Companies that meet the challenge of reducing carbon emissions with innovation and commitment can see a business benefit.
An analysis or the world’s 250 largest emitters of greenhouse gases (GHG) reveals a surprising conclusion: A low-carbon future is not just possible, but profitable. That’s good news, because worldwide emissions have remained flat when they should have declined – a strong indication that making significant strides with respect to climate change will not be easy.
The Global 250 GHG
To examine the impact industry has on the global climate, the researchers behind Global 250 Greenhouse Gas Emitters: A New Business Logic looked at the 250 largest publicly traded GHG emitters. The list includes energy, automotive, aircraft, manufacturing, and mining companies, among others. They found that, along with their value chains, these companies contribute about one-third global annual anthropogenic emissions.
“Without continual reductions in emissions from this group of companies,” the authors of the report wrote “Effectively mitigating the long-term risks of climate change is not possible.”
New horizons for business growth
Many businesses balk at environmental initiatives out of fear they’ll harm the bottom line, but the Global 250 report suggests that kind of thinking is outdated. When relationship between multiyear decarbonization trajectories and a broad set of financial performance metrics is analyzed, there is no evidence of a trade-off between financial and environmental performance among the Global 250.
In fact, the 20 percent or so of the Global 250 that have implemented plans for a low-carbon future are demonstrating that their transformation strategies create real business value through cost structure improvements, new revenue growth opportunities and risk mitigation. While no one would present climate change as a good thing, it seems the most innovative companies have treated it as a historic opportunity for innovation that drives durable growth and competitive advantage.
A cloudy future
The Global 250 report adds a measure of positivity to what’s otherwise a tense discussion. The consensus among climatologists is that worldwide GHG emissions must decline by 3 percent per year through 2050 in order to avoid a temperature change of more than 2 degrees Celsius. So far, GHG emissions have been flat or rising, meaning future progress must be more dramatic and may be more costly. That a low-carbon outlook can create a business windfall, then, is good news, because it may create a powerful incentive for reluctant emitters.
Read the full Global 250 Greenhouse Gas Emitters: A New Business Logic report and visit our dedicated sustainability blog.