6 minute read
Action on Climate Change
Our planet is changing. The effects of post-industrial emissions of greenhouse gasses (GHGs) into the atmosphere have altered our climate—and continue to do so at a rapid pace. Experts believe that many of these changes will have serious, negative, lasting effects on the planet and us. To slow down climate change and adapt to the inevitable parts of it, everyone needs to pitch in—including businesses. It’s part of being a good citizen. It also pays off in terms of practical business opportunities.
But how does climate change work pay off in the near and medium terms? Leading businesses—especially those with a history of investing in addressing climate change—know that climate change investments are needed now and that they do pay off. For example, they know that using less electricity means burning less fossil fuel, reducing their carbon footprint and saving them money in the form of utility bills. Of course, the exact returns a business receives depends on that company’s circumstances—its size, its stakeholders, its industry, the nature of its product/ service lineup, its supply chain and its culture. But despite each company’s unique situation, there are some common benefits that small businesses likely can obtain if they address climate change headon. Let’s look at six key payoffs from a business standpoint. We’re sure you’ll find at least one that fits your situation.
1
SAVE MONEY
The easiest way for any business to capture savings from addressing climate change is to reduce energy consumption: The less energy you buy, the lower your utility bills. So you should consider evaluating ways to reduce purchases of • electricity—for lighting and heating, ventilation and AC (HVAC) • steam—for heating • fuel—for boilers, burners and transportation • water—for daily operations, fixtures and flush fixtures How can your business use less energy? We’ll illustrate this a bit more in the step-by-step portion of this toolbox, but a great way for small businesses to reduce energy consumption is to swap out or retrofit inefficient energy-consuming equipment, such as lighting, flush and flow fixtures, machinery and HVAC equipment. Yes, this requires an up-front cost, but lower energy bills quickly repay that investment—and then some. Also, government and/or private subsidies often can help defer some of the up-front cost.
Other cost-saving opportunities lie in operations, facility management and procurement/supply chain. In general, it’s all about maintaining or even increasing your output while using fewer resources—which saves money and increases profitability.
2
REDUCE RISKS
All business activity creates economic, environmental and social impacts, and many of these pose risks to a business’s ability to continue, as a profitability concern. For example, the impacts of emitting GHGs into the atmosphere could eventually lead to stranded assets (such as buildings, transportation infrastructure and even employee-owned assets like houses and cars) because of sea level rise and other weather-related events resulting from climate change. Without these assets, a business could struggle or even collapse. And the picture becomes even worse when your suppliers’ assets are included.
What would happen if a supplier’s main factory were incapacitated by extreme weather conditions associated with climate change? • What if an agricultural supplier couldn’t provide adequate quantities of a commodity you need because of climate-change-related drought? • What if a transportation provider could not pick up shipments destined for you because it couldn’t access its fuel supply because of weather-related flooding? This all might sound unlikely or too far off in time to be of concern now. But the risks are real, and their root cause—GHG emissions—is well understood by scientists and other experts. Reducing GHG emissions and preparing to adapt to climate change reduce business risk—a linchpin in the case for small-business action on climate change.
3
ENHANCE YOUR BRAND
On the opportunity side, many small businesses can directly or indirectly benefit from climatechange-related investments that position them as: Right now, you can take simple steps to set your business apart from other businesses in the community, in your industry or of your size category. Larger companies have succeeded in boosting their brand image based on sustainability: Think of Clorox’s “Green Works” product line or GE’s “Ecomagination” initiative. The same principle can work for small businesses that invest in climate change actions (even businesses that are primarily B2B). Customers, investors, potential employees and many others increasingly seek out sustainable businesses that address climate change head-on. This is another strong case for small businesses to make sustainability investments.
4
CREATE NEW SALES REVENUE
New products and new markets for existing products can come from small-business investments in sustainability and climate change.
For example, some potential customers buy primarily from “responsible” businesses (suppliers that actively address environmental and social impacts), or at least give these companies preference in bidding. After making some key sustainability and climate change investments, a small business can take advantage of these opportunities to generate new revenue. Or what about collaborating with a supplier to change one or more of its products to address climate change, such as eco-friendly packaging, fewer petrochemical ingredients or less energy usage during its life span? Customers want products like these.
These types of changes can generate new revenue. And this is as true in the B2B space as it is in the B2C (business-to-consumer) space. What new products or markets could your business have if it invested in climate change?
5
IMPROVE YOUR SUPPLY-MANAGEMENT PROCESSES AND SUPPLIER RELATIONSHIPS
Many sustainability and climate change initiatives can improve supply-management processes (such as sourcing, procurement, inventory management and supplier management). Without a doubt, this work changes the relationship between the business and its suppliers from seller-buyer to a true partnership. Today, many suppliers expect— and are prepared for—customer requirements related to sustainability and climate change.
For example, your business may work with a supplier to collect information about that supplier’s GHG emissions so that you can better understand your overall carbon footprint. The data collection project likely will improve the way you and the supplier communicate. It is also likely to identify inefficient supply-management practices.
Although change often is hard, this work pays off in the end.
6
RESPOND BETTER TO OUTSIDE DEMANDS
Many small businesses may think that creating a more open and accountable business would add costs, expose the company to unnecessary scrutiny and invite meddling by various stakeholders. However, today’s business environment already requires transparency and accountability about environmental and social impacts. Businesses that don’t measure up are considered laggards at best, or frauds at worst. This isn’t to say that every aspect of a business should be made available for view, but many climate change actions are best practices, and they are almost standard fare in some industries and geographies. They include:
collecting and managing accurate environmental data, especially GHG emissions, water use and energy consumption data giving key stakeholders regular updates on climate change work using publicly available supplier codes of conduct to require suppliers to work on climate change
Small businesses that don’t have these accountability tools in place yet will benefit from their work. This is another part of the business case for sustainability and climate change investments.
So that’s a total of six good arguments for investing in climate change work. Which one(s) fit best with your business situation?
