with competitors. Some leaders indicated they were moving beyond mere differences in operational spend, market share and first-mover advantage to establish substantive barriers to entry.

Stepping back and assessing the S&P 500 results of the 2011 CDP information request provided an interesting perspective. While each company’s approach to the effects of climate change on their business was unique, it was in the actions of the leaders where we found the greatest similarities. The leaders possessed higher quality GHG emissions data that they freely shared with investors and other stakeholders. They also had firmly embedded the lens of climate change within the operations of their organizations. But, perhaps most importantly, senior executives drove the efforts by establishing and holding their organizations to both absolute and emissions intensity goals.

The S&P 500’s 2011 CDP leaders are now distancing themselves from the rest. The expanding GHG regulations across the globe are seen as an opportunity — rather than as a threat — to further secure their leadership positions and build market share.

Commentary Douglas J. Kangos, Partner, PwC

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The Carbon Disclosure Project requires companies to measure and report:1. Carbon emissions2. Integration of climate change into their

business strategy, and 3. Perception of climate change risks

and opportunities.

Disclosure and performance are assessed solely on the company’s CDP response. Companies’ disclosure scores have been reviewed and analyzed for the above elements for a number of years. This is the second year that performance has been assessed.

More information on the CDLI and CPLI can be found in the information request, supporting methodology and guidance documents at www.cdproject.net

Disclosure scores• Disclosure scores are an assessment

of the quality and completeness of a company’s response; they are not a measure of a company’s performance in relation to climate change management

• Scores are plotted over a 100-point normalized scale

• Companies are assessed based on their level of disclosure of carbon emissions measurement techniques and subsequent public disclosure

• Companies with the highest disclosure scores are listed in the CDLI

Performance bands • Where a company’s disclosure

score is 50 or more, its performance in contributing to climate change mitigation, adaptation and transparency is assessed and ranked in a performance band

• For 2011 there are six performance bands (there were four bands in 2010)

• Companies with the highest performance bands that meet additional CPLI criteria are listed in the CPLI

Generally, companies scoring within a particular range suggest levels of commitment to, and experience of, carbon disclosure. The indicative description of each level is provided at right for guidance only; investors should read individual company responses to understand the context for each business.

Carbon Disclosure and Performance

Figure 11: Carbon disclosure score elements

2011 Leaders

High (>70) Senior management understands the business issues related to climate change and building climate related risks and opportunities into core business

Midrange (50-70) Increased understanding and measurement of company-specific risks and opportunities related to climate change

Low (<50)

Limited or restricted ability to measure and disclose climate related risks, opportunities and overall carbon emissions

Disclosure score (Max. 100)

Finding strategic advantage through climate change action

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The 2011 Carbon Disclosure Leadership Index (CDLI)

The CDLI includes the companies with the highest carbon disclosure scores and provides a valuable perspective on the range and quality of responses to CDP’s questionnaire.

This year’s Carbon Disclosure Leadership Index (see Figure 12) includes the top-scoring 10% of S&P 500 companies: 55 in total.10 To qualify for this leadership index, a company must respond to CDP using the Online Response System prior to the deadline and make its response available for public use.

The average CDLI score in 2011 is 88, up from 86 in 2010 and 82 in 2009. This indicates that the quality and depth of

responses continues to improve despite the bar being raised every year through the CDP questionnaire. The distribution of CDLI companies is spread across a variety of sectors, confirming the view that high quality disclosure is possible regardless of sector.

Numerous companies have consistently achieved leadership over the years including 20 companies who have been carbon disclosure leaders for at least three consecutive years. The best-represented sectors in the CDLI are Financials (11 companies) and Consumer Staples (nine companies), which is consistent with the 2010 CDLI (nine for Consumer Staples and eight for Financials).

Sector Company name 2011 Carbon disclosure

score

2010 Carbon disclosure

scoreNews Corporation* 93 94

Carnival* 88 80 Tiffany & Co. 85 72 Johnson Controls 83 87

Wyndham Worldwide 83 -PepsiCo 90 71

Dean Foods* 89 91 Clorox 87 73 Kraft Foods 86 91 Molson Coors Brewing 86 83 Kellogg Company 85 67 Wal-Mart Stores* 85 86 Brown-Forman 84 83 Philip Morris International 83 87Energy Spectra Energy* 96 94 Hess* 91 90 Chevron* 86 80Financials Bank of America 97 85 Simon Property Group 96 78 Allstate 89 75 NYSE Euronext 89 80

Hartford Financial Services* 88 82Marsh & McLennan 88 50

“ The company has set a quantitative goal to mitigate our impact on climate change by reducing, offsetting, or displacing regional GHG emissions by 4.4 million metric tons. Since 2005, Con Edison and its subsidiaries have reduced Scope 1 direct emissions by 2.1 million metric tons (35% of total baseline 2005 emissions). Building on these early successes, Con Edison of New York and Orange and Rockland Utilities will also be working to reduce customer emissions through energy efficiency, distributed generation, and clean energy alternatives.” Consolidated Edison

Figure 12: 2011 S&P 500 Carbon Disclosure Leadership Index11

Continued overleaf.

10. This is based on total S&P 500 companies. The top-scoring 10% includes tied scores. 11. An asterisk indicates companies that have been carbon disclosure leaders for at least three consecutive years.


Consumer Staples


23

Sector Company name 2011 Carbon disclosure

score

2010 Carbon disclosure

scoreFinancials Comerica* 87 92

Morgan Stanley 87 85State Street 84 81

Goldman Sachs 83 62 ProLogis 83 80Health Care Gilead Sciences 95 83 Allergan* 83 80Industrials UPS 99 78 Boeing* 92 86 Lockheed Martin 90 76 Eaton 87 78 CSX 85 91 Ryder System 83 68Information Cisco Systems* 98 92Technology salesforce.com 91 -

Google 89 44EMC* 88 82

Hewlett-Packard 84 66IBM* 83 85

Materials Dow Chemical 95 80 Praxair* 93 93 Air Products & Chemicals* 92 81 Ecolab 91 84 Alcoa 88 77

Newmont Mining 88 87 Freeport-McMoRan

Copper & Gold87 60

Utilities Consolidated Edison* 96 96 PG&E * 92 90 Xcel Energy* 89 89 Sempra Energy 87 62 Entergy 85 76 Pepco Holdings* 84 87

“ Dow has committed to invest US$100 million to reduce energy usage and GHG emissions. ... As defined in Dow’s Energy and Climate vision, the current long term target is that Scope 1 and Scope 2 Kyoto GHG emissions will not exceed 1990 levels through 2025. The strategy is to grow the company while not increasing GHG emissions.” Dow Chemical

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The 2011 Carbon Disclosure Leadership Index (CDLI)

The S&P 500 respondents showed a strong overall improvement in the area of carbon disclosure. In 2011, almost 23% (77) of total respondents scored 80 or greater compared to 16% (53) in 2010. This trend shows more clearly than ever before that S&P 500 companies are analyzing and understanding the impact of climate change on their businesses.

As the overall quality of emissions disclosure has improved in 2011, the leaders (CDLI) have demonstrated a much more mature understanding of the impact of climate change. This appears to be driven by taking a strategic

approach with executive governance to identify meaningful risks and opportunities related to climate change. In 2011, disclosure leaders scored an average of 82 on the opportunity section of the questionnaire and 85 on the risk section compared to 46 and 55 scored by the overall S&P 500 respondents, respectively (see Figure 13). The CDLI companies also consistently out-performed the overall S&P respondents in areas such as managing and reporting emissions data and effectively communicating this information to stakeholders.

Figure 13: Carbon disclosure average score breakdown for the S&P 500 overall versus S&P 500 CDLI

100

90

80

70

60

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40

30

20

10

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rage

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Opportunities Risks Stakeholderengagement

Overall S&P 500 S&P 500 CDLI

Emissionsmanagement

Emissionsreporting

“ Morgan Stanley’s initial goal was to reduce emissions from our largest office buildings by 10% between 2006 and 2012. The firm achieved this goal early and established a new goal. Our new goal is to reduce emissions by 15% in all office buildings by 2013. This is calculated on a per square foot basis.” Morgan Stanley

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The 2011 Carbon Performance Leadership Index (CPLI)

In 2011, there are 11 leaders from a range of sectors which represent six of the 10 sectors. The average performance score for CPLI companies was 80, while the average performance score for the S&P companies that qualified to receive a score was 39. Both of these scores are down from 2010, when CPLI companies had an average performance score of 85 and S&P companies qualifying to receive a performance score had an average score of 47.

