Companies with Carbon Emissions Reduction Plans Outperform Counterparts

For the first time in history, the majority of the world’s largest corporations now include policies for addressing climate change in their business plans, reports the Carbon Disclosure Project (CDP). Such a finding indicates a significant change in the way businesses as a whole are viewing the importance of climate change and the effects it may have on them financially. As fears of resource scarcity and harsher weather patterns become a reality, the incentive for creating sustainable business models increases.

Large companies around the world voluntarily report their business strategies to address climate change, their actual emissions, and their energy use to CDP, which then assigns ratings to the businesses and ranks them in the Carbon Disclosure Leadership Index and the Carbon Performance Leadership Index. The report generated from the findings serves as a way to analyze trends and outcomes of sustainable business models. According the CDP Global 500 Report 2011, companies that led the way in carbon disclosure and performance realized about double the average total return of the Global 500 from January 2005 to May 2011. While many factors play roles in determining the financial success of a company, this correlation suggests that implementing a carbon performance strategy and managing emissions contributes to stronger financial performance.

The benefits of creating emissions reduction initiatives extends beyond financial performance based on energy savings and into company image. From a consumer standpoint, working with a business that has expressed dedication to reducing carbon emissions feels like a responsible decision. When a company chooses to disclose its business strategies to address climate change, it indicates a degree of transparency to the consumer, leading to increased trust in the business as a whole and a greater likelihood that the consumer will purchase that company’s goods, services, or stock. Your company will benefit from the publicity attached to going green and the ability to remain competitive in the market. Even if you choose not to disclose your company’s specific emissions reduction strategies, letting your customers know you are setting targets and taking steps to green your operations assures consumers that you are aware and devoted to addressing one of the largest issues facing business today.

Creating a sustainable business plan may seem overwhelming, but ultimately, it is comprised of smaller steps that add up to greener operations. Your emissions reduction initiatives will have both short-term payback and longer-term payback. According to the CDP, of all the reported emissions reduction activities, 59 percent have a return period of three years or fewer while 41 percent have a return period of more than three years. For example, you can begin by implementing a more effective shipping strategy, such as direct shipping, to see immediate returns on your action through a demonstrated decrease in your company’s environmental impact while creating long-term strategies to reduce energy use in the business’ day-to-day operations. This balanced approach to your climate change strategy is key to long-term sustainability, as the costs for climate-sensitive materials and services will only increase as climate change continues.