Companies that act fast and smart to get green and lean will have big business advantages

By Andrew Merrie

Climate change offers significant opportunities and if companies choose to see it as more than an extra cost it can provide new income streams.

Nick Robins of HSBC’s climate change centre of excellence says that emerging sustainability challenges in energy, climate and water compare to the Industrial Revolution and the IT revolution in their potential to invigorate business growth. The core opportunity lies in the recent reframing of the climate change focus on green jobs and low carbon growth.

Robins highlights three developments where he believes opportunities are particularly clear.

First is the ambitious and exciting South Korea Green Growth Plan – which was one of the most inspiring plans for green investment and green GDP growth to be presented at Copenhagen. Originally launched in July 2009, this $84bn five-year programme is targeted to develop green industry as a growth engine for the entire Korean economy.

German leadership

Second is the leadership position being taken by Germany in green technology development and the strong public private partnerships being formed to boost Germany’s economy through green tech investment. One of the most ambitious developments is the industrial consortium composed of Siemens, Deutsche Bank and Munich Re, and others, to implement the DesertTec project. This aims to provide Europe with electricity from extensive solar power generation to be built in northern Africa.

And the third factor Robins highlights is the focus of Barack Obama on the US cap-and-trade bill and his multibillion-dollar commitment to driving the development of clean technology and renewables in the United States.

So, there are specific opportunities that companies can take advantage of by addressing climate change in their own businesses, and with their customers, clients and across their value chains.

There is an opportunity for environmental leadership. Customers like to be associated with companies taking the climate change threat seriously – particularly if it also saves them money.

Carbon neutrality

Energy supplier Vattenfall has made an ambitious pledge to be carbon neutral by 2050 and claims that this is entirely achievable and even profitable. Vattenfall’s strategy has several elements that will position it as a climate change leader and result in increased market share.

The company is focusing investment in nuclear and renewables, alongside carbon capture and storage. Also, for the short-term, Vattenfall is investing in biomass-generated energy. Its policy is to continually reduce carbon emissions – until carbon neutrality is achieved – through the development of new energy efficiency technologies.

The opportunity to be among the early developers of low-emission goods and services has been recognised by Veolia Environmental Services, a waste management company. Gary Crawford, Veolia’s vice-president for greenhouse gases, says: “Our customers are demanding to know what their carbon footprints are, how they can reduce emissions and what services can help them do this.”

Veolia began quantifying its emissions across all operations in 2000, which it saw as the first step to being able to make significant reductions. As a result of this, Veolia is well positioned to provide comprehensive climate related goods and services –ahead of its competitors, the company says.

These include detailed greenhouse gas footprinting tools that Veolia’s customers and clients – ranging from industrial companies to local municipalities – can use to quantify their carbon footprint. In addition to this, Veolia has an extensive product suite that includes cutting edge technologies in waste and energy recovery that deliver cost savings and climate benefits in addition to environmental benefits more generally.

Take advantage of green investment

HSBC’s Nick Robins says that there is a demand for investing in climate change, particularly in terms of energy efficiency. Energy efficiency investment is seen as potentially highly lucrative.

Robins views investors’ interest in such investments as a response to the outcome of the recent financial crisis. Many of the large institutional investors are assessing the potential of the green growth economy and clean tech as possible alternatives characterised by lower volatility and longer investment time horizons and offering excellent returns over the longer term.

Efficiencies bring down costs

If a company is able to invest for the long-term, new technology can offer significant cost savings and efficiencies and thereby invigorate value creation. Even if a company has limited resources, small upgrade investments and adapting company procedures can result in significant benefits.

Shell, for example, now includes the cost of carbon emissions when budgeting for all new projects. Bill Spence, Shell’s vice-president for CO2, says that this means the company’s engineers can focus on developing techniques that reduce this cost, and so reducing emissions resulting from each project. Within Shell this is leading to fundamental changes in the way that the company does business, driving efficiency and energy use changes and thus cost savings.

And this is the central issue that leading companies have grasped. Low-emission and carbon sensitive projects and practices are also lower cost. Businesses making the right moves now can take advantage of these opportunities now, ahead of their competitors.

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