Market News

 May 15, 2007
Asian and European Firms Lead World on Carbon Cuts

 London, UK -- Nearly a third of companies currently have no way of monitoring their own carbon emissions, or the indirect emissions of their supply chain, and they have no plan to begin doing so, a new survey of global executives has found.

The survey, "A Change in the Climate," asked 634 executives at manufacturing and service-industry companies around the world what their companies are currently doing or plan to do in the near future about their own carbon-dioxide emissions.

Only one in ten of the companies responding said they comprehensively monitor their carbon impact across the entire business. One-quarter of companies monitor some or all of their emissions in parts of their operations, and 18 percent simply measure energy efficiency. One-third of the companies, 32 percent, said they neither monitor their emissions or have any plans to do so in the near future.

North American companies trail behind the rest of the world in cutting carbon costs, according to the survey. Only 7 percent of companies based in North America pay attention to their carbon footprint, and 41 percent neither monitor their emissions or plan to start such monitoring programs. In Europe, 28 percent of companies monitor their emissions, and 32 percent of companies globally do so.

The report did find that there are signs of progress across companies worldwide. Among companies that do not currently monitor their carbon output, more than a quarter, 28 percent, said they intend to have a monitoring program in place by 2010.

The results of the survey point to mixed messages emanating from public concern and behavior on climate change. Although the public at large expresses a good deal of concern about climate change, and 37 percent of the companies surveyed said they receive a credibility boost from taking action on carbon emissions, more than half of the companies -- 56 percent -- said their climate policies have no effect on their customers' behavior.

The report suggests that business leaders are still reacting to potential threats to their reputation or business in deciding how and whether to address climate change, rather than seeking to exploit revenue-increasing business opportunities.

The report quotes Tod Arbogast, the director for sustainable business at computer manufacturer Dell, who believes that "'customers have consideration for companies that lead' on carbon issues."

The report found that the costs to taking on carbon emissions are not high: companies are spending only about .6 percent of their budgets in this area, and 55 percent of executives expect that by 2010 these efforts will cost nothing or add to the bottom line. But without clear guidance from government, there is a good chance that the progress made thus far will stall out.

"Although relatively few companies are taking action to reduce their carbon impact today, it is interesting to see that business wants clarity from governments over this issue," said James Watson, the report's editor. "They don't see carbon reduction as a major cost, but they want to know how far they have to go."

Andrew Cahn, chief executive of UK Trade & Investment, which funded the report, said, "This report further emphasizes the need for government to continue working with business to ensure we have the right incentives and framework to maintain our competitive position and at the same time tackle climate change."

Among the most publicized of carbon-reduction strategies today, carbon offset programs get little more than lukewarm reception from the executives surveyed. Many companies surveyed found offset programs to be a temporary expedient and not a long-term solution, and 38 percent of the companies already involved in carbon reduction expect to increase their efforts from within, for instance by encouraging employees to plant trees.

Survey respondents were clear in their belief that government regulation is the single largest factor that will determine how their companies address climate-change issues. Without a clear government framework, like a market-based system to set the price of carbon, the report says corporate efforts will suffer from uncertainty about expectations and requirements.

The report quotes Matthew Gorman, the group sustainability manager at BAA, the U.K. airport operation, describing how companies feel trapped in a catch-22 about carbon regulations. "Governments tend to feel limited in their ability to introduce new policies for reducing emissions because they fear business resistance, while companies are unable to take their investments in low carbon solutions to scale because of lack of long-term policies."