Corporate Citizenship Perspectives

How companies can take action on climate change

Posted by Stewart Rassier, Director of Executive Education on Sep 28, 2015 1:56:10 PM
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CDP ReportingClimate change is again trending as a topic within corporate citizenship and the larger business community. The release of Pope Francis’ encyclical, “Laudato Si” (Be Praised), which highlights the impact developed economies are having on our planet and our responsibilities to act, the Environmental Protection Agency’s (EPA) Clean Power Plan, and the upcoming COP21—the 21st Session of the United Nations Framework Convention on Climate Change—are creating a buzz.

All three efforts are driven by scientific research that commonly asserts we must ensure global warming does not exceed 2 degrees Celsius (3.6 degrees Fahrenheit) in order to maintain life on earth as we know it.  

Action can take many forms within a business and many leading practices are captured in CDP climate change questionnaire responses. More than 4,700 companies completed the questionnaire last year and were evaluated on the transparency of information and company performance as it relates to climate change issues. A review of these questionnaires shows that action in the areas of engaging employees, business strategy integration, and greenhouse gas (GHG) reduction projects and targets lead to better performance.  

Engage employees

A top-down and bottom-up approach to engaging employees is recognized as an effective tactic for addressing climate change. One characteristic of leading companies is that they have board of director oversight of climate change issues. Several Boston College Center for Corporate Citizenship member companies, including Bank of America, Hasbro, Mosaic, and Texas Instruments, have board committees that oversee company initiatives on climate and environment.

Incentivizing employees to assess, manage, and implement strategies and programs that have a positive impact on the planet is another leading practice that CDP encourages through its scoring process. BASF—the largest chemical producer in the world— has embraced this approach by providing monetary rewards not only to executive officers who reach emissions and efficiency targets, but also compensating R&D project leaders and marketing/account executives that develop or sell new products for climate protection and adaptation. Member company Alcoa, a manufacturing company, directly ties 5 percent of its bonus plan to C02 emissions. While Intel and Sprint link the achievement of sustainability metrics to employee salaries.

Integrate into your business strategy

A business strategy that considers and connects climate change to risks, opportunities, processes, and procedures is also recognized as a leading practice. One approach to factoring climate change into your business strategy is by establishing an internal price on carbon, and 437 companies report they are presently doing that. The Walt Disney Company has been a leader in establishing this practice. Each unit is charged for its emissions, which has provided incentives for unit presidents to manage environmental impacts closely. TD Bank Group has calculated their internal price at $10 per ton of CO2 and charge back the price to their business units, based on their relative contributions. They use this price to make decision-making more tangible and evaluate future risk.

National Grid has adopted a higher internal price of approximately $85 in select investment decisions. The higher price reflects the industry and material nature of climate change to the business. National Grid identifies the purchase of new technologies to detect gas leaks and replacement of old assets as investment decisions impacted by the new internal price on carbon.

Create GHG reduction projects and targets

Finally, tangible targets and significant GHG reduction projects are needed. Cenovus Energy—a perennially high scorer with CDP—updated 28 of their natural gas compression facilities in 2014, which is estimated to reduce CO2 equivalent emissions by approximately 19,500 tons per year.

The industrial sector sees Northrop Grumman again earning a spot on the Carbon Disclosure Leadership Index with a commitment to a 30 percent reduction in GHG emission by 2020 and the high level of third-party verification.  

Since 2010, PepsiCo’s delivery fleet has reduced greenhouse gas emissions by more than 55,000 metric tons, while reducing its diesel fuel usage by 23 percent partly through using more energy efficient trucks.

In preparation for COP21 meetings, Microsoft has pledged support for a new project focused on targets, the Climate Neutral Now initiative. The project allows companies (and individuals) to set and track zero impact targets for emitting targets and increases the availability of renewable energy.

These bold actions in the areas of employee engagement, strategy implementation, programs, and metrics make business sense and are mitigating the environmental impact companies are having on our planet. 

At the Boston College Center for Corporate Citizenship, we tackle the topic of climate change and business in many of our courses and webinars. An upcoming course, CDP Reporting: Disclosing Environmental Impacts takes a closer look at the Climate Change Disclosure Questionnaire and offers an introduction into collecting, managing, and reporting environmental data. It’s a good first step for those considering reporting and ideal for employees tasked with the project this upcoming year.

Topics: Environmental Sustainability, Reporting, Engaging Employees, Integration, Climate, CDP, Green House Gas (GHG), COP21

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