Climate Action - Assisting business towards carbon neutrality

The past 10 years has seen climate change explode on to the global agenda, and riding in its wake, a new order of regulations, legislation and compliance measures for companies to adhere to. Those companies who have the foresight to embrace this climate change agenda stand not only to reduce their compliance costs, but save money through low carbon measures. The business case to act on climate change is compelling with more than one reason to seize the opportunities now. Businesses that have already done so are reaping huge benefits.

Compliance and regulation

Rising levels of compliance for businesses, due to tightening regulations in energy efficiency, building standards, waste and emissions look set to increase worldwide. Businesses that act now will be far better placed to mitigate increasing compliance costs in the future.

“How companies respond (to the risks, opportunities and challenges of climate change) will have important consequences for their competitiveness, profitability and even their very survival.” MINDY LUBBER, President of Ceres and Director of the INCR – Read full article

Savings and profits

Business costs can be slashed by actions that also reduce GHG emissions. Energy efficiency measures, reductions in waste production, investments in renewable energy not only result in clear CO₂ emissions reductions, but can drastically reduce costs and improve profits.

Case in point

• Multinational retail giant Wal-Mart has pledged to increase the efficiency of its vehicle fleet by 25 per cent over the next three years and eliminate 30 per cent of the energy used in-store. Why? Vast saving of upwards of $300 million in fuel costs per year.¹
• BP’s energy efficiency initiative has been the company’s most profitable project in the last decade; with a US$100 million investment, the company achieved US$400 million in savings.²

Seizing business opportunities

The opportunities for companies to explore new areas of business that have arisen out of the climate change challenge have never been greater. The World Business Council on Sustainable Development anticipates a 160-fold increase in renewable electricity generation, for example, and the fitting of carbon capture and storage technology to half of all coal-fired power generation. It also predicts an increase in energy consumption in the form of electricity rather than other fuels. According to UNEP, investment capital flowing into renewable energy rose from US$80 billion in 2005 to US$100 billion in 2006². Manufacturers diversifying in carbon reduction technology and companies that seize energy efficient measures and generate renewable energy stand to gain great business advantage. As Hunter Lovins says when setting out the business case for protecting the climate: "The early adopters gain substantial first mover advantage^."¹

“In a few years, predictions are that market based competition will swing in favour of renewable energies across the board”  WOLFGANG PALZ, Chairman, World Council Renewable Energies – Read full article

Other opportunities for business exist in changing technologies, eg as Toyoto has achieved in the development of its Prius and in the exploration of changing markets. Leading players in the oil industry for example, such as Anglo-Dutch Shell and BP, have begun to reposition themselves as no longer selling a product, ie oil, but selling a service, ie light, heat and power. BP, for example, rebranded itself in 2000 to 'Beyond Petroleum', making full use of sun imagery in its new logo.

Companies can also explore the opportunities in making existing products and services more efficient through, for example, emissions monitoring in supply chains. There is also the possibility of considering closed loop systems whereby the rubbish of one process can become the food stuff of another. German yoghurt giant Muller, for example, is to branch out into biofuel to manufacture bioethanol from dairy waste products, while UK tomato growers, John Baarda Ltd have teamed up with fertiliser manufacturer, Terra Nitrogen, to use its waste stream to heat its greenhouses.³

A case in point

• Carbon labelling is becoming increasingly popular with companies manufacturing consumer products. Timberland, for example, has included carbon labels on its shoes, making it the first US company to do so while UK, potato crisp manufacturer, Walkers and retail giant Tesco are working with the Carbon Trust to carbon label its products.²
• Honda and Toyota lead the way in climate-friendly, fuel saving technologies. Toyota, for example, dominates the gasoline/electric hybrid market already selling more than a million of its eco-friendly car, the Prius.²

Financial investor pressure

Investors now evaluate corporations on the basis of their preparedness for associated risks and opportunities related to climate change. In a world that recognises climate change as a serious threat, businesses can not afford to ignore it. To satisfy investors of a company’s ability to adapt to the new carbon constrained world, transparency in operations, management, finances and emissions is key. Above all, a company wishing to demonstrate good climate risk to its investors, must look to set out its stall through formalised carbon disclosure. Those that do, stand to benefit in a reduced carbon business environment.

“The challenge for companies is to demonstrate to investors that they have adequately quantified the climate change risk.” IAN WOODS, Senior Research Analyst, AMP Capital Investors – Read full article

Socially responsible investment screening aims to identify best in class performers with indices, such as the FTSE4Good, now carrying climate change criteria. Similarly, carbon leadership indices single out those companies most transparent in its efforts to curb greenhouse gas emissions. It now pays to be transparent with carbon data.

Retaining staff

A company with the foresight to take the opportunities afforded to them by the climate change agenda gain not only first mover advantage but industry leadership, an enviable competitive edge and one that is more likely to recruit and retain the best talent.

Last word

“In the future, the leading companies will be those that are able to provide goods and services that reach new customers and solve global challenges.” WORLD BUSINESS COUNCIL ON SUSTAINABLE DEVELOPMENT

References