Why and How Business Must Tackle Climate Change Now

The most recent Intergovernmental Panel on Climate Change (IPCC) report brought both daunting and galvanizing news. On the positive side, the paper mentioned that it is still possible to reach only a total of 1.5°C increase in global temperature. This was the level outlined in the Paris Climate Agreement as the threshold beyond which the world would experience catastrophic and irreversible climatic shocks and pressures. On the downside, maintaining temperatures at 1.5°C would require unprecedented climate action, setting the planet on track to reduce emissions by 45 percent from 2010 levels by 2030 and hit zero emissions by 2050.

Climate change will damage economies, devastate populations, increase resource scarcity and dramatically impact the cost of doing business. So for both humanitarian and business reasons, it is imperative that companies of all sizes take action. At the same time it is also likely that more aggressive climate policies will be enforced by government bodies on an international level, so from a business standpoint, addressing climate change now will serve as good business in the long run. In fact, over 150 companies have joined RE 100, thereby committing to going 100 percent renewable, and this movement is gaining momentum.

Averting a humanitarian and planetary crisis is reason enough to act with urgency, but there is also a business case for doing so. With the decrease cost of solar and other renewable energy sources, companies can save money and reduce energy uncertainty. What’s more, studies show that consumers want to support companies actively building a better world. Climate action offers companies excellent storytelling potential to be used in marketing initiatives to ensure their brands are meaningful and relevant to consumers because they align around shared values. The question is then what are the best ways for businesses to address climate change?

Here’s how businesses can champion climate action:

  • Measure your carbon footprint: You can’t change what you can’t measure. It’s imperative to measure how much greenhouse gas emissions your business generates annually. Once you set a business-as-usual benchmark, you can work on reducing your carbon footprint from existing levels. There are numerous tests and consultancies that can help with your carbon accounting. For example, CDP is well respected amongst the business community for its transparent and accountable carbon measurements. To maintain credibility, it’s important to conduct a third party audit, rather than undertake climate accounting internally.
  • Develop a climate action plan: Once you measure how much carbon you’re emitting, it’s time to lay out a plan. This means getting granular on the exact activities that produce greenhouse gas emissions and how to reduce them. Here are some key focus areas that can get you started.
  •  Supply chain: Supply chain emissions are often responsible for the majority of corporate carbon footprints. Some argue that addressing this issue is particularly difficult to address because they require changing materials sourcing and sometimes suppliers. But it is possible and necessary. A great example of a company taking on supply chain emissions is LEGO. The toymaker recently announced a bio-based material and is dedicated to transforming its predominantly plastic-based building blocks to plant-based material. Essentially, supply chain adjustments will have a significant impact on your business’s carbon footprint. To maintain quality and price benchmarks, it’s a good idea to start on trial projects and transition over time.
  • Energy: Electricity, heating and cooling are all traditional sources of carbon emissions. Improving energy efficiency is an excellent way to reduce your carbon output. Make sure you focus on facilities in your entire value chain including corporate offices and storefronts, as well as factories and third party warehouses.
  •  Transportation: Logistics and fulfillment routes are prime focus areas for emissions reductions. You can significantly reduce the distance your products need to travel to reach retailers or consumer homes by operating out of regional warehouses. Another way to reduce logistics emissions is to allow sufficient time to ship products via sea freight, rather than air. For international shipping, sea freight is also substantially less expensive. In addition to logistics and fulfillment, you can incentivize employees to travel in more sustainable ways. For one, consider transitioning to an all electric fleet for company owned vehicles. You can also offer company transportation to residential areas where many employees live. Another way to encourage eco-transport is to offer incentives for employees that commute via carpool, public transport or bicycle travel. Additionally, you can offer employees loans to purchase their own electric vehicles.
  •  Food: While it might not be apparent, the food we eat has a significant impact on our greenhouse gas emissions. In fact, agriculture is responsible for roughly one third of global greenhouse gas emissions. In general, plant-based foods are less carbon intensive than animal-based products. Of note, the production of red meat and dairy are especially carbon intensive. Therefore, if you offer company lunches or cater events, you can reduce your carbon footprint by sticking to plant-based foods and specifically avoiding beef and dairy-based eats.
  • Set emissions reduction targets: Once you’ve mapped out a climate action plan, you should have a better understanding of specific emissions sources and what you can do to reduce them. To make measurable changes its imperative to set quantitative and time sensitive emissions reduction targets. You should look at emissions reductions like a business plan. To help quantify your emissions reductions, it’s good business practice to set an internal price on carbon. This way you can assess metrics like the opportunity cost of capital, internal rate of return and payback periods. Be sure to obtain cost estimates for strategies in your climate action plan so you know the cost and time required to make reductions before starting.
  • Monitor progress: Once you’ve set targets and implemented a plan, it’s essential to assess your progress. Working with a third-party consultancy is imperative to maintaining accountability and measuring your true footprint. Monitoring progress not only validates your hard work, but can also offer insights on where you can improve.
  • Support climate-smart politics: Government policy is a strong lever that can shift the needle towards a low-carbon future. Companies often try to avoid politicizing their business, but when it comes to climate change it’s essential that companies support policies and politicians actively working to reduce emissions. While naysayers often argue that policy increases the cost of business, climate policies will actually open new opportunities and improve the economy overtime. Policies like the Clean Air Act, rebates for electric vehicles and renewable energy incentives drive down the cost of clean energy and transportation technology, which reduces the cost of business in the long run. Therefore, companies must use their lobbying influence to encourage politicians to support progressive climate policy.

Business leaders must take action to tackle climate change both for business, humanitarian and planetary benefits. Companies can take a stand by measuring emissions, making a climate action plan, setting emissions reduction targets, measuring progress and supporting policies that advance climate change mitigation. Anything less would be to ignore the reality of the impact of climate change, and that would only hurt business and our future in the long run.

Source: Forbes
Date: Oct 25, 2018