In recent years, there has been a consistent trend that S&P 500 senior executives are increasingly engaged and want to have accurate and relevant information to make informed decisions about their company’s response to

climate change. In response, CDP has raised the bar by enhancing the questionnaire and scoring methodology for both disclosure and performance questions to make the scoring results more relevant to investors.

This year’s data showed clear improvements to prior year disclosure scores for S&P companies. As companies continue to improve disclosure scores, performance improvements are also recognized, but at a lesser rate. When performance was introduced in 2009 as a pilot, the focus was to measure the extent to which a company had a framework in place to address climate change impacts. This year, performance focused on measuring the quality and status of a company’s

short- and long-term actions to mitigate climate change. As a result of this higher and more relevant standard, fewer companies earned a place on the CPLI in 2011 as compared to 2010. Performance improvements tend to take longer to achieve. They generally follow improvements in information gathering and analysis that first lead to an increase in disclosure scores. As companies measure, they can manage and then begin to perform and optimize results. Given the natural progression of performance lagging behind disclosure, the expectation is that companies will continue to improve over the coming years.

Sector Company names 2011 Performance

Band

2010 Performance

BandConsumer Staples Clorox A C Molson Coors

BrewingA C

Financials Bank of America* A A Morgan Stanley A B Industrials CSX* A A Lockheed Martin A B Information Technology

Cisco Systems* A A

Materials Air Products & Chemicals

A B

Alcoa A B Ecolab A B Utilities Consolidated Edison* A A

Figure 14: 2011 S&P 500 Carbon Performance Leadership Index12

12. Carbon performance scores were first introduced by CDP in 2010 (with a pilot in 2009). An asterisk indicates companies that have been carbon performance leaders for at least two consecutive years.

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This year, for the second time, all companies with a sufficiently high disclosure score received a performance band; the qualifying threshold to receive a performance band was a disclosure score of 50. Disclosure scores of less than 50 do not necessarily indicate poor performance; rather, they indicate insufficient information to evaluate performance. However, it can be assumed that companies which do not disclose are inactive on climate change.

Performance is grouped into six bands: A, A-, B, C, D and E (see Figure 15).

The Carbon Performance Leadership Index (CPLI) includes the companies in the highest performance band (A) and provides a valuable perspective on the range and quality of activities being performed by the S&P 500 in response to climate change.

Eligibility for the CPLI (Band A) • Attain a disclosure score of 50

or above

• Attain a performance score greater than 70

• Score maximum performance points on question 13.1a (absolute emissions performance); at least a 2.65%13 reduction in carbon emissions must have been achieved as a result of emissions reduction activities over the last year

• Disclose gross global Scope 1 and Scope 2 figures

• Score maximum performance

points for verification of Scope 1 and Scope 2

Notes:

• Band A- (A minus) companies are not in the CPLI. They are strong performers, with a performance score high enough to warrant inclusion in the CPLI but they do not meet all other CPLI requirements

• CDP reserves the right to exclude a company from the CPLI if there is anything in its response that calls into question its suitability for inclusion

Performance scoring is an instructive exercise for all stakeholders. The score provides an indication of the extent to which companies are addressing the potential opportunities and risks presented by climate change. CDP recognizes that this is a process that will evolve over time. It is important for investors to keep in mind that the carbon performance band is not:

• A measure of how low carbon a company is

• An assessment of the extent to which a company’s actions have reduced carbon intensity relative to other companies in its sector

• An assessment of how material a company’s actions are relative to the business; the score simply recognizes evidence of action

It is possible to review individual company disclosures in addition to performance rankings in order to gain the most comprehensive understanding of company performance. A listing of companies and their bands is included in Appendix 2. Companies that did not qualify for a performance band appear in Appendix 2 with a dash (-) in the performance band column.

More information can be found in the information request, supporting methodology and guidance documents, as well as within individual company responses at www.cdproject.net

13. The Intergovernmental Panel on Climate Change (IPCC) has set a target of 80% reduction in emissions by 2050, based on 1990 levels. This equates to a 2.65% annual reduction.

Band A/A- (>70) Fully integrated climate change strategy driving significant maturity in climate change initiatives

Band B (>50) Integration of climate change recognized as priority for strategy, not all initiatives fully established

Band C (>30) Some activity on climate change with varied levels of integration of those initiatives into strategy

Band D (>15) Limited evidence of mitigation or adaptation initiatives and no/limited strategy on climate change

Band E (≤15) Little evidence of initiatives on carbon management potentially due to companies just beginning to take action on climate change

Per

form

ance

ban

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is h

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st)

No performance score allocated below a disclosure of 50%

Figure 15: Carbon performance elements

The 2011 Carbon Performance Leadership Index (CPLI)


27

• Strategy: Companies scoring highly in this area were most likely to demonstrate integration of their climate-related priorities into their overall business strategy. They frequently disclose targets aligned with those ambitions and emission reduction initiatives.

• Governance: Companies scoring highly in this area were most likely to demonstrate the most structured and most defined climate change management mechanisms by frequently reporting formalized accountability, incentives and oversight from the board or executive level.

• Stakeholder communications: Companies scoring highly in this area were most likely to recognize the importance of providing transparent and quality disclosures for their stakeholders by taking steps to verify data and report climate-related information in their external communications.

• Achievements: In support of their commitment to reduce emissions, these companies disclose the highest number of actions taken to reduce their emissions, and most report success in achieving emissions reduction.

Performance scorecard

S&P 500 CPLI

S&P 500

Sample Size 11 337Strategy

Integration of climate change risks or opportunities into overall business strategy

100% 65%

Implementation of absolute or intensity emissions reduction targets

100% 64%

GovernanceBoard or executive-level oversight

100% 87%

Monetary incentives 100% 54%Stakeholder Communications

Assurance or verification of emissions

100% 20%

Disclosure of climate change information in mainstream filings or other regulatory filings

91% 19%

AchievementsProgress towards meeting targets

91% 57%

Absolute or intensity emissions reduction in the past year from climate change initiatives

100% 32%

Figure 16: Key indicators of performance leaders vs. all S&P 500 respondents

CPLI leaders tended to exhibit a comprehensive approach to climate change action in four key areas.

28

Appendix 1: Selected data from the 2011 CDP questionnaire results

Figure 17: Year-over-year disclosure for S&P 500 respondents14

0% 10% 20% 30% 40% 50% 60% 70% 80%

Percentage of S&P 500

Responded

350 (70%)

339 (68%)

2011 2010 2009

332 (66%)

Disclose GHG emissions

294 (59%)

306 (61%)

262 (52%)

Board or executive-level oversight

226 (45%)

292 (58%)

222 (44%)

Disclose absolute and/or intensity emissions reduction targets

170 (34%)

214 (43%)

169 (34%)

Rewarding climate change progress

167 (33%)

214 (43%)

115 (23%)

Assurance and/or verification of emissions

116 (23%)

69 (14%)

132 (26%)

14. The percentages in the figure are based on the percentage of S&P 500 companies. The counts and percentages for “Responded” are based on the data disclosed at the time of printing. Data for other indicators are based on responses received by July 1, 2011.

The counts and percentages for “Assurance and/or verification of emissions” are based on companies that have met CDP’s criteria for assurance/verification. For the 2011 questionnaire, CDP has applied a stricter scoring methodology for assurance/verification compared to the prior years shown in the figure.


29

Figure 18: Absolute and intensity emissions reductions targets disclosed by S&P 500 respondents

Intensity Absolute Absolute and Intensity

0 5 10 15 20 25 30 35 40

Number of Companies


Consumer Staples

Industrials


Financials

Health Care

Utilities

Materials

Energy

Telecommunications Services

20

14

7 4

19 7 3

10 14 4

2 12 3

8 4

3

1 1

3

5

6 10 5

4 21

18 6

Company SectorApple Inc. Information TechnologyAmazon.com Consumer DiscretionaryBerkshire Hathaway FinancialsComcast Consumer DiscretionaryHoneywell International IndustrialsDIRECTV Group Consumer DiscretionaryExpress Scripts Health CareNational Oilwell Varco EnergyEOG Resources EnergyGeneral Dynamics Industrials

Figure 19: Largest non-respondents by market capitalization in 201115

15. Based on market capitalization data available from Thomson Reuters as of May 31, 2011

30

Appendix 1: Selected data from the 2011 CDP questionnaire results

Figure 20: Scope 1 and Scope 2 total reported emissions by S&P 500 respondents16

Scope 1: 1.63 billion t CO2-e Scope 2: 0.29 billion t CO2-e

6%

10%

21%

60%

Telecommunication Services Financials Information Technology

Health Care Consumer Discretionary Consumer Staples

Industrials Materials Energy Utilities

N.B.: Excludes sectors below 3%

Telecommunication ServicesFinancialsInformation TechnologyHealth CareConsumer DiscreationaryConsumer StaplesIndustrialsMaterialsEnergyUtilities

6%4%

11%

25%

6%

3%

17%7%

16%4%

16. Scopes 1, 2 and 3 emissions are terms used under the GHG Protocol. For a full description, see GHG Protocol: A Corporate Accounting and Reporting Standard, available at: www.ghgprotocol.org/files/ghg-protocol-revised.pdf.

