Harvard Business Online

Why Businesses Should Cut Carbon


Posted on Green Advantage: December 11, 2009 8:42 AM

The big global meeting going on in Copenhagen (called COP15) is all about reducing carbon emissions in order to combat climate change. But is climate change the only reason your business should reduce energy use and carbon emissions? Hardly.

But first, let's get out of the way the "scandal" about hacked emails from climate scientists, a story which threatens to overshadow the conference in the media.

I'll be clear and say that many of the most respected scientific communities in the world have come out with strong statements that say the following: nothing in the emails truly undermines the vast, overwhelming evidence from a huge range of sources that the Earth is warming and humans are causing it. See the American Association for the Advancement of Science (AAAS), the American Meteorological Society, the Intergovernmental Panel on Climate Change, NASA, and Nature magazine.

But for business, the science of climate change doesn't matter as much as many want you to believe. Because while climate change and the outcome of Copenhagen are vitally important to society and may change business as usual dramatically, there are actually many non-climate-change reasons why your company should seek to reduce carbon emissions. In other words, you should be doing this stuff already—Copenhagen treaty, email scandals, or no. Because by reducing carbon emissions, you can:

1. Save money now. Energy costs money. Leaner, more efficient companies and countries are more profitable. Companies are finding amazing, head-slappingly easy ways to cut back in areas like facilities (heating/cooling, lighting), fleet, and IT...all with paybacks in terms of months not years (there's more on this in my book Green Recovery). 2. Save money later. One of the beefs with "going green" is that some of the high profile actions, particularly using renewable energy, cost more money (not the initiatives I mentioned above—those save money fast). But on the macro level, consider this...renewable energy is a business model with effectively zero variable cost—your feedstock is free. While the payback periods in some regions seem long, they do pay back, and then your operating costs are permanently lower. 3. Reduce risk. The availability of resources such as water and oil is a serious concern. As demand grows in the developing world, supply will not easily keep pace. Expect expensive, unpredictable, oil prices in particular. So why have your value chain depend on volatilely-priced resources? 4. Answer pressing customer questions. If anyone thinks the "greening of the supply chain" movement is slowing down, they're kidding themselves. Wal-Mart is the lead dog, but many other big companies in other value chains are asking tough questions as well, in particular about carbon. And the best answer wins—more shelf space, more mind space, more money. 5. Attract and retain the best people. Even though unemployment is high right now, over the long term, the battle for good talent is still waging and will get worse. The next generation of workers cares about green and sees no trade-off between financial success and corporate social responsibility. 6. Drive innovation. Constraints are the mother of invention. Need to deliver your product or service with drastically less energy, toxicity, water, and other resource use? Then you better get thinking.

In addition, at the macro level, decoupling our economy and growth from carbon, and particularly oil, will...

7. Keep us safe. The U.S. sends over half a trillion dollars annually to parts of the world that fund extremism and terror. We put our troops at risk defending oil, and more will be at risk as climate change destabilizes regions and creates climate refugees. (Okay, so this point does have something to do with climate change.) See the American Security Project reports—from a group of distinguished former admirals and generals—which describe how climate change is a "threat multiplier." 8. Make the U.S. more competitive. We're losing the race to the clean energy future to China, Germany, and others. The pursuit of new technologies, a new grid, massive installations of new energy will create new jobs and invigorate the country.

These reasons have little to do with the science of climate change. Unfortunately, the focus on eliminating CO2 as being solely about battling climate change has been misplaced, both from the environmental community and from the contrarian/skeptical community (such as the authors of Superfreakonomics). The business logic, instead, is compelling and unavoidable: all businesses must get much leaner on energy and carbon—for their own competitive advantage and survival. Get started now to be more profitable no matter what happens in the policy world.

HBR's Copenhagen Climate Talks Coverage • Focus on the (Carbon) Negative• Why the U.S. Should Build a Green City• Are You Guilty of Personal Greenwashing?• Eight Reasons Businesses Should Cut Carbon (that Have Nothing to Do with Climate Change)
Andrew Winston helps companies use environmental thinking to grow and prosper. He is co-author of the best-seller Green to Gold, writes a monthly e-letter Eco-Advantage Strategies, and regularly blogs on green business.

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