Climate Change Compliance as a Business Opportunity
A great deal of attention is being paid to the development of multilateral and national accords and legislation designed to compel private industry to reduce carbon emissions. The key assumption underlying these efforts seems to hold that private industry worldwide cannot be counted on to initiate or facilitate carbon emissions reductions voluntarily, and certainly not as part of a preferred business model. But suppose for a moment that this assumption is not entirely correct, that private industry is in fact ready to start embracing climate change as a function of its own self-interest. The implications of such a trend could be far reaching.
The evidence is interesting. In 2007, the Carbon Disclosure Project (CDP), founded by Merrill Lynch, surveyed 2,400 of the largest publicly traded companies worldwide seeking detailed information on the perceived business risks and opportunities presented by climate change and global greenhouse gas emissions. While virtually all respondents recognize the risks, up to 80 percent of firms internationally also consider it an area that holds important business opportunity, with a majority considering the issue significant enough to include as an ongoing area of attention by board members and upper management. In the U.S., this includes an increasing number of companies adopting formal programs of climate change risk disclosure, impact and opportunities disclosure to their shareholders and in publicly filed documents.
This apparent shift is being driven, in part, by the private investment community. Investment banks, brokerage firms and insurance companies have started to channel their expertise and capital into identifying and implementing climate change opportunities, with new products emerging in the areas of risk management and finance. The trend initiated by these industry sectors, coupled with new legislation, consumer awareness and market demand, is resulting in a new focus on green activities in other traditional industries such as:
- Utilities, energy and materials production are focusing attention on retrofitting existing energy and industrial facilities to produce lower levels of carbon emissions, and creating new ones powered, in part, by new forms of renewable energy supported by a rapidly growing number of alternative energy technologies and technology companies supported by privately and publicly funded research and development.
- Consumer products and services industries are identifying clear trends among consumers to buy green products.
- The resort industry is a good example of a service industry that has discovered strong marketing and business advantages to offering green resort facilities and amenities.
In short, climate change has begun to acquire cache among consumers and the ramifications for this are just starting to be felt.
These shifts in industry perception of climate change are new and evolving, but if they continue to expand at the rate seen in the last 5 years, the positive implications for climate change are clear.
