Carbon Facts

Climate change is increasingly recognized as one of the greatest challenges facing humanity today. There is an overwhelming scientific consensus that the earth’s climate is changing and that most of the observed increase in temperature is very likely due to human-caused greenhouse gas emissions.

Looking forward, businesses will encounter significantly increased pressure to reduce their contribution to climate change. All industries will likely experience a greater degree of scrutiny over their "carbon footprint" and may need to demonstrate environmentally responsible practices to remain competitive in the marketplace. As such, responding to climate change will be one of the major issues affecting businesses over the next decade and beyond. Some of the anticipated issues and risks influencing businesses will likely include:

Regulatory Environment

The business community will likely face more stringent GHG emissions policies in the future. These initiatives are expected to exceed voluntary initiatives and incentives favoured in the past. Policy measures likely to emerge include carbon taxes that penalize greenhouse gas emitters and emission trading schemes that target specific sectors.

Carbon emissions policies could significantly increase costs and reduce competitiveness, especially if regulations are not applied evenly around the world. However, companies that lead the way in proactive emissions reductions in anticipation of a new regulatory environment may develop significant competitive advantages.

Consumer Values

Public concerns regarding the negative impacts of climate change have moved to the forefront of consumer consciousness. Even media coverage of environmental disasters, like Hurricane Katrina, is serving to elevate a sense of urgency among citizens to act on environmental concerns.

As these environmental concerns continue to gain societal momentum, it is inevitable that businesses will be judged on their environmental track record. Consumers will vote with their wallets by purchasing products and services from companies with clear plans to reduce carbon emissions and well-defined measures to minimize the environmental impact of their activities.

Operational Costs

Businesses could be faced with rising operational costs due to stricter regulatory requirements and increased emissions charges. Through either regulatory policies or voluntary commitments, carbon emissions will have an associated cost that will directly impact a business’s profitability and cash flow. Over time, these costs may escalate as more stringent policies emerge.