Big Companies are Taking Climate Change Very Seriously
Big companies are taking climate change very seriously. Before the December 2015 climate talks in Paris, 154 companies signed the pledge to demonstrate their support for action on climate change. The 154 companies have operations in all 50 states, employ almost 11 million people, represent over $4.2 trillion in annual revenue and have a combined market capitalization of over $7 trillion.
The possibility of a price on carbon is helping spur these companies to take action on climate change. Most companies have a positive perception of a mandatory carbon price. Seventy-five percent of the largest companies say they will either be better off with a mandatory carbon price or that it would not have much effect on their operations, according to a report by Ingersoll Rand and GreenBiz. Companies with revenues less than $10 billion show even greater (82 percent) support.
Although the possibility of a mandatory carbon price is driving companies to take climate change action, few have established an internal carbon fee. Only nine percent of the largest companies, four percent of large companies and three percent of small companies have established an internal carbon fee. There are several reasons why, according to the report. One main one: it’s too new of an idea. However, as mandatory carbon fees become more likely, companies will start looking at the steps they can take to be prepared. Another reason: energy efficiency is much more common and immediately cost effective.
Energy efficiency is an even greater driver of action on climate change. More companies have a strategy for meeting energy efficiency commitments than carbon or greenhouse gas (GHG) commitments. Most companies can achieve annual energy savings of two two 10 percent through energy efficiency, according to the U.S. Environmental Protection Agency (EPA) Energy Star program. Ninety-five percent of all companies that have set goals for carbon and GHG reductions have also set energy efficiency goals.
Renewable energy is another area where companies have made major commitments. Forty-five percent of the largest companies have set a public commitment to use renewable energy. Utilities are the sector with the most commitments (75 percent), with consumer goods following closely behind (71 percent). Energy efficiency plays a key role at companies with renewable energy goals. Ninety-eight percent of the largest companies that have set renewable energy goals also have energy efficiency goals. There is a similar trend with large companies and smaller companies.
Ingersoll Rand is a good example of a company taking climate change seriously. Not only did the company jointly sponsor the report, but it made climate change commitments at the 2014 United Nations Climate Summit. The company committed to a 35 percent reduction in its GHG footprint of its operations by 2020, a 50 percent reduction in the GHG refrigerant footprint of its products by 2020 and to adopt lower global warming potential alternatives across its portfolio by 2030. In addition, Ingersoll Rand committed to a $500 million investment in product related research and development over five years to fund long term reduction of GHG emissions.
Photo: Ingersoll Rand