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May 25, 2010

Corporations Want Climate Change Legislation but Are Not Waiting to Act
    by Robert Kropp

Survey by Ernst & Young of executives of 300 global corporations indicates that they are implementing climate change mitigation strategies while calling for effective legislation.

SocialFunds.com -- The fate of meaningful climate change legislation, both in the international sphere and in the US Senate, remains uncertain. The results of the United Nations Climate Change Conference (COP15) last December were disappointing for those who hoped for a breakthrough international agreement, and the US Senate has yet to finalize domestic climate change legislation.

Meanwhile, as reported yesterday in the
New York Times, polls reveal that climate skepticism is growing.

Yet, even as major industry trade organizations such as the US Chamber of Commerce spend many millions of dollars in efforts to derail legislation in the US, the number of businesses that are calling for effective political leadership on the issue is growing. Furthermore, while many of these companies emphasize that meaningful legislation is critical to help them craft a business case, they are not waiting in the wings to do so.

Last week, an analysis by
American Businesses for Clean Energy (ABCE) tallied more than 6,000 US companies that have joined coalitions and initiatives calling for climate change legislation. In a recently published survey of 300 global corporate executives from 16 countries and 18 industry sectors, Ernst & Young has found that most “expect to make significant investments to deliver both cost savings and revenue generation opportunities relating to climate change.”

The survey, which polled executives of companies with more than $1 billion in annual revenue, is the third in Ernst & Young’s series of white papers entitled The Business Response to Climate Change.

Even after the heightened media attention given to a handful of high-profile defections from the US Chamber over its opposition to climate legislation, the number of executives cited in the Ernst & Young as calling for action in legislative spheres indicates the growing acceptance by business of a transition to a global low-carbon economy. According to the survey, 94% of respondents believe that national policies are important to their development of mitigation strategies, and 81% think international treaties are important, as well.

Despite the current lack of clear signals from legislators, however, companies are not sitting back and waiting for direction. Already, 70% of respondents expect to increase spending on climate change initiatives between 2010 and 2012. Nearly half expect to invest up to five percent of revenue on such initiatives. Eighty-two percent expect investment to focus on energy efficiency measures, while 65% expect to develop new products and services.

While consumer demand was cited by 89% of respondents as the primary driver of corporate climate change strategies, it is interesting for sustainability investors to note that “over 40% of the senior executives surveyed believe that equity analysts currently include climate change-related factors in company valuations.”

Perhaps in response to increasing investor interest, “64% of respondents provide transparent reporting of their greenhouse gas (GHG) emissions data in an annual corporate social responsibility (CSR) report or a sustainability report,” and two-thirds of those who do report have their data verified by independent third-party auditors.

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