Hidden Profits in Climate Change - NFP Report
26 June 2013 at 11:58 am
A new global Not for Profit analysis claims smart corporates can innovate to solve a global challenge – and profit along the way.
The 3% Solution: Driving Profits Through Carbon Reduction, released by World Wildlife Fund (WWF) and environmental disclosure organisation, CDP, claims “companies can reap big profits from cutting their carbon emissions, simultaneously helping the world avoid runaway climate change”.
The analysis says that if US businesses act now to reduce emissions by an average of 3% annually, they can save up to $190 billion in 2020 alone, or $780 billion over 10 years.
According to the report, reducing carbon emissions by 3% annually from now to 2020 – equivalent to cutting total annual greenhouse gas emissions in 2020 by 1.2 gigatonnes of CO2 from 2010 levels – is enough to put the US corporate sector on track for a 25% reduction against 1990 levels.
“This reduction pathway is consistent with the lower end of what the Intergovernmental Panel on Climate Change (IPCC) says is needed by 2020 to help avoid a global temperature increase of 2 degrees Celsius above pre-industrial levels,” the report said.
The report says four out of five companies from the S&P 500 who report their emissions to CDP see bigger financial returns on their carbon reduction investments than their overall capital investments, making reallocation of their capital expenditures a sound business decision.
“To unlock the billions of dollars in cost savings, on average the US corporate sector would need to invest 3 to 4% of their capital expenditures each year on low-risk, profitable carbon reduction projects,” the report said.
"World Governments have moved far too slow to address the climate change threat and people are looking for leadership from the brands they trust to take concrete actions now,” Carter Roberts, President and CEO of WWF said.
“These numbers provide a glimpse into the future – where smart companies slashed emissions, increased profits and helped secure a better future for all of us.”
Paul Simpson, CEO of CDP said the report points to specific financial opportunities that US corporations can seize.
“But it is critical that senior management devote much more attention to the issue to drive the necessary near-term increase in capital expenditure required for companies to capture the full economic benefit of greenhouse gas emissions reductions.
“Corporations must act now not only to address environmental risk, but also to aid economic recovery in the United States and build resilience. Investing in energy efficiency and renewable energy saves cost, stimulates innovation, creates jobs and builds energy independence and security.”
The report also includes a Carbon Target and Profit Calculator, which provides a guide for companies to set emission reduction goals and to claim their share of the savings.
WWF is a leading conservation organisation, working in 100 countries with almost 5 million members worldwide.
CDP is an international, Not for Profit organisation providing a global system for companies and cities to measure, disclose, manage and share vital environmental information.