Published on June 20th, 2013 | by Joshua S Hill2
The 3% Solution Could Save US Businesses $780 Billion Within 10 Years
A joint report published by the World Wildlife Fund (WWF) and the Carbon Disclosure Project (CDP) outlines an analysis that could save companies billions as well as help the corporate sector contribute to the goal of avoiding pushing global temperatures over 2°C above pre-industrial levels.
The 3% Solution: Driving Profits Through Carbon Reduction, released Tuesday, provides an analysis demonstrating that US businesses can act now to reduce emissions by an average of 3% annually, which would amount to savings of $780 billion over the next 10 years and reducing the greenhouse gas emissions in 2020 by 1.2 gigatonnes of CO2 from 2010 levels. That would put the US corporate sector on track to a 25% reduction against 1990 levels, but is only representative of the lower end of what the Intergovernmental Panel on Climate Change (IPCC) says is necessary to avoid a global temperature increase of 2°C by 2020.
According to the report, 4 out of 5 companies from the S&P 500 (Standard & Poor’s 500) who report their emissions to the Carbon Disclosure Project could see huge financial returns on their carbon reduction investments over their overall capital investments, which makes “reallocation of their capital expenditures a sound business decision” according to the press release published by the WWF and CDP.
The report concludes that the US corporate sector would on average have to invest 3 to 4% of their capital expenditures each year on “low-risk, profitable carbon reduction projects.”
Naturally, to promote the idea of a 3% reduction, the report comes with an online Carbon Target and Profit Calculator which can provide companies with a guide to setting their emission reduction goals. The calculator — available at the3percentsolution.org – provides companies with the opportunity to visualise the savings they can make by setting “ambitious 2020 carbon reduction targets” — and hopefully understand the import such decisions have on the environment at large.
“World governments have moved far too slow to address the climate change threat and people are looking for leadership from the brands they trust to take concrete actions now,”said Carter Roberts, President and CEO of WWF. “These numbers provide a glimpse into the future – where smart companies slashed emissions, increased profits and helped secure a better future for all of us.”
“The report points to specific financial opportunities that US corporations can seize,” Paul Simpson, CEO of CDP added. ”But it is critical that senior management devote much more attention to the issue to drive the necessary near-term increase in capital expenditure required for companies to capture the full economic benefit of greenhouse gas emissions reductions.
“Corporations must act now not only to address environmental risk, but also to aid economic recovery in the United States and build resilience. Investing in energy efficiency and renewable energy saves cost, stimulates innovation, creates jobs and builds energy independence and security.”
WWF and CDP are now recommending that companies interested in capturing these savings do the following:
- Run the calculator and set or revise a carbon reduction target to claim the company’s share of the savings
- Reallocate capital to deliver better returns at lower risk
- Translate the savings to the company’s bottom line
Several big-name companies have already commented on The 3% Solution;
“This report shows that not taking action to reduce emissions and fight climate change is like leaving big money on the table,” said Chris Librie, Senior Director, Sustainability Programs, HP Sustainability & Social Innovation. “HP is already taking actions in line with those recommended by The 3% Solution. During 2012, we completed a comprehensive carbon footprint analysis to better understand the impact of our company and our products. HP is among the first companies globally to publish this level of information. We work to reduce the impact of our products and operations. In addition, we collaborate with suppliers to improve their environmental performance – resulting in a 24% decrease in production supplier GHG emissions intensity over four years. HP calls on other American businesses to heed the call made in The 3% Solution and capture their share of these savings – all while doing some good for the planet.”
“This study shows that there are tremendous opportunities for companies to make operational changes that benefit both the environment and their economic bottom-lines,”said Jeff Seabright, Vice President, Environment & Water, The Coca-Cola Company.”There is a pressing need for business, government and civil society to work together to pursue these ‘no regret’ opportunities if we are to stabilize emissions in this decade.”
“Sprint is the first and, to date, only U.S. telecom company to publicly announce an absolute greenhouse gas (GHG) emission reduction goal (an absolute 20% reduction of scope 1 and scope 2 by emissions by 2017 below 2007 levels),” said Bill White, Senior Vice President of Corporate Responsibility, Sprint. ”We continue to look for opportunities to drive energy and emission efficiencies and The 3% Solution presents business leaders with strong evidence that can significantly reduce costs and their environmental impact.”
The sad reality is that many companies will only make environmentally-conscious decisions if it affects their bottom line. Yes, there are some companies out there who understand not only the environmental benefit of taking action, but also the good PR and moral leadership that comes with such a decision. But, on the whole, if an environmentally-friendly decision doesn’t have financial benefits as well, many companies won’t bother. Subsequently, reports and tools which so clearly demonstrate the financial benefits of environmentally-friendly action are all the more appreciated in this day and age.