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Part 1
Getting Started: Planning for the Success of the GHG Management Programme
Part 1 looks at how to design and implement a greenhouse gas (GHG) management programme for businesses. It begins by looking at how to define a business case for managing GHG emissions by examining common risks and opportunities faced by businesses. Next steps include establishing goals, obtaining buy-in and commitment, creating a climate leadership team and allocating resources.
All businesses and organizations, regardless of their size or sector, can manage and reduce their impact on the climate. Generally, this can be approached like any business strategy – by assessing the risks and opportunities, setting goals, assigning staff and resources, developing and implementing a plan to achieve those goals, and monitoring the results.
Green Initiative Generates Strong Returns
In 2005, GE, one of the world’s largest energy technology companies, launched a new initiative – Ecomagination – focusing on the development of clean energy solutions such as wind and solar energy, hybrid locomotives, lighter and stronger materials and efficient lighting.
By the end of 2006 Ecomagination had already produced $12 billion in revenue, with an additional $50 billion expected from pending orders and commitments. GE ‘has never had an initiative that has generated better financial returns so quickly’, according to Vice President Lorraine Bolsinger. Ecomagination also includes a commitment by GE to reduce its overall GHG emissions by 2012.
Sources
www.america.gov/st/energy_English/2007/Septem-ber/20070914164754esnamfuak0.530987.html www.ecomagination.com
For businesses that already have broad sustainability programmes, managing GHG emissions can fit well into existing efforts, or, alternatively, it can be the first step towards reducing their overall environmental impact. The best- practice model of greenhouse gas management outlined in this guide involves a systematic approach, but there is still considerable flexibility for businesses to tailor a GHG management programme to their own needs.
Some businesses will choose to start with a full-scale GHG management programme, and begin by measuring emissions from their entire operations, whereas others may initially focus on the development of a single carbon neutral product. Still other businesses will set a reduction target for a particular department or business unit, or for a single category of emissions, like electricity use, or transportation.
Because there are many options when it comes to GHG management, it is important to do some initial planning to decide how best to proceed. Below are four steps that most businesses will find useful when creating a GHG management programme: (1) define the business case; (2) establish goals; (3) obtain buy-in and active commitment to the goals from leaders in the organization; and (4) create a climate leadership team and allocate funds to the programme.
1. Define the Business Case
Businesses undertake initiatives for two basic reasons: to mitigate risks or to capture opportunities – or both. Therefore, most businesses will find it helpful to begin with an analysis of the climate change issues that are likely to affect them, and their associated risks and opportunities, and then use this analysis to define their organization’s business case, or rationale, for implementing a GHG management programme. Even businesses that have an initial idea of the goals for their GHG management programme will benefit from such an analysis.
Opportunities in Green Technology
According to leading venture capitalist, John Doerr, developing clean energy sources is ‘the largest economic opportunity of the 21 st century’. His firm has already invested hundreds of millions of dollars into green tech start-ups, such as innovative power plants, affordable solar cells for roofs and high-performance plug-in hybrid cars.
Source
Testimony before US Senate Committee on Environment and Public Works, 7 January 2009
At the outset, a business may not have enough information for a full analysis, but a preliminary assessment will assist in developing an initial goal or goals for the GHG management programme. As it proceeds and has better information, a business will be able to perform a more informed analysis of the risks and opportunities it faces.
The Carbon Disclosure Project
The growing importance of climate change issues for businesses and investors is illustrated by the rapid growth of the Carbon Disclosure Project (CDP). This not-for-profit organization currently represents institutional investors that have a combined $55 trillion in assets under their management. On their behalf, CDP sends questionnaires to the world’s largest corporations (3,700 in 2009) and asks for information about their greenhouse gas emissions data and the business risks and opportunities they face in relation to climate change. The CDP makes the responses to these questionnaires available online.
Source
www.cdproject.net
As a starting point, some of the most common risks and opportunities related to climate change are summarized in Table 1 on the next page. Each business should take into consideration its own individual circumstances and then review these risks and opportunities. In doing so it may be helpful to ask the following questions:
Will the company need to respond to climate change-related risks with respect to any of the issues below?
How long will it take the company to respond if necessary?
Is there a competitive advantage or other opportunity in being proactive?
Table 1: Risks and Opportunities as Drivers for Business Action on Climate change
RISKS
FROM INACTION ON CLIMATE CHANGE | ISSUES FOR BUSINESSES | OPPORTUNITIES
FROM ACTION ON CLIMATE CHANGE |
- Continued exposure to high fuel and energy costs
| FUEL AND ENERGY COSTS | - Cost savings from reduced fuel and energy consumption as a result of reducing GHG emissions
- Improved operational efficiencies, e.g. through better fleet management
|
- Being a target of public campaigns singling out businesses that do not take action to reduce their climate impact
| REPUTATION | - Brand enhancement – showing leadership on climate change can increase visibility in the marketplace and attract new customers
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- Increased challenges recruiting new employees for businesses with poor records on climate change action
- Higher employee costs related to lower productivity and more employee turnover as a result of employee dissatisfaction with company failure to take action
| EMPLOYEES | - Attracting new employees looking for companies with strong sustainability programmes
- Motivating employees, building loyalty and promoting employee innovation with climate change action
- Enhancing employee wellness and increasing productivity through measures that also save energy (e.g. use of natural lighting, HVAC upgrades)
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- Investor concern about climate change risk exposure and company inaction
- Shareholder resolutions demanding specific measures to address climate change
| INVESTORS | - Attracting new investors who want to invest in progressive, well-managed companies
- Meeting corporate social responsibility goals
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- Carbon taxes and other measures leading to increased fuel and energy costs
- Requirements to meet energy efficiency standards for buildings and vehicles
- Limits on emissions for large GHG emitters
| REGULATIONS | - Benefitting from government incentive programmes for voluntarily reducing GHG emissions
- Flexibility to choose a course of action – likel...
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