17. The sizes of the bubbles are based on number of targets identified by S&P respondents. The % reductions achieved by respondents was rounded to the nearest 20%.

Figure 21: Progress toward absolute or intensity targets reported by S&P 500 respondents17

100%

80%

60%

40%

20%

0%

% E

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s re

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0% 20% 40% 60% 80% 100%

Average % time elapsed for targets


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3M Industrials AQ AQ 76 C 6,250,000 4,300,000 1,950,000 † IntAbbott Laboratories Health Care AQ AQ 72 C 1,609,000 838,000 771,000 1,338,000 TI Wa Tr

EC Ld 3 Abs

Abercrombie & Fitch Consumer Discretionary

AQ AQ 80 D 129,667 7,487 122,180 6,275 Tr †

Ace Ltd Financials AQ AQ 82 B 56,406 14,741 41,665 10,213 Tr 3 Int

Adobe Systems Information Technology

AQ AQ 73 C 30,710 3,642 27,068 43,864 Tr Lu ¢ Int

Advanced Micro Devices


AQ AQ 66 D 167,011 26,594 140,417 286,884 Tr EC TSP SE

† Abs Int

AES Corporation Utilities AQ AQ 33 - NPAetna Health Care AQ AQ 60 E 61,801 7,317 54,484 16,596 Tr ^ †Aflac Financials AQ AQ 66 E 27,721 4,352 23,369 †Agilent Technologies


AQ AQ(L) 68 C 125,472 10,700 114,772 † Abs

Air Products & Chemicals

Materials AQ AQ 92 A 23,691,275 14,366,791 9,324,484 97,169 Tr TSP 3 Int

Airgas Materials NR NR - AK Steel Holding Materials NR NR - Akamai Technologies


AQ AQ 75 C 73,057 199 72,858 66,034 TI Tr Lu † Int

Alcoa Materials AQ AQ 88 A 44,527,155 29,517,734 15,009,421 1,942,918 PGS 3 Abs Int

Allegheny Energy Utilities NR AQ - Allegheny Technologies

Materials IN AQ - NP

Allergan Health Care AQ AQ 83 B 95,299 42,674 52,625 15,296 TI Tr 3 Abs Int

Allstate Financials AQ AQ 89 C 218,978 35,504 183,474 33,543 Tr Oth †Altera Information

TechnologyAQ AQ 44 - NP

Altria Group Consumer Staples AQ AQ 67 C 524,631 273,437 251,194 41,799 PGS Tr † AbsAmazon.com Consumer

DiscretionaryNR DP -

Ameren Utilities AQ AQ 75 B 67,068,709 67,068,709 3 Abs

American Electric Power

Utilities AQ AQ 75 C 138,294,800 138,294,800 1,634,883 PGS Fu TI Tr

† Abs

American Express Financials AQ AQ 80 C 221,851 32,504 189,347 38,143 Tr 3 Abs

American International Group

Financials AQ AQ 26 - †

American Tower Telecommunication Services

AQ AQ 63 C 144,379 5,820 138,560 8,954 Tr EC †

Ameriprise Financial Financials NR NR - AmerisourceBergen Health Care NR DP -

Appendix 2: Table of emissions, scores and sector information by company

Please refer to the key at the end of Appendix 2 for further explanation of the abbreviations used.

32

Appendix 2: Table of emissions, scores and sector information by companyC

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Amgen Health Care AQ AQ 66 E 430,983 136,986 293,997 36,340 Tr † AbsAmphenol Information

TechnologyNR NR -

Anadarko Petroleum Energy AQ AQ 75 B 8,770,874 7,872,285 898,589 3

Analog Devices Information Technology

AQ AQ 49 - NP

Aon Financials AQ AQ 43 - 13,536 3,144 10,392 22,279 Tr ¢ Abs

Apache Energy AQ AQ 65 D 10,900,000 9,860,000 1,040,000 †Apartment Investment and Management

Financials NR NR -

Apollo Group Consumer Discretionary

NR NR -

Apple Inc. Information Technology

DP AQ -

Applied Materials Information Technology

AQ AQ 58 D 179,000 30,000 149,000 36,863 Tr † Abs

Archer Daniels Midland

Consumer Staples NR NR -

Assurant Financials AQ AQ(L) 33 - NPAT&T Telecommunication

ServicesAQ AQ 72 C 8,903,473 1,105,251 7,798,222 63,209 Tr ^ †

Autodesk Information Technology

AQ AQ 82 B 6,253 990 5,263 39,970 PGS Tr EC Lu Oth

† Int

Automatic Data Processing


AQ AQ 25 - 173,000 18,000 155,000 †

AutoNation Consumer Discretionary

DP NR -

AutoZone Consumer Discretionary

NR NR -

AvalonBay Communities

Financials DP NR -

Avery Dennison Industrials AQ AQ 79 C 558,256 173,779 384,477 † IntAvon Products Consumer Staples AQ AQ 63 D 178,281 75,047 103,234 7,678 Tr † AbsBaker Hughes Energy AQ AQ 67 D 600,000 300,000 300,000 116,600 Tr 3 Int

Ball Materials AQ AQ 68 E 1,306,014 356,071 949,943 † IntBank of America Financials AQ AQ 97 A 1,872,213 119,760 1,752,453 1,052,130 TI Wa Tr

EC 3 Abs

Bank of New York Mellon

Financials AQ AQ 81 B 211,570 9,474 202,096 26,827 Tr † Abs

Baxter International Health Care AQ AQ 74 C 801,000 339,720 461,280 2,144,000 Tr EC TSP USP DSP SE

3 Abs Int

BB&T Financials AQ AQ 58 E 172,066 1,643 170,423 †


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Becton, Dickinson and Co.

Health Care AQ AQ 43 - 530,124 61,975 468,149 † Abs Int

Bed Bath & Beyond Consumer Discretionary

DP IN -

Bemis Company Materials AQ AQ 68 D 868,501 223,719 644,782 †Berkshire Hathaway Financials NR NR - †Best Buy Consumer

DiscretionaryAQ AQ(L) 70 B 940,696 236,170 704,526 3 Abs

Big Lots Consumer Discretionary

AQ IN 15 - †

Biogen Idec Health Care AQ AQ 69 C 102,515 46,069 56,446 11,758 Tr † AbsBMC Software Information

TechnologyNR IN -

Boeing Industrials AQ AQ 92 B 1,717,000 595,000 1,122,000 255,000 Tr ✓ Abs Int

Boston Properties Financials NR NR - Boston Scientific Health Care AQ AQ 42 - 144,000 27,000 117,000 †Bristol-Myers Squibb

Health Care AQ AQ 76 D 524,189 253,398 270,791 73,480 Tr ^ † Abs

Broadcom Information Technology

AQ AQ 76 C 38,692 2,746 35,946 559 Wa Oth †

Brown-Forman Consumer Staples AQ AQ 84 B 200,934 125,267 75,667 4,828 Tr 3 Int

C.H. Robinson Worldwide

Industrials AQ AQ 45 - NP

C.R. Bard Health Care NR NR - CA Technologies Information

TechnologyAQ AQ 68 D 77,222 12,776 64,447 32,566 Wa Tr †

Cablevision Systems


NR X -

Cabot Oil & Gas Energy NR NR - Cameron International

Energy NR NR -

Campbell Soup Consumer Staples AQ AQ 78 B 850,376 468,292 382,084 2,305,882 PGS † IntCapital One Financial

Financials AQ AQ 51 D 219,615 14,896 204,719 † Abs

Cardinal Health Health Care AQ AQ 72 D 352,666 140,989 211,676 15,069 Tr †Carefusion Corp Health Care NR AQ - CarMax Consumer

