It is 2013 and many people still wonder whether or not human induced climate change will happen or is real. Even as the list of devastating first ever climate change events continues to grow annually the naysayers continue their oil infused lobbying. For over 3 decades there has been much international debate across the board. Still today, there are certainties and uncertainties. Even amongst the circles of well educated professionals doubt or lack of knowledge is apparent and well documented. If there is even a remote chance that the naysayers are wrong and Climate Change is real then the impact on all of our lives will be enormous and the impact on the lives of our children many times worse. But let us assume, we really do not know. The question that remains is, whether it would make sense to take action and mitigate climate change anyhow. Should we, given the uncertain circumstances, implement changes and manage our resources or should we just go forth with a business as usual attitude? What are the pros and cons of adapting to climate change that might or might not happen? What are the risks?
Let’s first understand what it means to take corporate action against climate change: It is developing an environmental strategy and policy for the company and includes the following possible components
- An integrated reporting strategy
- Carbon foot-printing: is a great way to start as it’s a tool to use to understand non-financial data
- Water management to achieve efficiencies and save costs
- Energy management to achieve efficiencies and save costs
- Waste management to reduce waste to landfill and save costs
- Contaminants elimination to prevent harm to the environment and have a safe working environment for employees
- Renewable energy as a way to reduce costs and secure energy supply
- Supply Chain greening aimed at reducing costs and ensuring your supply chain joins the green journey
- Green education for key staff to build awareness
- Training in efficiency for all employees to build skills
- New service and product development aimed at addressing the growing environmental goods and services market
The uncertainty whether or not climate change will actually happen, might prevent many executives from taking the above action. But this is a point where every citizen, human or corporate, has to make a decision.
There is an interesting video on youtube with the somewhat exaggerated title of “The Most Terrifying Video You’ll Ever See” by wonderingmind42 (Greg Craven). Personally, I would not call it terrifying, but rather rational or quite logical. In his video, he talks about the decision making principle for us as a global race. He does not prescribe what we should think about climate change but rather prompts us to find out how we think about climate change. I would like to pick up on his idea and elaborate on his philosophy in regard to corporate responsibility and awareness towards our environment.
Creg Craven introduces the 4 different options. Our future will roughly fall into one of these 4 scenarios:
- Climate changes does not happen – yet we have prepared for it.
- Climate changes does not happen – and we have not prepared for it
- Climate change does happen – and we have prepared for it.
- Climate change does happen – but we have not prepared for it.
Putting these into a table of scenarios, it would look like this:
I am suggesting that companies who have not arrived at a decision yet, and are unsure what to do, should try the above exercise. Management should fill thoughts and considerations relevant to one’s business and the environment one depends on into these white boxes. As an example I have filled the table demonstrating potential outcomes:
Now that we created a bigger picture, we can see many possible effects and consequences. It is time to choose. Since there is uncertainty around climate change, we cannot pick from the rows as to whether or not climate change will actually happen, we can only select which column is the best for us. Which column has the most positive aspects? Should we take action? Or should we continue business as usual?
What do you think? Which column would you choose?
I can see a column that has a lot more ticks than the other: It is the one averting the most risks by taking action. Not only will this decision support us should climate change happen, but it might also avert climate change from happening in the first place. I feel we can safely come to the conclusion, that the question around climate change is irrelevant. The question around environmental policy and strategy gets a much clearer answer. It is just like the decision to buckle up when driving a car…
On top of this the decision is further strengthened by the fact that an environmental strategy will increase shareholder value through cost reduction and opportunity identification. In reality all companies are in business to make money and we often meet with CEOs that tell us that they need to reduce costs or increase revenue and that their CSI (Corporate Social Investment) budget is for social not environmental initiatives. This is a great discussion as Terra Firma Solutions has many case studies where we can show CEO’s the Rands and cents behind employing an environmental strategy. It’s the empirical facts behind this strategy that often convince CEO’s to deploy an Environmental Strategy. The facts are clear, an environmental strategy is a key tool in any companies cost reduction, revenue identification and differentiation strategy. There are few places that a company can invest its money that will give shareholders a better return than an area like energy efficiency or supply chain greening. Seems like a no brainer to me!