Financial Savings Of Cutting Emissions

Green Money

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A new report released by WWF-US and the Carbon Disclosure Project (CDP) shows that US businesses could unlock savings of $190 billion by cutting emissions. The 3% Solution report takes a business-friendly approach to our climate crisis, turning the burden of slashing emissions into a balance sheet winner. It explores what profitable action the US corporate sector can take to meet the IPCC’s 2020 target of reducing emissions by 25% from 1990 levels.

It’s taken six years to publish and it was worth the wait. With analysis provided by McKinsey, Point380 and Deloitte, it provides a robust and practical pathway for businesses who want to be climate-conscious but still behave responsibly toward their shareholders.

The authors have avoided repetitious doomsday accounts of climate catastrophe, instead shifting the onus to maximisation of savings and improved brand equity through leadership. They show that in a low carbon future, good business is synonymous with sustainable business.

The way forward is detailed in the report’s Carbon Productivity Portfolio, a five point pathway for companies who want to get in on the action. Setting clear and ambitious carbon reduction targets is the lynchpin of the five, followed by improving energy management and investment, increasing low carbon energy supplies, developing low carbon products and value chains, and engaging with government and other key stakeholders. Each of these key areas comes with hard data and examples of companies acting now, reaping the rewards financially and environmentally.

One of the most striking statistics comes under the second action area: to improve energy management and investment. 79% of US companies in the S&P 500 that report to the CDP earned more on average from carbon reduction investments than on their overall capital expenditures. Energy efficiency initiatives in particular saw an average 196% return on investment. Numbers like these are what makes this report worth taking notice of: this isn’t just a piece of green rhetoric, but a diligently demonstrated case for carbon efficiency as good business sense.

It also highlights the rewards brought by a bottom-up approach to energy management. Including employees company-wide is more likely to engage staff in meeting targets, but it also means that communication can flow from the shop floor, whittling out issues that might otherwise be overlooked. General Electric has devised energy ‘treasure hunts’ where managers assess potential savings in their own plants and Raytheon has created an ‘energy champions’ programme, improving employee engagement and respecting the value of on-the-ground know-how.

The combination of company case studies and quantitative analysis in The 3% Solution should make it hard to ignore for corporate sustainability laggards. There are financial savings of cutting emissions are waiting to be grabbed here and clear steps toward future resilience.

But we mustn’t forget the flip-side: the window for action is closing. The IEA warned this month that a two degree scenario is looking less and less likely, with projections of nearly double that temperature rise if we don’t change course fast. We don’t know exactly what a four degree planet would look like, but we do know that it would be a radically altered, inhospitable environment for many of the globe’s population.

The 3% Solution offers an attractive path forward and has been well received so far, but the proof will be in the implementation of its proposed steps.

About the Author Emily Kenway

Emily Kenway works in the third sector promoting responsible practices by companies and investors. Prior to 2011, Emily was a professional opera singer before following her passion for sustainability into this new career. Her particular interests include the circular economy, environmental impacts, and the food industry.

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