DiscretionaryNR X -

Carnival Consumer Discretionary

AQ AQ 88 B 10,748,637 10,700,267 48,370 46,246 PGS Wa Tr

3 Int

Caterpillar Industrials AQ AQ 58 D 2,651,000 831,000 1,820,000 19,443 Tr Lu ^ † Abs Int

CB Richard Ellis Group

Financials AQ AQ 66 D 48,950 19,107 29,843 1,133 PGS Wa Tr

† Abs

CBS Consumer Discretionary

AQ NR 31 - †

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Celgene Health Care AQ AQ 62 E 15,547 5,903 9,644 †CenterPoint Energy Utilities AQ AQ 18 - †CenturyLink Telecommunication

ServicesAQ NR 55 E 1,370,911 167,193 1,203,718 34,678 Wa Tr †

Cephalon Health Care DP DP - Cerner Health Care NR X - CF Industries Holdings

Materials DP NR -

Charles Schwab Financials AQ AQ 0 - NPChesapeake Energy Energy NR NR - Chevron Energy AQ AQ 86 B 66,619,864 62,136,044 4,483,820 404,000,000 USP 3

Chubb Financials AQ AQ 42 - 14,216 14,216 †CIGNA Health Care AQ AQ 38 - NPCincinnati Financial Financials AQ AQ 53 E 40,813 17,914 22,899 †Cintas Industrials NR NR - Cisco Systems Information

TechnologyAQ AQ 98 A 650,620 53,363 597,257 6,837,461 PGS Eq

Fu TI Tr EC TSP

USP DSP

3 Abs

Citigroup Financials AQ AQ 70 B 1,184,849 43,116 1,141,732 100,243 Tr † AbsCitrix Systems Information

TechnologyNR NR -

Cliffs Natural Resources

Materials NR AQ -

Clorox Consumer Staples AQ AQ 87 A 354,818 68,084 286,734 172,943 TI Tr 3 Int

CME Group Financials AQ AQ 7 - NPCMS Energy Utilities AQ AQ 67 C 20,120,547 20,078,077 42,470 12,273,305 Fu † AbsCoach Consumer

DiscretionaryNR NR -

Coca-Cola Company

Consumer Staples AQ AQ 78 C 3,359,909 2,113,413 1,246,496 6,342,126 Tr TSP Fr Oth

† Abs

Coca-Cola Enterprises

Consumer Staples AQ AQ 77 C 211,598 113,411 98,187 583,584 Fu TI Tr † Abs

Cognizant Technology Solutions


AQ AQ 68 C 175,935 28,647 147,288 46,270 Tr † Int

Colgate-Palmolive Consumer Staples AQ AQ 80 B 692,284 267,077 425,207 105,969 PGS TI Wa Tr Lu ^

† Abs Int

Comcast Consumer Discretionary

DP IN -

Comerica Financials AQ AQ 87 B 63,921 7,508 56,413 17,828 Tr Lu † AbsCSC Information

TechnologyAQ AQ(L) 75 C NP

Compuware Information Technology

AQ AQ 74 C 25,677 2,515 23,162 3,399 Tr † Abs


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Conagra Foods Consumer Staples AQ AQ 67 C 2,093,714 1,010,130 1,083,584 586,512 TI Tr † IntConocoPhillips Energy AQ AQ 41 - 68,005,000 57,981,000 10,024,000 512,000,000 USP †CONSOL Energy Energy NR NR - Consolidated Edison

Utilities AQ AQ 96 A 5,214,097 3,838,598 1,375,499 25,745,818 Tr TSP 3 Abs

Constellation Brands

Consumer Staples AQ AQ 76 C 116,465 76,849 39,616 242,261 TI Wa Tr †

Constellation Energy Group

Utilities AQ AQ 81 C 17,474,460 16,690,866 783,594 56,120 Wa Tr EC

3 Abs Int

Corning Information Technology

AQ AQ 34 - 1,175,452 266,635 908,817 †

Costco Wholesale Consumer Staples AQ AQ(L) 49 - NPCoventry Health Care

Health Care NR AQ -

CSX Industrials AQ AQ 85 A 5,475,420 5,214,546 260,874 20,899 Tr 3 Int

Cummins Industrials AQ AQ 81 C 664,497 229,654 434,843 25,431 Tr 3 Int

CVS Caremark Consumer Staples AQ AQ 67 D 1,766,839 220,888 1,545,951 10,933 Tr †D.R. Horton Consumer


Danaher Industrials AQ AQ 10 - NPDarden Restaurants Consumer

DiscretionaryAQ AQ 79 C 1,078,250 347,655 730,595 6,092 Tr † Int

DaVita Health Care NR NR - Dean Foods Consumer Staples AQ AQ 89 B 1,570,038 829,790 740,248 127,393 Wa Tr

TSP † Abs

IntDeere Industrials AQ AQ 63 C 1,336,644 455,171 881,473 37,656 Tr † IntDell Information

TechnologyAQ AQ 72 C 438,906 34,115 404,791 112,679 Tr † Abs

IntDenbury Resources Energy DP NR - DENTSPLY International

Health Care DP AQ -

Devon Energy Energy AQ AQ 59 D 4,170,000 3,680,000 490,000 16,063 Fu †Devry Consumer


Diamond Offshore Drilling

Energy NR NR -

DIRECTV Group Consumer Discretionary

NR NR -

Discover Financial Services

Financials NR IN -

Discovery Communications


NR X -

Dominion Resources

Utilities AQ AQ 69 D 59,353,956 59,004,018 349,938 Oth ¢

Dover Industrials AQ NR 64 E 386,524 129,793 256,731 †

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Dow Chemical Materials AQ AQ 95 A- 38,084,000 29,043,000 9,041,000 3,025,000 TI Tr TSP

3 Int

Dr Pepper Snapple Group

Consumer Staples AQ AQ 60 E 405,936 228,019 177,917 228,281 TI Tr † Int

DTE Energy Utilities AQ AQ 72 D 40,190,300 39,890,000 300,300 16,704,400 Fu Tr USP

† Abs Int

Duke Energy Utilities AQ AQ 62 C 90,612,245 90,612,245 † Abs Int

Dun & Bradstreet Industrials DP NR - E*TRADE FINANCIAL

Financials NR NR -

E.I du Pont de Nemours

Materials AQ AQ 80 B 15,432,000 10,749,000 4,683,000 146,253 Tr † Abs

Eastman Chemical Materials AQ AQ 28 - † IntEaton Industrials AQ AQ 87 B 705,000 95,000 610,000 68,100 Tr ^ ¢ Int

eBay Information Technology

AQ AQ 63 C 207,746 11,462 196,284 21,600 Tr † Abs

Ecolab Materials AQ AQ 91 A 273,564 186,012 87,552 12,596 Tr 3 Int

Edison International Utilities AQ AQ 29 - 56,700,000 56,700,000 †El Paso Energy NR AQ - Electronic Arts Information

TechnologyNR NR -

Eli Lilly Health Care AQ AQ 61 C 1,621,619 454,521 1,167,098 204,478 TI Wa Tr EC Oth

† Int

EMC Information Technology

AQ AQ 88 B 346,066 28,031 318,035 105,029 Tr 3 Abs Int

Emerson Electric Industrials AQ AQ 24 - †Entergy Utilities AQ AQ 85 B 34,786,668 33,967,962 818,706 14,632,716 SE 3 Abs

EOG Resources Energy DP AQ - EQT Corporation Energy NR NR - Equifax Industrials NR DP - Equity Residential Financials NR NR - Estée Lauder Consumer Staples AQ AQ 77 C 92,030 33,290 58,740 38,100 Tr USP † IntExelon Utilities AQ AQ 79 C 9,522,374 9,245,696 276,678 5,033 Tr † AbsExpedia Consumer

DiscretionaryAQ NR 63 E NP

Expeditors International of Washington

Industrials AQ AQ(L) 56 D 41,344 5,724 35,620 †

Express Scripts Health Care NR NR - Exxon Mobil Energy AQ AQ 70 B 147,000,000 132,000,000 15,000,000 1,600,000 USP 3 Abs

IntF5 Networks Information

TechnologyDP X -

Family Dollar Stores Consumer Discretionary

IN IN -


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Fastenal Industrials AQ DP 13 - NPFederated Investors Financials DP NR - FedEx Corporation Industrials AQ AQ 50 D 14,149,767 13,152,895 996,872 1,008,493 PGS † IntFidelity National Information Services


