September 29th, 2008
As legislators grapple with the financial crisis on Wall Street, Jay Reno – a summer intern at Climate Counts – weighs in on the relationship between climate action and economic growth. Jay is a student at Elon College in North Carolina.
The extent to which climate change will affect our planet remains unclear, but it will undoubtedly continue to pose a threat to today’s global society. Just as the planet’s people, plants and animals are becoming adversely affected by rising temperatures, so too are businesses’ bottom lines. With such inflated fuel prices causing a trickle effect into many sectors of our economy, it’s a wonder that far more than just our nation’s investment banks, mortgage lenders, and insurance companies haven’t surrendered into bankruptcy.
So is this climate issue something businesses should be worrying about? At first glance, the answer may seem to be no. Some would argue that companies do not have the time and money to invest in carbon-curbing initiatives. Others would say that in today’s “stagflated” economy, businesses have much higher priorities to attend to. However, the probability of a company’s long-term survival is directly dependent on the changes they make now. Taking early and innovative action on climate initiatives will – most likely sooner rather than later – become extremely profitable for businesses, in addition to securing financial stability in very uncertain times.
A glimpse into the future of our world economy likely reveals that companies may not survive without taking steps to address climate change, namely through the reduction of fuel and energy use, aggressive efficiency measures, and steady investment in alternative sources of energy.
And then there’s the profit-saving potential. By reducing fuel and energy use in daily operations, companies can reduce long-term costs. By switching to clean technologies like solar, wind and biofuels, companies can relieve their fuel expenditures.
Financing renewable projects are increasingly coming at lower initial costs. And once in place, the costs of these renewable energy sources will start to pay off every second they are generating power. A recent study by the Florida Solar Energy Center (FSEC), concluded that the annual costs incurred by solar hot water system was between 50% and 80% less than the average electric water heater. With average payback periods between eight to ten years for photovoltaic solar power and only three to four years for solar hot water systems, one might question why more companies haven’t begun a large-scale switch to green energy.
Chairman and CEO of News Corporation, Rupert Murdoch, addresses his similar views on the profitability of addressing climate change:
“When so many of the [climate change] solutions make sense for us as a business, it is clear that we should take action not only as a matter of public responsibility, but because we stand to benefit … Many companies have already learned, acting on this issue is simply good business.”
Murdoch poses a valid point. Climate action is multi-faceted in its benefits. In addition to opening the door to profitability and sustainability, it gives companies an opportunity to reduce virgin fuel and energy usage and contribute to a cleaner atmosphere. So regardless of intent – for the planet, for the wallet, or for both – it’s a win-win situation.
Businesses that have started to reduce their carbon footprint, have started to see the benefits, and haven’t looked back. Food processing magnate, Nestle, for example, has taken a tremendous leap forward in addressing its climate impact. Nestle has launched global efforts to transform the ways it utilizes energy in its operations. The amount of energy required to make one ton of its products has decreased by 24.3% over the past five years. Concurrently, Nestle has shown a profit increase of $4.7 billion AND a greenhouse gas emissions decrease of 33.1% per ton of products produced over the same five year period. These numbers lead many to believe in a correlation between profit, energy reduction and greenhouse gas emissions reductions. While correlations don’t necessarily denote fact, companies like Nestle have nonetheless determined that carbon and energy reductions have do impact their bottom lines.
Outside of number crunching, becoming more climate-friendly has other benefits. Businesses that act on and promote climate change will take the upper hand in recruiting the new wave of intelligent and mindful youth. As a member of the rising generation, I feel it second nature to combat the global climate crisis we are all facing. And as a member of the rising generation, we are the ones who have the most at stake.
Finally, in order to ensure long-term survival, it is also essential for businesses to assess the impacts of their internal operations. By first adopting accurate methods of inventorying their greenhouse gas emissions, companies will then have the tools necessary to create reduction goals and make sure those goals are met. Doing so will allow companies to keep annual public records of their progress and initiatives, something which I feel will become a standard operating procedure for all companies in the future.
Businesses are a force. They shape an economy. And they can use their strength to promote climate stability. As simple as it may sound, going green will earn you green.