Tuesday, April 21, 2015

Carbon Reduction Makes Good Business Sense

Carbon reduction efforts are both low risk and profitable making them part of good business strategy. US greenhouse gas (GHG) emissions have dropped nine percent in the last ten years and we could see far greater declines if the business community understood that this is sound business strategy. There are proven tools available to help businesses assume a leadership role in GHG emission reductions that contribute to the bottom line.

In 2012 there were already clear indications that big companies were embracing renewable energy and lowering emissions. According report from Calvert Investments, Ceres and World Wildlife Fund (WWF) the majority of US Fortune 100 companies had already set renewable energy goals. Internationally more than two thirds of Fortune's Global 100 made similar commitments in 2012.

Since 2012 the number of companies adopting renewable energy has radically increased. Many like Apple and Ikea are adopting 100 percent renewable energy. In 2014 these two organizations were among a number of companies that pledged to go 100 percent renewable.

According to the EPA's 20th Inventory of US Greenhouse Gas Emissions and Sinks GHGs have declined 9 percent since 2005. Led by power plants In 2013 total US GHG emissions were 6,673 million tons. Power plants were responsible for the lions share at 31 percent followed by the transportation sector at 27 percent. At 21 percent industry and manufacturing are the third largest source of GHGs in the US. The EPA reports that the rise in emissions observed from large industrial facilities were attributable to increases in coal use for power generation.

A World Wildlife Fund and CDP report titled, The 3 Percent Solution: Driving Profits Through Carbon Reduction, indicates that businesses can cut emissions by one quarter and save hundreds of billions of dollars. By cutting GHGs by 3 percent per year US businesses could see emissions reductions of 25 percent by 2020 compared to 1990 levels.

Cuts of this magnitude would eliminate 1.2 gigatons of CO2 compared to 2010 levels and save businesses up to 190 billion in 2020 alone or 780 billion over ten years. This is not merely speculative math, the report shows that 80 percent of companies on the S&P 500 see better rates of return from carbon reduction than they see in their overall capital investments.

Reductions of 25 percent by 2020 from industrial and manufacturing sectors is in line with the kind of GHG decreases recommended by the IPCC to keep temperature rises below the 2 degrees Celsius upper threshold limit.

To achieve this kind of financial return from emissions reduction the US corporate sector needs to annually invest between 3 and 4 percent of their capital expenditures on carbon reduction.

The report includes a tool known as the Carbon Target Profit Calculator which serves as a guide for companies to set and achieve emissions reduction goals. The analysis includes actions that are part of what is known as the Carbon Productivity Portfolio.

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