-----

Resources



Market News

 June 16, 2007
A change in the climate: Is business going green?

 Businesses are not keeping up with the growing carbon awareness of a general public disturbed by predictions of climate change, but more firms are starting to focus on the issue, according to an independent report from the Economist Intelligence Unit. A Change in the Climate, commissioned by UK Trade & Investment, reviews the corporate response to climate change.

Nearly one-third of companies surveyed (32%) do not monitor direct carbon emissions or indirect effects such as supply chain activities and have no plans to start doing so, according to the 634 executives globally who responded. About one in five companies (18%) simply measure energy efficiency, while a further 25% monitor some or all emissions across parts of the business. Just one in ten companies comprehensively monitors its entire carbon impact across the whole business.

Even so, there are signs of action. Nearly one in five companies have a scheme in place to reduce some of their carbon impact, and another 28% expect to have one up and running by 2010, although less than half (45%) have no plans at all. Change is also creeping into other aspects of the business: 35% of respondents' firms either have already reduced their air travel, or plan to do so, although more than half (54%) are resistant on that point. Similarly, while only 18% of respondents said their firms use low-emission vehicles today, another 26% plan to introduce them within three years. And 40% either already use renewable energy or intend to do so within three years. But most activity is focused on individual behaviours, such as switching off lights and powering down computers at night: 54% already promote such activities and another quarter plan to within three years.

The survey also highlights the central role of government regulation in shaping businesses' response to carbon issues. Respondents selected compliance with existing rules as the biggest single factor influencing their carbon-reduction strategies.

"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."

According to Andrew Cahn, chief executive of UK Trade & Investment, “This report further emphasises 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. The UK remains a leader in developing solutions to the challenges posed by climate change."

But while public interest in carbon emissions may be high, consumer behaviour has yet to respond. As a result most firms still do not view their environmental strategy as affecting their market position, and only 10% see it as a potential liability. Thirty-seven per cent of respondents cite enhanced credibility with the wider public as an attractive benefit of carbon reduction, but only 15% see it as a marketing opportunity and only 7% as a tool for differentiating their products. More than half – 56% – say their carbon policies have no discernible effect on their customers.

PDF Download this report for free. A Change in the Climate [2,746 KB]

Other key findings from the report include:

  • Asian companies are leading the way in measuring emissions and energy use Asian companies are on a par with, and often slightly ahead of, their global rivals. Just 27% say they do nothing, the lowest proportion of any region. Twenty percent measure energy efficiency, slightly ahead of firms elsewhere. Asian firms are far more likely to see benefits for their companies from carbon reduction, and also pay more attention to environmental activists.
  • Businesses would value a clearer framework on carbon emissions from governments. Half of all respondents say regulations have a highly significant or significant effect and 39% cite the desire to stay ahead of future requirements as a highly significant or significant motivation. Appropriate involvement from governments is also widely seen as a spur to greater efforts from business, with 71% envisaging a significant effect from appropriate tax incentives.
  • Cutting carbon isn't necessarily expensive... Those businesses that are taking carbon reduction measures are not spending heavily. The majority spend less than 1% of operating expenses. By 2010, more than half (55%) of these executives expect these efforts either to impose no costs on their business or else result in a net positive effect, mostly through savings on energy bills and increased sales for enhanced brands. Just 10% think it will have an overall negative impact on costs, with the balance unsure.
  • ...but the learning curve remains steep. Those companies that are making a serious attempt to monitor and control their carbon impact face the usual challenges of the early adopter. There is little "best practice" and some thorny issues are yet to be resolved -- for example, what kind of strategy is needed if the biggest proportion of the firm's carbon footprint is produced by customers using the product.
  • Companies are uncertain about offsets, but they remain an important option. Carbon offsetting schemes have received a lot of publicity recently. But while businesses view such schemes as a temporary expedient rather than a long term solution (38%), firms already engaged in carbon reduction expect its importance to continue to grow and 38% of them expect their efforts to be internal, such as getting employees to plant trees.

PDF Download this report for free. A Change in the Climate The full report is available for free download.