Climate Change: Why Businesses Started Caring
Leading US businesses have long understood ‘doing well by doing good’. But in 2012 there seemed to be a significant shift in the number of companies that adopted that approach. Fifteen year sustainability professional, and Executive Vice President of The CarbonNeutral Company in the Americas, Mark LaCroix, looks at what’s driven the change.
As the world’s second largest economy and home to many of the world’s biggest and most successful businesses, the impact of US business operations and supply chains is felt throughout the world, giving a massive global footprint. And during 2012 it seems that an increasing number of US businesses put climate change mitigation on their boardroom agendas. Companies like UPS and Bain & Company decided it was in their strategic best interests to lead on climate action as a means to generate business value: with each of these companies making a statement of carbon neutrality as part of their sustainability strategy.
I was with Interface – a business that has long been considered a sustainability leader - for over 25 years and was fortunate enough to be near the epicenter of Ray Anderson’s sustainability epiphany. While Ray’s legacy as a sustainability pioneer is well documented, what is less known about Ray is how fiercely competitive he was – his principle of ‘doing well by doing good’ meant, doing well, first and foremost, in a pure business sense, by doing the right thing for the planet and for people.
Now we’re starting to see more businesses showing that sort of competitive spirit and leveraging progressive carbon management strategies to create meaningful competitive differentiation. The drivers for doing so didn’t change in 2012, but there were some key factors that increased businesses’ awareness of how to use them to add value.
Firstly, we had the emergence of California as one of the world’s largest carbon markets, and as the US’s first meaningful compliance market. The California/AB32 cap & trade system took important tips from the EU Emissions Trading System and, closer to home, RGGI in the Northeastern US, to create a well-designed cap and trade system. California’s program doesn’t directly impact many businesses throughout the country, however, what it does do, is mark a signal about the role and value of offsetting programs in delivering efficient and effective emission reduction programs: programs that will deliver strategic value to business.
The US’ resurgent manufacturing sector has, I believe, also sharpened the focus on the need for climate mitigation as a way to gain a competitive edge with companies realizing that far flung supply chains can be difficult to manage, particularly as ‘just in time’ production and mass customization becomes more prevalent. Businesses are looking to manufacture within the US, but realize that to compete globally they need to manage costs, and that the management of carbon intensity enables them to do that.
Of course, the changing climate was moved further up some media agendas by the backdrop of extreme weather events. We lived through a summer of drought and heat waves, and then the watershed moment of Hurricane Sandy. Such extreme weather, with dramatic impact throughout the country, inevitably drives more businesses to consider addressing climate risks as a way of future proofing their operations.
Academia in the US has stepped up as well with graduate level programs like the Erb Institute for Global Sustainable Enterprise at the University of Michigan producing ‘next generation’ sustainability professionals that have started to populate businesses across the country. These highly trained sustainability professionals are pragmatic, well equipped, and eager to help businesses move beyond the ‘low hanging fruit’ initiatives to the thornier and more difficult challenges ahead.
When US business starts to pay attention, it can be a catalyst for much greater action globally – just look at the success of the Montreal Protocol, where US business played a crucial role, in acting ahead of government and removing CFCs from the supply chain. If the shift I detected in 2012 continues, I hope to see a trend in 2013: a trend for leading businesses to put carbon management at the center of sustainability strategy, and send signals for others to do the same.
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