2012-11-20

Co.Exist

Can A Warming World Bring On A New Business Climate?

The government clearly isn’t willing to engage with the issue, so it’s up to the business community. Can they think long-term enough to change course before it’s too late?

This election marked the first time since 1984 that climate wasn’t mentioned even once during the presidential debates. Since climate legislation hit a wall in the U.S. Senate in 2010, discussion of a solution to this pressing problem has been MIA in Washington. While media reported the parade of weird weather over the past two years—epic storms, crippling droughts and record temperatures—the stories rarely linked them climate change, and almost never talked about action to stop it.

Then just two days after Sandy plowed ashore, and less than a week before the election, Bloomberg Businessweek hit newsstands with a bright red cover declaring, "It’s Global Warming, Stupid." The story was not simply another volley against skeptics, but rather a call for mainstream thinkers to get their heads back in the game.

So what’s the takeaway for businesses when a leading business voice reminds us loudly that it’s time to get serious about the most underreported economic challenge of our time?

Unlike in the policy realm, climate change has remained an active topic in many corporate C-suites around the world, and an operational priority for a growing list of businesses. Forward-looking executives recognize that the longer we wait to start taking it seriously, the harder and more expensive it will be for their companies to prosper in a changing world.

The new normal undoubtedly means companies will have to move server rooms, reinforce supply chains, and reposition those backup generators. But that’s only treating a symptom. Real resilience means attacking the cause. And that’s going to require everyone—business included—to embrace a longer view of their place in the world, and start acting accordingly.

Fortunately, there are plenty of good examples. Consider Unilever, the global consumer products company that announced plans in 2010 to cut its greenhouse emissions, water use and waste in half over a decade—all while doubling sales. CEO Paul Polman attributes the company’s record share price strong earnings directly to its sustainability vision.

"Business cannot survive in a society that fails, so it is stupid to think that a business can just be standing on the sidelines of a system that gives them life in the first place," he told Reuters last month. "So this is not idealistic at all. All of the actions that we do are hard-wired to our business purposes, hard-wired to our brands."

And Unilever is hardly alone. Walmart has promised to eliminate 20 million metric tons of greenhouse gas emissions from its global supply chain by 2015, on the road to a larger goal to be supplied by 100% renewable energy. For five years, Environmental Defense Fund has been working with the relentlessly cost-conscious retailer to identify strategies to improve environmental performance across the company and to push those solutions out to thousands of vendors.

Earlier this year, Microsoft decided to make each of its business units financially accountable for their own greenhouse emissions, and created an internal accounting price for carbon—based on market rates for renewable energy and carbon offsets—that will serve as the incentive to drive energy savings in data centers, labs and offices in more than 100 countries. Proceeds from the internal "fees" will go to company-wide emissions reduction efforts.

You don’t have to be a global giant to find these kinds of opportunities, and it doesn’t need to be expensive. EDF’s Climate Corps program has matched specially trained graduate students—mostly MBAs – with over 200 companies and other organizations over the past five years. In total, the fellows have identified more $1.2 billion in energy savings opportunities, with the potential to avoid yearly carbon dioxide emissions equal to the pollution from 200,000 cars.

These companies aren’t doing this out of the goodness of their hearts. They are doing it because this is the business model that fits the world as it is becoming. No single company can cut enough emissions on their own to hold back the rising seas, or stop the climate from warming. But every ton they don’t emit is a cost savings as well as a step to safer, stronger and more prosperous environment and economy.

Policy remains absolutely essential of course, and there are signs that Washington is starting to wake up to the issue again (my colleague Nat Keohane has a great to-do list when they do). But that’s a slow road under the best circumstances. And with Capitol Hill still sharply divided along party lines, we’re a long way from the political alignment we need.

But in the end, it is business that delivers innovation. Right now it is up to the private sector to keep leading the climate charge. Eventually lawmakers will come along, because once you start a parade, the smart politicians are always happy to step to the front to lead it.

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