DP DP -

Fifth Third Bancorp Financials AQ AQ 75 D 133,612 15,316 118,296 2,607 Tr †First Horizon National

Financials DP NR -

First Solar Information Technology

AQ NR 82 C 273,887 1,845 272,042 6,793 Tr Oth †

FirstEnergy Utilities NR AQ - Fiserv Information


FLIR Systems Information Technology

DP NR -

Flowserve Industrials NR NR - Fluor Industrials IN IN - FMC Corp Materials NR NR - FMC Technologies Energy DP NR - Ford Motor Consumer

DiscretionaryAQ AQ 46 - 5,268,477 1,602,246 3,666,231 3 Int

Forest Laboratories Health Care AQ AQ 41 - NPFortune Brands Consumer

DiscretionaryDP IN -

Franklin Resources Financials AQ AQ 63 D 39,949 10,362 29,587 7,966 Tr †Freeport-McMoRan Copper & Gold

Materials AQ AQ 87 C 9,985,750 5,622,379 4,363,371 337,500 TI Tr PSP

3

Frontier Communications


DP DP -

GameStop Consumer Discretionary

NR NR -

Gannett Consumer Discretionary

NR DP -

Gap Consumer Discretionary

AQ AQ 75 B 520,461 25,383 495,078 53,074 TI Tr † Abs

General Dynamics Industrials IN IN - General Electric Industrials AQ AQ 73 C 5,650,000 2,500,000 3,150,000 † AbsGeneral Mills Consumer Staples AQ AQ 64 C 1,002,526 279,484 723,042 452,295 TI Tr † IntGenuine Parts Consumer


Genworth Financial Financials AQ AQ 66 E 15,215 176 15,039 34,822 Tr EC USP

†

Genzyme Health Care AQ AQ 85 B NPGilead Sciences Health Care AQ AQ 95 B 67,094 29,725 37,369 18,795 Tr EC 3 Int

Goldman Sachs Financials AQ AQ 83 B 351,487 14,645 336,842 168,250 Tr 3 Abs

38


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Goodrich Industrials NR NR - Goodyear Tire & Rubber


AQ AQ 69 C 3,340,000 1,410,000 1,930,000 113,437,000 TSP USP SE

† Int

Google Information Technology

AQ AQ 89 A- 1,237,476 11,126 1,226,350 207,065 Tr EC Ld SE ^

3 Abs

H&R Block Consumer Discretionary

AQ AQ 17 - †

H.J. Heinz Consumer Staples AQ AQ 80 B 893,483 532,661 360,822 129,412 Tr TSP ¢ Int

Halliburton Energy AQ AQ 54 E 4,020,000 4,020,000 44 Tr †Harley-Davidson Consumer

DiscretionaryIN IN -

Harman International Industries


NR NR -

Harris Information Technology

AQ NR 47 - NP

Hartford Financial Services

Financials AQ AQ 88 B 107,626 30,889 76,737 75,511 Tr EC 3 Abs

Hasbro Consumer Discretionary

AQ NR 51 D 30,456 6,817 23,639 † Abs

HCP Financials NR NR - Health Care Reit Financials NR NR - Helmerich & Payne Energy NR X - Hess Energy AQ AQ 91 B 9,034,065 8,452,627 581,438 40,308,994 TI Tr

TSP USP 3 Abs

IntHewlett-Packard Information

TechnologyAQ AQ 84 B 1,865,170 136,660 1,728,510 5,850,300 PGS Tr

TSP ^† Abs

Home Depot Consumer Discretionary

AQ AQ 82 B 3,073,094 268,091 2,805,003 3,390,000 TI † Abs Int

Honeywell International

Industrials IN IN - NP

Hormel Foods Consumer Staples AQ AQ 47 - 1,430,830 809,430 621,400 †Hospira Health Care AQ AQ(L) 50 E 424,230 74,930 349,300 6,260 Tr † Abs

IntHost Hotels & Resorts

Financials AQ NR 68 D 627,783 124,783 503,000 1,426 Lu ^ †

Hudson City Bancorp

Financials DP IN - †

Humana Health Care AQ AQ 81 D 124,850 9,723 115,127 6,758 Tr †Huntington Bancshares

Financials AQ AQ 17 - 91,679 10,452 81,227 †

IBM Information Technology

AQ AQ 83 B 2,704,276 578,290 2,125,986 3,134,613 Tr EC Lu USP ^

3 Abs

Illinois Tool Works Industrials AQ AQ 75 C NPIngersoll-Rand Industrials AQ AQ 55 D 885,052 471,388 413,664 10,676 Tr † Int


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Integrys Energy Group

Utilities AQ AQ 30 - 11,761,196 11,761,196 †

Intel Information Technology

AQ AQ 66 C 2,878,008 1,165,284 1,712,724 43,595,000 PGS TI Tr USP

† Abs Int

Intercontinental-Exchange

Financials DP AQ -

International Flavors & Fragrances

Materials AQ AQ 63 D NP

International Game Technology


NR IN -

International Paper Materials AQ AQ 66 C 13,633,900 9,559,400 4,074,500 21,000 Tr † AbsInterpublic Group of Companies


AQ AQ 22 - NP

Intuit Information Technology

AQ AQ 58 D 43,036 6,335 36,701 52,674 PGS Wa Tr EC

TSP PSP DSP SE ^

† Abs

Intuitive Surgical Health Care NR NR - Invesco Financials AQ AQ 79 D 7,065 580 6,485 7,159 Tr 3 Abs

Iron Mountain Industrials NR NR - ITT Industrials AQ AQ 72 C 318,107 80,711 237,396 23,650 Tr † IntJ.M. Smucker Consumer Staples AQ AQ 81 B 407,538 178,251 229,287 10,070 Tr Lu 3 Int

Jabil Circuit Information Technology

AQ AQ 69 C 530,225 23,564 506,661 98,502 EC Lu ^ 3 Int

Jacobs Engineering Group

Industrials AQ AQ 53 E 13,050 6,382 6,668 10,357 Wa Tr Oth

†

Janus Capital Group Financials AQ AQ(L) 35 - 169 169 †JCPenney Consumer

DiscretionaryAQ AQ 65 D 1,181,643 109,201 1,072,442 163,321 TI Tr † Int

JDS Uniphase Information Technology

AQ AQ 66 D 48,389 8,629 39,760 5,956 Tr † Abs

Johnson & Johnson Health Care AQ AQ 78 C 1,279,804 345,723 934,081 296,286 Tr 3 Abs Int

Johnson Controls Consumer Discretionary

AQ AQ 83 B 1,911,629 562,223 1,349,406 79,785 Tr † Abs Int

JPMorgan Chase Financials AQ AQ 81 B 1,322,232 96,034 1,226,197 137,804 Tr † AbsJuniper Networks Information

TechnologyAQ AQ 59 E 79,580 3,942 75,638 35,679 Tr EC † Abs

IntKellogg Company Consumer Staples AQ AQ 85 B 1,343,409 580,482 762,927 260,000 TI 3 Int

KeyCorp Financials NR IN - Kimberly-Clark Consumer Staples AQ AQ 70 C 5,728,814 2,611,787 3,117,027 648,040 TI 3 Abs

Kimco Realty Financials AQ NR 37 - †KLA-Tencor Information

TechnologyNR NR -

Kohl’s Consumer Discretionary

AQ AQ 78 C 859,581 27,062 832,519 226,902 TI Tr 3 Abs

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Kraft Foods Consumer Staples AQ AQ 86 C 3,319,396 1,468,901 1,850,495 37,225,790 PGS Fu TI Tr EC TSP USP

DSP ^

† Int

Kroger Consumer Staples AQ AQ 49 - 6,550,146 2,062,714 4,487,432 †L-3 Communications Holdings

Industrials NR AQ - †

Laboratory Corporation of America

Health Care NR NR -

Legg Mason Financials AQ AQ 53 E 12,821 604 12,217 2,506 Tr Leggett & Platt Consumer

DiscretionaryAQ AQ 24 - NP

Lennar Consumer Discretionary

DP DP -

Leucadia National Financials NR NR - Lexmark International


AQ AQ 65 C 158,316 17,531 140,785 9,783 Tr † Abs

Life Technologies Health Care AQ AQ 73 C 91,274 39,250 52,024 20,500 Tr † IntLimited Brands Consumer

DiscretionaryAQ AQ 75 C 337,518 33,554 303,964 581,428 TI Tr † Abs

Lincoln National Financials IN NR - Linear Technology Information

TechnologyNR NR -

Lockheed Martin Industrials AQ AQ 90 A 1,374,988 313,866 1,061,122 212,431 Tr 3 Abs

