Pew Center Unveils Guide To Developing Business Strategies Accounting For Climate Change Risks, Opportunities

On Oct. 18, the Pew Center on Global Climate Change released, "Getting Ahead of the Curve: Corporate Strategies That Address Climate Change," a how-to guide for corporate decision makers as they navigate rapidly changing global markets. The report examines the development and implementation of corporate strategies that take into account climate-related risks and opportunities.

The report, authored by Andrew Hoffman of the University of Michigan, offers a step-by-step approach for companies to reshape their core business strategies in order to succeed in a future marketplace where greenhouse gases are regulated and carbon efficiency is in demand. The research shows a growing consensus among corporate leaders that taking action on climate change is a sensible business decision. Many of the companies highlighted in the report are shifting their focus from managing the financial risks of climate change to exploiting new business opportunities for energy efficient and low-carbon products and services.

Relying on data from six on-site case studies, as well as results from a 100-question survey completed by 31 companies, the report offers a unique and in-depth look at the development and implementation of corporate strategies that address climate change. The featured case studies include Alcoa, Cinergy (now Duke Energy), DuPont, Shell, Swiss Re and Whirlpool Corp.

One of the conclusions is that businesses need to engage actively with government in the development of climate policy. Of 31 major corporations polled for the report, nearly all companies believe that federal greenhouse gas standards are imminent. Of these companies, 84 percent believe regulations will take effect before 2015. The report offers policy makers insight into how companies are moving forward on climate change and how they can most effectively engage in the policy discussion.

"If you look at what is happening today at the state level and in the Congress, a proactive approach in the policy arena clearly makes sound business sense" said the Pew Center's Eileen Claussen. "In the corporate world, inaction is no longer an option."

Lessons learned at each step of the strategy development process are presented in the report, and four overarching themes emerge:

  • Strategic timing -- For some companies, there is a danger of starting too early; others highlight the risks of starting too late.
  • Establishing an appropriate level of commitment -- For many companies, uncertain demands from government, the marketplace and the financial community -- coupled with limited hard data and models to guide aggressive action -- make it challenging to support extensive expenditures on GHG reductions.
  • Influence policy development -- Any policy that regulates greenhouse-gas emissions will certainly constitute a major market shift. Early action is seen as a way for companies to gain credibility and leverage participation in the process of policy.
  • Creating business opportunities -- Companies are positioning to capture emerging opportunities and gain competitive advantage.

The report is available at http://www.pewclimate.org.

This article originally appeared in the 10/01/2006 issue of Environmental Protection.

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