Managing Your Carbon Footprint…Why, When & How

A Decision-Making Framework Report from The Conference Board

 

For Immediate Release, May 10, 2007

 

The carbon question poses new strategic, managerial, and process challenges for companies, according to a new study by The Conference Board, the global business research and membership organization.

 

According to the study on carbon-specific decision-making, a company’s choice to manage its carbon footprint and seek related new businesses may range from the simple to the complex, with the organization’s unique circumstances being a decisive factor.

 

The report also finds that the influencing factors for this decision will generally embrace both external and internal drivers. Other perspectives influencing how a company proceeds include:

Business-based drivers (e.g. whether to reduce certain emissions or enter new product or service markets) will be evaluated by business investment criteria and based on whether the decision will yield a needed return on investment.

Value-based drivers (e.g., “we need to do this because it is the right thing to do”) may create more flexibility in investment and return decisions.
“The interplay between the various drivers is likely to be complex for some companies, and reaching decisions on whether and how best to move forward will be challenging,” says Meredith Armstrong Whiting, Senior Research Fellow at The Conference Board and co-author of the report with Charles Bennett.

 

The driving momentum to reduce the carbon load on the environment is the result of a combination of factors:

- Direct concerns about the impact of carbon emissions on the environment.
- The relationship between fossil-fuel consumption and greenhouse gases emissions (GHG).
- More indirectly, but just as important, changes in the global energy situation.
- Environmental regulations and policies designed to reduce GHG emissions.

While the case for immediate GHG reductions is increasingly compelling, development of a complex carbon management program might not be a practical choice for some companies, especially those whose operations are not carbon-intensive. Such organizations may choose to concentrate on near-term measures such as energy efficiency, which can offer important returns with a minimum of investment.

 

For many companies, however, policy and societal conditions appear to be headed toward mandatory emissions reductions and ultimate stabilization, a process that may take years or decades. This wide range of timing scenarios is important to consider when developing a business strategy.

 

Convening a cross-functional management team to address carbon management issues can be important to the project’s internal sale-ability and success, not only in terms of executive suite approval and financing but also in terms of implementation. If individual business units are not involved in the planning process, the communication process will be more difficult when it comes to implementation. The exact makeup of a team will vary according to any given company’s organizational structure, but there should be broad representation from different business perspectives.

 

“Tallying and reporting greenhouse gas emissions is not new,” says Whiting. “Many companies have been doing so for over a decade, and the processes’ sophistication has increased dramatically as a result. But it is a demanding process—time-consuming, expensive, and technically complex. To ensure credibility, once a company decides to embark on the process, it must be thoroughly completed.”

 

Questions that a company should ask in defining its approach to carbon footprint measurement should include:

Who is the audience?
What emissions to include?
What baseline to use? (past date or present date) What tools and protocols to use?
Are appropriate resources such as people, finances, and data management abilities available?
Is this a global or domestic issue?

IMPROVING OUR PLANET

 

Carbon management-related economic opportunities that can also help solve many of the world’s important challenges are on the rise, both in the business world and among its varied and numerous stakeholders. Such challenges include the world’s rapidly expanding energy needs, population growth, and continually increasing stress on ecosystem services and environmental quality.

 

The number of companies contemplating moving forward with new products or services strongly suggests a recognition of potential business opportunities and a willingness to take risks to achieve them.

 

One such opportunity is the nexus of the world’s quickly expanding energy needs and general concern about the rate of growth of GHGs. When questions of energy supply security and emerging economies’ access to modern energy are added to this discussion, the need for innovation increases exponentially.

 

Potential business opportunities are more obvious in some sectors (e.g., energy production) than others (e.g., consumer products), but businesses should not assume a lack of opportunity without a careful evaluation of options. Even if direct opportunities in a company’s primary line of products or services are not realizable, there may be possibilities within a supply or value chain for changes that could benefit both supplier and user. For example, a change in primary product ingredients that reduces GHG emissions upstream might lower costs or perceived risks associated with end products, thus increasing their appeal in the marketplace (assuming constant or better quality).

 

When formalizing the strategy for a comprehensive GHG/Carbon Management program, companies must consider the following key components of the implementation process:

Review key influencing factors.
Select elements of the strategy, such as an emissions inventory and emissions reductions and offsets.
Develop a communications and “expectations management” approach considering internal communications and stakeholder interaction.
Create appropriate management system/integrate with appropriate existing systems.
Monitor and measure progress; report and position publicly either through a public GHG registry, a corporate sustainability report, or by joining a voluntary group of companies publicly committed to GHG management.
Modify and update as needed.

For a copy of the complete report, click here.

 

Contact: Frank Tortorici (212) 339-0231
Source: Managing for a Carbon-Concerned Future: A Decision-Making Framework Report
#1404-07-RR, The Conference Board