Loews Financials NR NR - Lorillard Consumer Staples NR NR - Lowe’s Consumer

DiscretionaryAQ AQ 36 - NP

LSI Information Technology

AQ AQ 79 C 84,158 5,689 78,469 305,849 TI Tr SE † Abs

M&T Bank Financials AQ AQ 69 C NPMacy’s Consumer

DiscretionaryAQ AQ 24 - †

Marathon Oil Energy AQ AQ 47 - 18,809,000 13,885,000 4,924,000 3 Int

Marriott International


AQ AQ 70 B 2,207,415 395,391 1,812,024 54,723 Tr † Abs Int

Marsh & McLennan Financials AQ AQ 88 C 114,469 2 114,468 41,465 Tr †Marshall & Ilsley Financials DP AQ - Masco Industrials AQ AQ 73 C 531,914 200,533 331,381 5,609 Tr † IntMassey Energy Energy NR NR - MasterCard Information


Mattel Consumer Discretionary

AQ AQ 38 - 190,068 13,242 176,826 6,936 Tr †


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McAfee Information Technology

NR NR -

McCormick & Company

Consumer Staples AQ AQ 57 C 74,710 14,393 60,317 † Int

McDonald’s Consumer Discretionary

AQ AQ 32 - NP

McGraw-Hill Consumer Discretionary

AQ AQ 65 D 210,604 62,084 148,520 216,442 TI Tr ^ † Abs

McKesson Health Care DP AQ - Mead Johnson Nutrition

Consumer Staples AQ AQ 14 - †

MeadWestvaco Materials AQ AQ 77 B 3,115,200 2,339,967 775,233 565,000 TI 3 Abs Int

Medco Health Solutions

Health Care AQ AQ 55 E 87,211 5,914 81,297 †

Medtronic Health Care AQ AQ 43 - 236,697 25,040 211,657 † IntMEMC Electronic Materials


NR NR -

Merck & Co. Health Care AQ AQ 79 B 2,075,661 1,046,881 1,028,780 300,299 TI Tr USP

3 Abs

Meredith Consumer Discretionary

AQ AQ 34 - 37,131 6,725 30,406 † Abs

MetLife Financials AQ AQ 33 - 927 Wa ^ †Metro PCS Communications


NR NR -

Microchip Technology


AQ AQ 71 C 241,107 97,349 143,758 † Abs

Micron Technology Information Technology

AQ AQ 25 - 1,713,277 780,776 932,501 †

Microsoft Information Technology

AQ AQ 81 B 1,191,654 47,383 1,144,271 389,017 TI Tr SE 3 Int

Molex Information Technology

AQ AQ 50 E 258,339 12,197 246,142 4,145 Tr †

Molson Coors Brewing

Consumer Staples AQ AQ 86 A 948,128 413,790 534,338 38,948 PGS TI Wa Tr ^

3 Abs Int

Monsanto Materials AQ AQ 38 - 1,815,700 1,153,800 661,900 † AbsMonster Worldwide Information


Moody’s Financials AQ AQ 6 - †Morgan Stanley Financials AQ AQ 87 A 359,073 14,322 344,751 63,103 Fu Tr 3 Int

Motorola Solutions4 Information Technology

AQ X 60 E 279,234 15,794 263,440 125,438 Tr † Int

Murphy Oil Energy NR NR - Mylan Health Care NR NR - Nabors Industries Energy NR NR - NASDAQ OMX Group

Financials AQ(L) AQ - NP

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National Oilwell Varco

Energy NR NR -

National Semiconductor


AQ AQ 57 E 293,513 147,887 145,626 1,741 Tr † Abs Int

NetApp Information Technology

AQ AQ 59 E 96,320 8,082 88,238 †

Netflix Consumer Discretionary

NR X -

Newell Rubbermaid Consumer Discretionary

AQ AQ 44 - NP

Newfield Exploration Energy IN X - Newmont Mining Materials AQ AQ 88 C 4,694,161 3,048,246 1,645,915 538,893 Fu †News Corporation Consumer

DiscretionaryAQ AQ 93 A- 538,264 81,791 456,473 40,067 Tr 3 Abs

NextEra Energy Utilities DP AQ - Nicor Utilities NR NR - NIKE Consumer

DiscretionaryAQ AQ(L) 40 - 71,900 6,900 65,000 1,405,800 TI Tr

SE ^ † Abs

IntNiSource Utilities AQ AQ 61 D 22,641,378 22,368,211 273,167 1,206,705 Fu ^ † IntNoble Energy Energy AQ AQ 65 D 2,454,780 2,303,500 151,280 † IntNordstrom Consumer

DiscretionaryAQ AQ 73 D NP

Norfolk Southern Industrials AQ AQ 76 B 5,238,171 4,958,921 279,250 † IntNortheast Utilities Utilities AQ AQ 45 - 3,974,306 3,543,177 431,129 1,805 Tr † AbsNorthern Trust Financials AQ AQ 69 D 62,248 4,221 58,027 11,809 Tr EC 3

Northrop Grumman Industrials AQ AQ 80 C 1,261,650 323,050 938,600 1,220,152 Tr EC TSP

† Int

Novell Information Technology

NR NR -

Novellus Systems Information Technology

AQ AQ 51 D NP

NRG Energy Utilities AQ AQ 69 C 57,182,000 57,000,000 182,000 3,812 Tr EC † AbsNucor Materials NR DP - NVIDIA Information

TechnologyAQ AQ(L) 54 D 25,674 1,698 23,976 4,005 Tr † Int

NYSE Euronext Financials AQ AQ 89 C 83,235 3,326 79,909 8,070 Tr 3

Occidental Petroleum

Energy AQ AQ 57 C 17,800,000 11,200,000 6,600,000 3

Omnicom Group Consumer Discretionary

AQ AQ 51 E 118,171 34,749 83,422 142,988 Tr † Abs

Oneok Utilities NR X - Oracle Information

TechnologyAQ AQ 54 E 448,731 15,208 433,523 † Int

O’Reilly Automotive Consumer Discretionary

NR AQ -

Owens-Illinois Materials AQ AQ 24 - 3,751,000 3,751,000 †


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PACCAR Industrials DP NR - Pall Industrials AQ AQ 56 D 150,395 37,730 112,665 † IntParker-Hannifin Industrials AQ AQ 65 D 683,483 87,172 596,311 † IntPatterson Companies

Health Care NR NR -

Paychex Information Technology

NR NR -

Peabody Energy Energy IN IN - People’s United Financial

Financials NR NR -

Pepco Holdings Utilities AQ AQ 84 B 2,148,393 677,815 1,470,578 18,392 Tr EC †PepsiCo Consumer Staples AQ AQ 90 A- 6,048,225 4,006,160 2,042,065 112,000 Fr Oth 3 Int

PerkinElmer Health Care AQ AQ 53 D 40,575 18,663 21,912 10,227 Tr † AbsPfizer Health Care AQ AQ 81 B 2,707,928 1,459,943 1,247,985 9,781,207 PGS Eq

Fu TI Wa Tr EC Lu

SE

3 Abs

PG&E Utilities AQ AQ 92 B 4,216,239 3,218,256 997,983 48,753,850 Fu Wa Tr USP

3 Abs

Philip Morris International

Consumer Staples AQ AQ 83 B 768,773 355,789 412,984 627,767 TI Tr ^ 3 Int

Pinnacle West Capital

Utilities AQ AQ 40 - 15,267,665 15,245,383 22,282 † Int

Pioneer Natural Resources

Energy NR NR -

Pitney Bowes Industrials AQ(L) AQ - 120,263 46,210 74,053 Plum Creek Timber Financials AQ AQ 66 D 134,975 32,160 102,815 292,061 PGS Tr

TSP † Abs

PNC Financial Services

Financials AQ AQ 75 B 369,651 44,700 324,951 107,453 PGS Fu Tr EC

† Abs

Polo Ralph Lauren Consumer Discretionary

DP DP -

PPG Industries Materials AQ AQ 56 D 6,090,000 4,300,000 1,790,000 22,000 Tr † Abs Int

PPL Utilities NR NR - Praxair Materials AQ AQ 93 A- 15,050,000 4,350,000 10,700,000 582,025 Eq TI

