Climate change strategy for businesses
Business is facing a fork in the road. It can either adopt climate friendly policies or it can face the consequences. Most large companies now see managing their greenhouse gas emissions and minimising energy consumption as integral parts of their environmental management practices. Many have set targets to reduce their greenhouse gas emissions, have worked with their suppliers and customers to reduce their emissions, and have encouraged governments to adopt policies directed at significantly reducing global greenhouse gas emissions. Yet, climate change remains an issue that is primarily seen as one of operational efficiency rather than the creation of long term sustainable value. The majority of companies have focused their efforts on those actions that provide clear and relatively low risk returns, and those where the costs are relatively modest. This wait and see approach, perhaps unsurprisingly, is particularly prevalent in situations where the actions involve significant capital expenditures (e.g. in the power generation sector) or where the actions could commit the company irrevocably to a specific course of action (e.g. discontinuing a particular product line). When challenged, companies cite the huge uncertainties in climate change policy at the national and international levels as the major barrier to them thinking about climate change in any terms other than relatively short term costs and benefits. While there is a logic in this line of argument, it is striking that climate change, in many ways (e.g. pervasive uncertainty, major implications for huge swathes of the economy, changing public and consumer attitudes), looks exactly the same as many of the other strategic issues that companies need to address. While there may be a concern among business leaders about the risks inherent in responding to – or being seen to respond to – a green issue, the reality is that, from a business perspective, climate change is...
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