BUSINESS MANAGMENT CONTEMPORY ISSUES IN BUSINESS

Business Management Contemporize Issues in Business

Table of Contents

Business Management Contemporize Issues in Business3

Introduction3

Discussion4

The Effects of Climate Change on Your Company4

Regulatory risk6

Supply chain risk7

Litigation risk8

Reputational risk9

Improving Your Company's Climate Competitiveness10

Step 1: Quantify your carbon footprint10

Step 2: Assess your carbon-related risks and opportunities11

Step 3: Adapt your business in response to the risks and opportunities12

Step 4: Do it better than your competitors13

Summary and Conclusion14

References16

Appendix19

Business Management Contemporize Issues in Business

Introduction

Companies that manage and mitigate their exposure to climate change risks while seeking new opportunities for profit will generate a competitive advantage over rivals in a carbon-constrained future. We offer here a guide for identifying the ways in which climate change can affect your business and for creating a strategy that will help you manage the risks and pursue the opportunities. Whether you're in a traditional smokestack industry or a “clean” (REN21 2009) business like investment banking, your company will increasingly feel the effects of climate change. Even people skeptical of the dangers of global warming are recognizing that simply because so many others are concerned, the phenomenon has wide-ranging implications.

Investors already are discounting share prices of companies poorly positioned to compete in a warming world. Many businesses face higher raw material and energy costs as governments around the globe increasingly enact policies placing a cost on emissions. Consumers are taking into account a company's environmental record when making purchasing decisions. There's a burgeoning market in greenhouse gas emission allowances (the so called carbon market), (REN21 2008) with annual trading in these assets valued at tens of billions of dollars. Even in the United States, which has lagged the rest of the developed world in the regulation of greenhouse gas emissions, the debate is rapidly shifting from whether climate change legislation should be enacted to when and in what form.

Discussion

Companies that manage and mitigate their exposure to climate change risks while seeking new opportunities for profit will generate a competitive advantage over rivals in a carbon-constrained future. (National Renewable Energy Laboratory 2006)

The Effects of Climate Change on Your Company

Executives typically manage environmental risk as a threefold problem of regulatory compliance, potential liability from industrial accidents, and pollutant release mitigation. But climate change presents business risks that are different in kind because the impact is global, the problem is long term, and the harm is essentially irreversible. Furthermore, U.S. government policies have offered companies operating in the United States little guidance as to how environmental policy may change in the future. (Makower 2009) Ignoring the financial and competitive consequences of climate change could lead a company to formulate an inaccurate risk profile.

In fact, the most important distinctions to be made when considering environmental risk assessment aren't between sectors but within sectors, where a company's climate-related risk mitigation and product strategies can create competitive advantage. Government regulators aren't the only ones monitoring individual companies for inadequate climate-related practices. Big investors are beginning to demand more disclosure from companies. For example, the Carbon Disclosure Project, a coalition of institutional investors representing more than $31 ...