Tuesday, August 8, 2017

More Decoupling: Corporate Emissions Reduction are Compatible with Growth

The CDP tracks corporate emissions. The figures in the 2016 report serve as a baseline for corporate climate action following the Paris Agreement. This annual report also ranks companies according to their carbon emissions and in so doing it reveals both leaders and laggards.

One of the salient findings to emerge from the report is the connection between climate action and profitability. Corporations that are acting on climate change are improving their balance sheets by capitalizing on new business opportunities and revenue streams. The report specifically suggests that there is a competitive advantage associated with greenhouse gas (GHG) emission reduction. Corporations that reduced emissions grew significantly while those that didn't saw their fortunes decline.

A total of 85 percent of the 1089 companies that disclosed data for this report have set targets for emissions reduction. Even though participation in the CDP report is voluntary the combined amount of emission avoidance is substantial. By 2030 a total of one 1Gt CO2e (1,000 MtCO2e) will be avoided if all participating companies reach their emissions reduction targets. To put this in perspective one gigaton is equivalent to the emissions produced by 291 coal fired power-plants in a year.

The report also explains that climate efforts may make companies more attractive to investors. It is also a good idea to prepare for inevitably regulatory requirements.

The primary reason that will drive company involvement is enhanced competitiveness and improved profitability. Companies in CDP's 2016 Climate A List are some of the most successful companies in the world. The 193 companies identified as A grade for their actions in mitigating climate change include companies like Apple, Colgate Palmolive Company, Nissan Motor Co., Sky, and Sony.

Over a five-year period, 62 companies in the CDP sample succeeded in decreasing emissions whilst also increasing revenue. This includes brands like Host Hotels & Resorts Inc., SSE, SCA and Wipro.

The correlation between climate action and enhanced profitability is not new. A 2014 CDP report showed that companies who were engaged in climate action increased profitability by 9.6%. In 2016 companies that met the "decoupled growth criteria" saw revenues increase by an average of 29% while reducing GHG emissions by 26%. All the other companies in the study saw GHG emissions increase and revenues fall by an average of 6%.

It is becoming increasingly apparent that we cannot continue with business as usual without encountering some serious risks. The CDP report is but the latest in a string of research that shows decoupling is possible, emissions reduction is compatible with growth. Together these findings offer some tantalizing suggestions that are likely to generate more interest in corporate emissions avoidance.

Click here to access the report.

Comprehensive Compilation of Studies Proving the ROI of Sustainability
Acting on Climate Change Makes Good Economic Sense According to Citibank
The US/China Ratify Climate Deal and Corporations are Decoupling
Decoupling economic growth from emissions
More Evidence for the Decoupling of the Economy and Emissions
The Challenge of Sustainability: Economic Growth and Emissions Reduction

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