WHAT CAN CORPORATIONS DO ABOUT CLIMATE CHANGE?
Strategy

Climate change is one, if not the biggest impacts we’ve had particularly since the industrial revolution, and this is very much apparent in our day to day lives. From the receding of the glaciers in Antarctica, to drastic changes in weather patterns across the globe, and this keeps getting worse by the decade.

Apparently, corporations are one of the major contributors in exacerbating this process. A publication from Grist estimated that none of the world’s top industries would be profitable if they paid for the natural capital they use. For example, think about beef in Latin America or coal in China. If we considered the impact that that has on water, soil and local communities, not one of these sectors would be profitable in today’s dynamic.

Therefore, if it’s not the companies, and this is not on their balance sheets, who then is paying that cost? Unfortunately, the cost is paid by all of us. We pay in terms of the cost of the impact of oil spills, responses to increasing hurricanes, migration,heatwaves etc. This phenomenon segues into various questions, amongst others is: Is there a way that corporations can help alleviate this problem?

The answer to this question is a probable yes. In as much as corporations are one of the major contributors to climate change in one respect, by the same token, they can have a positive contribution in another. This, however, can only be achieved if corporations incorporate certain practices in their day-to-day operations, and these could be, but not limited to the following:

Developing a Climate Action Plan

The first step for many companies perhaps could be to develop climate action plans across the company and for individual business units. The components of a climate action plan depend on the type of company and the goals it wants to achieve.

For example, should the plan be designed through a “top-down” or “bottom-up” process; to what extent should the plan features market mechanisms such as internal carbon price and/or and external carbon offsets; and should the plan establish one or more targets – and if so, of what type and how? etc.

Setting Goals and Targets

After developing a climate action plan, the next step could be setting goals and targets predicated on this plan. A growing number of companies have voluntarily adopted climate-related targets. The type of target an individual company chooses depends on its products and production methods, policy environment, and business models. Some targets focus on reducing greenhouse gases, and others on energy use. Some serve as absolute limits, and others are relative to production levels and revenues.

Once targets are established, they can drive innovation within the company, spurring internal programs and products that can help the company meet its goals.

Promoting environmentally friendly ways of working or doing business  

Some ways of working are more ecological than others. For example, telecommuting has many ecological advantages. One can also consider video conferences that avoid employees traveling by car for meetings.

Paperworks also have a strong environmental impact, as does computer work and the Internet because of servers. Sometimes, avoiding copying an entire company in an e-mail that only concerns one department can save a lot of CO2 emissions.

 

Internal Carbon Pricing
One business strategy gaining traction among leading businesses is internal carbon pricing, which assigns a price to carbon emissions attributable to the business. More than 1,200 companies worldwide are either pursuing internal carbon pricing or preparing to do so in the coming years.
Companies that establish a corporate carbon price assign a monetary value to CO2 emissions associated with a business activity. This price signal is factored into investment decisions, providing an incentive for the company to move from emissions-intensive programs and products to low-carbon, climate-resilient alternatives.
Raising awareness among employees, clients and other stakeholders
As an economic agent, companies can play a role in raising awareness on their employees, consumers, media and other stakeholders. This could be done by organizing in-house contests or campaigns to raise and improve awareness on sustainability issues. These gestures gradually create the ground for best practices that individuals could then reproduce at home and transmit to their friends.
IN A NUTSHELL
Human beings are good at dealing with fight-or-flight problems, and are susceptible to slow burn issues. We’re terrible at dealing with issues that get worse and worse in the background which, on a day-to-day basis, we can put in the back of our mind and get not too engaged with. Apparently, climate change is one such issue. If we want to stay on this planet longer than 100 years that Stephen Hawking predicted we have left, we need to change the dynamic and change the way that we operate on this planet, and corporations – large or small, can help drive this change.
The author is a chartered accountant, currently working with a multi-national auditing firm in Zambia

 

 

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