Wa Tr 3 Abs

IntPrecision Castparts Industrials NR NR - Priceline.com Consumer

DiscretionaryAQ NR 12 - †

Principal Financial Group

Financials AQ IN 56 C 70,766 70,766 † Abs

Procter & Gamble Consumer Staples AQ AQ 49 - 5,904,000 2,795,000 3,109,000 † IntProgress Energy Utilities DP AQ - Progressive Financials NR AQ - ProLogis Financials AQ AQ 83 B 7,887 2,045 5,843 2,365 Tr 3 Int

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Prudential Financial Financials AQ AQ 41 - 84,370 5,836 78,534 12,422 Tr † AbsPublic Service Enterprise Group

Utilities AQ AQ 79 C 24,123,436 22,873,019 1,250,417 66,428,619 PGS Fu TI Tr EC Lu USP

† Abs

Public Storage Financials NR NR - Pulte Homes Consumer

DiscretionaryNR AQ -

QEP Resources Energy DP X - QLogic Information

TechnologyAQ AQ 35 - 7,425 7,425 †

Qualcomm Information Technology

AQ AQ 62 C 97,537 57,713 39,824 3

Quanta Services Industrials NR NR - Quest Diagnostics Health Care AQ AQ 46 - 261,791 83,093 178,698 39,800 PGS TI

Wa Tr † Abs

Qwest Communications International (see CenturyLink)5


AQ(SA) AQ - NP

RadioShack Consumer Discretionary

NR NR -

Range Resources Energy AQ AQ 25 - NPRaytheon Industrials AQ AQ 71 C 602,876 98,909 503,967 † AbsRed Hat Information

TechnologyNR IN -

Regions Financial Financials NR DP - Republic Services Industrials NR NR - Reynolds American Consumer Staples AQ AQ 56 D 309,614 117,383 192,231 †Robert Half International

Industrials NR IN -

Rockwell Automation

Industrials AQ AQ 70 C 102,960 22,880 80,080 183,000 TI Tr † Int

Rockwell Collins Industrials AQ AQ 67 C 169,582 26,761 142,821 20,796 Tr † AbsRoper Industries Industrials NR NR - Ross Stores Consumer


Rowan Companies Energy AQ AQ 13 - †RR Donnelley & Sons

Industrials DP DP -

Ryder System Industrials AQ AQ 83 B 548,248 461,828 86,420 13,510 Tr †Safeway Consumer Staples AQ AQ 44 - 2,301,449 399,000 1,902,449 † AbsSAIC Information

TechnologyNR IN -

salesforce.com Information Technology

AQ IN 91 B 13,299 1,764 11,535 20,442 PGS Tr EC ^

3

SanDisk Information Technology

AQ DP 59 D NP


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Sara Lee Consumer Staples AQ AQ 78 B 1,091,717 473,876 617,841 3,552,179 PGS TI Tr USP

SE

3 Int

SCANA Corporation Utilities NR DP - Schlumberger Energy AQ AQ 80 B 1,940,000 1,610,000 330,000 1,563,500 PGS TI

Tr Oth ^ †

Scripps Networks Interactive


AQ AQ 16 - †

Sealed Air Materials AQ AQ 55 D 698,217 199,678 498,539 † IntSears Holdings Consumer

DiscretionaryAQ AQ 60 D 3,274,557 883,809 2,390,748 †

Sempra Energy Utilities AQ AQ 87 A- 10,382,046 10,053,417 328,629 4,755,062 Fu ^ 3 Abs

Sherwin-Williams Materials AQ AQ 71 D 515,288 225,383 289,905 9,443 Tr † AbsSigma-Aldrich Materials AQ AQ 72 D 211,309 63,229 148,080 84,773 TI Tr † IntSimon Property Group

Financials AQ AQ 96 A- 606,269 23,432 582,837 11,522 Tr EC 3 Abs

SLM Financials NR NR - Snap-on Industrials AQ AQ 45 - NPSouthwest Airlines Industrials AQ AQ 35 - 13,974,732 13,930,772 43,960 † IntSouthwestern Energy

Energy NR NR -

Spectra Energy Energy AQ AQ 96 A- 10,115,070 9,066,460 1,048,610 8,263,416 Tr EC USP

3 Abs Int

Sprint Nextel Telecommunication Services

AQ AQ 81 B 2,080,549 74,106 2,006,443 2,100,702 Tr SE 3 Abs

St. Jude Medical Health Care NR NR - Stanley Black & Decker

Industrials AQ AQ 70 D 381,505 100,374 281,131 241,878 TI Tr TSP

† Int

Staples Consumer Discretionary

AQ AQ(L) 58 D 546,257 137,831 408,426 † Abs

Starbucks Consumer Discretionary

AQ AQ 65 C 1,014,105 209,828 804,277 3 Int

Starwood Hotels & Resorts Worldwide


AQ AQ 81 C 2,969,843 593,549 2,376,294 1,416,319 Tr Fr † Int

State Street Financials AQ AQ 84 B 146,754 5,683 141,071 20,855 Tr 3 Int

Stericycle Industrials NR NR - Stryker Health Care DP AQ(L) - Sunoco Energy DP AQ - SunTrust Banks Financials AQ AQ 37 - †SUPERVALU Consumer Staples AQ AQ 69 C 2,887,130 962,821 1,924,309 273,810 PGS Wa

Tr † Abs

Symantec Information Technology

AQ AQ 77 C 160,120 7,770 152,350 47,916 Tr † Int

Sysco Consumer Staples NR NR - T. Rowe Price Group

Financials AQ AQ 70 D NP

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Target Consumer Discretionary

AQ AQ 77 C 3,129,941 414,968 2,714,973 22,986 Tr † Int

TECO Energy Utilities DP AQ - Tellabs Information

TechnologyAQ AQ 55 E 29,832 2,424 27,408 9,431 Tr †

Tenet Healthcare Health Care NR NR - Teradata Information


Teradyne Information Technology

AQ AQ 55 D 26,130 2,343 23,787 3,297 Tr † Abs

Tesoro Energy NR DP - Texas Instruments Information

TechnologyAQ AQ 52 E 1,956,912 831,460 1,125,452 †

Textron Industrials AQ AQ 43 - 644,096 129,790 514,306 † IntThe Hershey Company

Consumer Staples AQ AQ 67 C 403,786 129,274 274,512 159,886 Tr TSP † Int

The Southern Company

Utilities AQ IN 52 D 132,000,000 132,000,000 †

Thermo Fisher Scientific

Health Care AQ AQ 35 - †

Tiffany & Co. Consumer Discretionary

AQ AQ 85 C 44,126 3,593 40,533 3 Int

Time Warner Consumer Discretionary

AQ AQ(L) 45 - 260,618 24,767 235,851 50,525 Tr ^ †

Time Warner Cable Consumer Discretionary

NR DP -

Titanium Metals Materials DP NR - TJX Companies Consumer

DiscretionaryAQ AQ 82 C 762,410 64,250 698,160 14,300 Tr 3 Int

Torchmark Financials NR NR - Total System Services


AQ AQ 36 - NP

Travelers Companies

Financials AQ AQ 60 D 88,472 37,084 51,388 † Abs

Tyco Industrials AQ AQ 66 C NPTyson Foods Consumer Staples DP NR - U.S. Bancorp Financials AQ AQ 70 C 411,379 40,445 370,934 24,256 Tr †Union Pacific Industrials AQ AQ 57 D 11,560,004 11,207,344 352,660 †United States Steel Materials AQ AQ 51 D 46,935,476 41,698,658 5,236,818 † Abs

IntUnited Technologies Corporation

Industrials AQ AQ 58 D 1,914,377 946,075 968,302 66,336 Tr † Abs

UnitedHealth Group Health Care AQ AQ 74 D NPUnum Group Financials AQ AQ 73 D 42,948 9,677 33,271 4,244 Tr †UPS Industrials AQ AQ 99 A- 12,630,498 11,712,803 917,695 9,864,729 Fu Tr

EC TSP Fr

3 Int


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Urban Outfitters Consumer Discretionary

NR X -

V.F. Corporation Consumer Discretionary

AQ AQ 74 D 285,657 93,585 192,072 18,334 Tr †

Valero Energy Energy NR DP - Varian Medical Systems

Health Care AQ NR 75 E 62,907 42,807 20,100 13,208 Tr †

Ventas Financials DP DP - Verisign Information

TechnologyDP AQ -

Verizon Communications


AQ AQ 61 C 6,062,598 567,297 5,495,301 † Int

Viacom Consumer Discretionary

AQ AQ 17 - NP

Visa Information Technology

AQ DP 40 - NP

Vornado Realty Trust

Financials NR NR -

Vulcan Materials Materials IN AQ - W.W. Grainger Industrials AQ AQ 66 E NPWalgreens Consumer Staples AQ AQ 66 C 2,252,701 280,991 1,971,710 † IntWal-Mart Stores Consumer Staples AQ AQ 85 B 21,404,099 5,922,051 15,482,048 42,841 TI Tr ✓ Abs

