Navigant Research Blog

Political Posturing Won’t Stop Climate Action

— June 12, 2017

The debate over climate change wages on in Washington, DC, but the businesses that lead the national economy are taking action today. Even without regulatory mandates, corporations are making significant investments in energy efficiency, clean energy, and other sustainability initiatives to combat climate change. Uncertainty is bad for business, and climate change forces corporate risk analysis and planning. The upside is that smart investments can help combat climate change and deliver bottom-line benefits.

The Evidence: Action at the Top

Fortune  500 companies have been making commitments on climate for decades at this point. Nearly 50% of these industry majors have committed to greenhouse gas emissions reductions. More specifically, the effort of RE100 has recruited over 95 companies pledging to rely on 100% renewable energy. Pressure from shareholders and customers has driven investment in renewables and emissions reductions requirements across the supply chain.

When the top of the Fortune 100 list fail to lead, there is significant backlash. At the end of May, for example, Exxon Mobil faced major shareholder push back on the company’s failure to address climate risk assessment. According to The Washington Post, 63% of shareholders voted in favor of the oil giant assessing and disclosing the climate risk against long-term financial performance. This motion by Exxon’s shareholders echoes efforts with many other major fossil fuel-based companies in the last year, according to the advocacy group Ceres.

The Benefits: Loyal Customers, Happy Shareholders

Walmart, the world’s largest retailer, has faced its share of controversy around corporate social responsibility. However, when it comes to climate change and sustainability, some of the company’s major recent efforts are showcasing it as a leader. In 2016, the company set science-based targets for 18% greenhouse gas emissions reductions by 2025 from 2015 levels. This is a notable effort, bringing commitments inside the fence as opposed to the extensive pressure the company has historically put on its suppliers.

Walmart is demonstrating the business benefits of leadership on climate change and sustainability. As Joby Carlson, director of Energy and Operations Sustainability, explained in Energy Manager Today, “We try not to do anything that doesn’t have a good financial return. Sustainability has to hit the balance among the economics, the environmental, and the social side. Energy efficiency has been our bread and butter. We are a low-cost retailer so we are sensitive about the cost of operations. Optimizing and reducing our energy demand has translated into millions and millions [in savings].”

Corporate America is leading the charge and moving forward with combating climate change, and in the process, redefining sustainability as a metric of business success. As companies focus their efforts inside their operations, there is more opportunity to leverage technology that delivers emissions reductions while also delivering cost savings and other broad business benefits, including loyal customers and committed investors.

 

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