Aided by specialist consultants like EcoAct, companies adapt operations to slash CO2 and other emissions with improved and continually monitored supply chains.
Battling climate change and its catastrophic environmental consequences has become an urgent focus for public and private actors alike. Now, embracing recent government-brokered international treaties and methods for reducing carbon emissions, businesses across the globe are assuming a critical role in preventing global warming – and making that effort a pivotal factor in wider sustainable development strategies.
Assumption of that leading position by companies follows two monumental developments for the environment: signing of the 2015 international accords in Paris establishing measures to limit global warming to 2C maximum; and adhesion of 193 countries to the United Nation's new list of 17 objectives in its Sustainable Development Agenda (SDA). Together, those new structures, criteria and tools for analyzing sustainably responsible policies allow public and private organizations to more effectively restrict CO2 output, and improve future reduction innovation.
By establishing 17 total sustainable development goals (SDG) – including clean water and sanitation, responsible consumption and production, and good health and well-being -- the SDA creates a framework in which carbon reduction parallels and cross-nurtures other corporate social responsibility commitments (CSR). It also marks governments and civil social actors turning to businesses to take the lead to combat global warming and other environmental challenges posing grave socio-economic consequences.
"Involvement and action by companies are crucial to success, because the challenges and costs are simply too enormous for governments to assume on their own," notes Gerald Maradan, co-founder Paris-based EcoAct, a specialized consultancy advising companies on carbon reduction strategies. "Fulfilling CO2 reduction and other SDG targets represents $5 trillion in annual investment, towards which the private sector currently provides $1.7 trillion. Clearly, the role of businesses in this must increase if it's to succeed."
Most companies working to reduce carbon production through voluntary cuts or compensation projects do so out of concern for the environment and human life. Yet there is also compelling financial logic for such action and investment.
The 2006 Stern Report estimates 5% to 20% of global GDP is already lost to various affects of global warming, while spending to fight the problem represents a mere 3.5% to 9% of world GDP. Moreover, notes Mr. Maradan, failing to sufficiently invest in reversing climate change now will result in a far bigger future price tag.
"Were temperatures to rise 2C, estimated losses would be $800 billion, and $2.5 trillion if they rose by 2.5C – about 17% of (global) output," Mr. Maradan says. "Taking action now is cheaper than waiting. Meanwhile, allowing the problem to develop risks creating extreme climate and weather calamities that could cost many companies their very existence by making entire operational areas inaccessible."
In response, a growing number of companies have introduced internal carbon prices. Those are fees or levies their divisions pay per designated volumes of carbon produced -- a de facto tax that encourages units to find ways of cutting costs by reducing CO2 output.
Revenues generated by internal carbon pricing provide the overall company funding for future CO2 reduction investments, or financing of external projects offsetting their carbon footprint. For example, a company might provide more efficient cooking technologies to developing nation communities currently relying on wood burning. Or, it might distribute low-consuming light bulbs or capture methane gas leaking from landfill sites in its areas of operation.
"Most carbon today is produced in emerging economies, so offset projects allow companies to help reduce CO2 generated there without undermining local growth," Mr. Maradan says. "Offset projects permit businesses to reduce carbon locally to protect all our interests globally."
Logistics specialists are also active in these efforts – especially with transport generating nearly 15% of all greenhouse gases, and air traffic set to quadruple by 2030. Meantime, with business partner activities often representing the largest factor in most companies' carbon footprint, logistics experts play a vital role helping clients track their overall tallies – and identifying where that can be reduced in supply chains.
In addition to investing nearly $100 million in state-of-the-art green hubs it built in Singapore and Paris, for example, Bolloré Logistics is reducing its environmental footprint and those of clients through operational innovations and CSR analysis of partner and transport selection.
The Group's SAVE PROGRAM supports customers' efforts to reduce GHG emissions and atmospheric pollutants along the supply chain, thus limiting environmental impact. The two principal challenges of the SAVE PROGRAM are improving air quality and fighting against climate change.
By tracking CO2 production of client freight in the Group's LINK collaborative platform, meanwhile, the SAVE PROGRAM's dedicated team of experts "analyzes and compares transport scenarios according to feasibility, constraints and environmental benefits for maximum efficiency and responsibility results," explains Beatrice Piau, Green Supply Chain Solutions Manager at Bolloré Logistics in Paris.