Scientists have agreed that in order to prevent further changes to the climate, the amount of carbon in the atmosphere must be reduced. There are four major benefits for a firm that reduces its carbon emissions:
Bottom-line Cost Savings
Not only do recent studies report that companies with a sustainability strategy have stock prices that outperform their respective industries by 15% (A.T. Kearney, 2009), but a firm’s energy related costs can be significantly reduced by reducing carbon emissions. In fact, a July 2009 McKinsey & Company report concluded that in the United States, energy efficiency improvement could generate savings of more than $1.2 trillion.
It is a near certainty that a price on carbon dioxide emissions will emerge in the next several years. Requirements are changing at all levels of government, both in terms of incentives and stimulus funds, as well as regulation. For example, the Province of Ontario recently announced draft carbon reporting legislation that will phase-in carbon reporting for heavy emitters (more than 25,000 tonnes annually) by 2012, while including voluntary reporting guidelines for smaller emitters. Preparing in advance will help organizations alleviate risk from costs incurred from excessive carbon emissions and fines resulting from non-compliance with upcoming regulations.
Attracting & Retaining Top Talent
Now more than ever, young employees are demanding comprehensive environmental strategies from their employers, and job seekers are making it one of their decision criteria. In fact, 92% of Generation Y employees are more inclined to work for a company with a sustainability strategy, while 50% of these young grads are willing to take a lower salary to work for a company with a good reputation with respect to environmental sustainability (BrownFlynn, 2008).
Green Branding & Reputation
Credible branding and reputation are of critical importance to shareholders, customers, and prospective employees. However, with 98% of green marketing claims being either in-part or entirely false (Mulch, 2009), and 75% of consumers believing that environmental claims are just marketing ploys (Benismon Byrnes, 2008), substantiating claims with tangible data backed up with third-party support is becoming essential to gain a competitive edge. In addition, many business partners – with Wal-Mart leading the charge – are imposing strict requirements upon vendors to incorporate environmentally sustainable practices into their business operations.