5 Reasons Business is Joining the Climate Cause

Originally published on www.inc.com on September 24, 2014

In the run-up to next year's Paris climate summit, governments, investors and businesses are expressing a new sense of urgency and making new commitments in an attempt to slow global warming.

While UN member countries took up the issue in New York this week, companies rallied behind the Carbon Disclosure Project, the UN Global Compact, the Climate Disclosure Standards Board, the World Bank and others, offering commitments such as these:

• Commit to setting GHG emissions reduction targets that will limit global warming to below 2C
• Provide climate change information in mainstream corporate filings
• Responsibly engage policy makers on climate change policy
• Put a price on carbon

Nearly 350 global institutional investors representing over $24 trillion in assets issued a statement calling on government leaders to provide stable, reliable and economically meaningful carbon pricing.

And the World Bank announced that 73 countries, including China and Russia, and 22 states, provinces and cities, which together account for 54% of global greenhouse gas emissions, and 1,042 businesses and investors, rallied to signal support for carbon pricing.

But why is it good for business to join the climate cause? Here are five practical reasons:

1. Risk management. Companies know that sound management includes planning for all kinds of risks, including climate-related risks. Water shortages, for example, can have a dramatic effect on production. Companies recognize that they need global solutions to mitigate many of the risks they are faced with.
2. Investor pressure. Investors want full disclosure on risks of all kinds. They are pressuring companies for disclosure of climate risk and mitigation strategies. They are also making their own calculations on what investments might be more profitable over the long term, and some pension funds, for example, are integrating sustainability criteria into their investment strategies.
3. Energy efficiency means cost savings. A company needing to replace lighting in a factory today will find several environmentally friendly solutions offering huge cost savings in electricity bills. And there are plenty of examples beyond light bulbs, all with innovative financing solutions designed to be cash-flow friendly.
4. Sustainability sparks innovation. An R&D department in, say, a kitchen appliances company may stumble on a whole new product line while looking for energy savings, making the company much more popular with its customers and leading to a boom in sales.
5. Millennials feel strongly about climate change and talented ones will be most drawn to the companies doing something about it.

More to come as business leads the charge for change.