The debate over the success, failure, and continuation of the Kyoto Protocol has begun. Yet, despite some of the uncertainty and lack of participation by several major nations, climate change issues are clearly taking a higher priority in the boardroom and executive suite of many major corporations around the world. Corporate social responsibility (CSR) is no longer a buzzword, but a reality.
According to a new study by Ernst & Young, 90% of the executives surveyed indicated that climate change governance rests with C-suite executives or board members. For the next year, 92% of the respondents indicated that energy costs will be a very important driver. That figure, according to the study was closer to 100% for companies in energy intensive industries.
The study also discovered that 82% of executives plan to invest in energy efficiency initiatives. Other areas that will see increased spending include development of new products and services, and increasing transparency in reporting. Almost half of the respondents say they will spend in the range of 0.5% to 5% of their revenue on climate change initiatives. If this figure is to be believed, E&Y estimates that this will represent between $5 million and $50 million annually.
In addition, the study shows that key stakeholders will have to cast a wide net across the organization as climate change is a collaborative effort that not only includes energy and facilities management, but also risk and internal audit, tax, finance, operations, IT, legal, and HR. To increase collaboration amongst internal units, the study suggests the establishment of an internal climate change steering committee.
The study also shows that many companies are working with their supply chain to reduce their carbon footprint. The study found that 36% of all respondents were doing this. However, in the auto industry, the figure was close to 70%.
It is clear from the study that climate change issues are weaving into all actions taken by major corporations. However, the study also stresses that leadership is needed to execute these changes properly as such changes are “transformational.”