IntWalt Disney Company


AQ AQ 51 C 1,465,646 550,782 914,864 † Abs

Washington Post Consumer Discretionary

NR NR -

Waste Management Industrials AQ AQ 61 C 24,732,846 24,531,046 201,800 † Abs Int

Waters Health Care AQ AQ 47 - 34,922 14,605 20,317 † AbsWatson Pharmaceuticals

Health Care AQ AQ 67 D NP

WellPoint Health Care AQ AQ 66 D 159,871 7,151 152,720 84,493 Tr EC † AbsWells Fargo & Company

Financials AQ AQ 81 A- 1,602,788 116,858 1,485,930 124,316 Tr 3 Abs

Western Digital Information Technology

AQ AQ 52 E 519,144 10,717 508,427 31,517 Tr EC †

Western Union Information Technology

NR NR -

Weyerhaeuser Financials AQ AQ 56 C 2,938,907 1,712,178 1,226,729 † AbsWhirlpool Consumer

DiscretionaryAQ AQ 52 D 825,761 233,300 592,461 130,472,837 USP

DSP † Abs

Whole Foods Market

Consumer Staples AQ AQ 61 D 711,979 324,141 387,838 179,995 Wa Tr † Int

Williams Companies Energy AQ AQ 31 - 16,916,133 16,090,704 825,429 †Windstream Telecommunication

ServicesAQ AQ 8 - †

48


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Wisconsin Energy Utilities AQ AQ 51 D 20,926,674 20,926,674 †Wyndham Worldwide


AQ NR 83 B 398,385 100,814 297,571 3

Wynn Resorts Consumer Discretionary

NR NR -

Xcel Energy Utilities AQ AQ 89 B 58,008,343 56,075,310 1,933,033 17,707,804 Fu TI EC ^

† Abs

Xerox Information Technology

AQ AQ 54 C 335,869 156,664 179,205 6,149 TI PSP SE ^

† Abs

Xilinx Information Technology

AQ AQ 42 - 25,594 2,056 23,538 †

XL Capital Financials AQ AQ 38 - 5,097 Tr †Yahoo! Information

TechnologyAQ AQ 36 - 49,342 Tr EC † Int

Yum! Brands Consumer Discretionary

AQ AQ 61 D NP

Zimmer Holdings Health Care AQ AQ 53 E 102,461 6,743 95,718 †Zions Bancorporation

Financials DP DP - †


49

Key:

AQ Answered questionnaire AQ(L) Answered questionnaire late so

company not scored SA Company is either a subsidiary or

has merged during the reporting process. See company in brackets for further information on company’s status.

IN Provided information DP Declined to participate NR No response X Company did not fall into one of

the CDP samples in that year - Company did not meet

disclosure score threshold of 50 or did not answer questionnaire

NP Answered questionnaire but

response not made publicly available

^ Company provided an “Other”

Scope 3 source type which was adjusted to be included in one of the main scope 3 source types

✓ Verification/assurance complete

for reporting year ✓ Verification/assurance ongoing

for reporting year - prior year(s) completed

¢ Verification/assurance ongoing for

reporting year - first year started † No verification or assurance,

or verification undertaken did not meet CDP’s verification requirements. For more details, please see www.cdproject.net/verification

Abs Absolute emissions reduction target

Int Intensity emissions reduction

target

Scope 3 Source Key:

PGS Purchased goods & services Eq Capital goods Fu Fuel- and energy-related

activities (not included in Scopes 1 or 2)

TI Transportation & distribution Wa Waste generated in operations Tr Business travel EC Employee commuting and

teleworking Lu Leased assets (upstream, not

included in Scope 1 or 2) In Investments (not included in

Scope 1 or 2) TSP Transportation and distribution of

sold products PSP Processing of sold products USP Use of sold products DSP End of life treatment of sold

products Ld Leased assets (downstream, not

included in Scope 1 or 2) Fr Franchises (not included in

Scope 1 or 2) SE Supplier emissions Oth Other

1. Those companies marked AQ(L) in 2011 submitted responses after the analysis cut off date of July 1, 2011. These companies’ responses are not included in the analysis of this report.

2. Total of Scope 1 and Scope 2 reported emissions.

3. The verification/assurance key provided for each company is based on the CDP’s criteria. If a company had more than one level of completion of verification/assurance across the different scopes, the highest level was used for purposes of the key. Moving from highest to lowest levels of verification/assurance:

- complete; - prior year(s) complete; - first year started; and - no verification/assurance.

4. Motorola Solutions was part of Motorola in 2010.

5. During the reporting period, Qwest Communications International merged with CenturyLink to become CenturyLink.

Design and production Lavish is a leading Creative Services agency based in London. We specialise in the creation and management of brand assets and communication materials for clients in the corporate and not-for-profit sectors.

For more information on Lavish visit www.lavishconnect.co.uk

Global Advisor and Report Writer

In addition, CDP has been generously supported by:

CDP Silver US Consultancy Partners 2011

Carbon Disclosure Project 2011 This report and all of the public responses from corporations are available to download from www.cdproject.net

Our sincere thanks are extended to the following:

Advisors:Jane Ambachtscheer, Marc Fox, Joyce Haboucha, Jon Johnson, Bill Thomas, Martin Whitaker, Martin Wise

Organizations:Skadden Arps, UN PRI, US EPA

Chris RisoReport [email protected]

Zoe Tcholak-AntitchDirectorCDP North America

Paula DiPernaSpecial AdvisorCDP North America

Doug KangosSustainable Business Solutions

Pamela LilakSustainable Business Solutions

Steve LoprestiUS Thought Leadership Institute

Robert CarraroDirector of [email protected] James MarshallCDP Reporter [email protected]

Chrystina GastelumCDP Supply [email protected]

Kathy NielandSustainable Business Solutions

John O’HaraSustainable Business Solutions

Sue HowellsHead of Global Operations

Carbon Disclosure Projectc/o RPA, 6 W 48th Street10th FloorUnited States of AmericaNew York, NY 10036Tel: + 1 (212) 378 2086Fax: + 1 (212) 812 4335

Carbon Disclosure Project40 Bowling Green LaneLondon, EC1R 0NEUnited KingdomTel: + 44 (0) 20 7970 5660Fax: + 44 (0) 20 7691 [email protected]

PricewaterhouseCoopers LLP300 Madison Avenue24th FloorNew York, NY 10017Tel: +1 (646) 471 4000Fax: +1 (813) 286 6000Email: [email protected]

Contact details can be found at the following web address:http://pwc.com/sustainability

Important NoticeThe contents of this report may be used by anyone providing acknowledgement is given to Carbon Disclosure Project (CDP). This does not represent a license to repackage or resell any of the data reported to CDP and presented in this report. If you intend to do this, you need to obtain express permission from CDP before doing so.

PwC and CDP prepared the data and analysis in this report based on responses to the CDP 2011 information request. PwC and CDP do not guarantee the accuracy or completeness of this information. PwC and CDP make no representation or warranty, express or implied, and accept no liability concerning the fairness, accuracy, or completeness of the information and opinions contained herein or for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. You should not act upon the information contained in this publication without obtaining specific professional advice. All information and views expressed herein by CDP and/or PwC are based on their judgment at the time of this report and are subject to change without notice due to economic, political, industry and firm-specific factors. Guest commentaries where included in this report reflect the views of their respective authors; their inclusion is not an endorsement of them.

PwC and CDP and their affiliated member firms or companies, or their respective shareholders, members, partners, principals, directors, officers and/or employees, may have a position in the securities of the companies discussed herein. The securities of the companies mentioned in this document may not be eligible for sale in some states or countries, nor suitable for all types of investors; their value and the income they produce may fluctuate and/or be adversely affected by exchange rates.

‘PricewaterhouseCoopers’ and ‘PwC’ refer to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

‘Carbon Disclosure Project’ and ‘CDP’ refers to Carbon Disclosure Project, a United Kingdom company limited by guarantee, registered as a United Kingdom charity number 1122330, and CDP North America, registered in the United States as a 501(c)(3) Corporation.

© 2011 Carbon Disclosure Project. All rights reserved.

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