Climate Change Strategy: The Business Logic behind Voluntary Greenhouse Gas Reductions

Abstract

Economic uncertainties have prompted American policy-makers to withdraw U.S. involvement in the Kyoto Treaty. But interestingly, some U.S. companies are taking advantage of the present lack of a mandatory U.S. GHG emission reduction program to set targets at their own pace and in their own way; a way that fits with their own strategic objectives. To date, as many as sixty corporations, with net revenues of roughly $1.5 trillion, have set reduction targets. And hundreds more are considering such steps. In point of fact, many of these companies are agnostic about the science of climate change or the social responsibility of protecting the global climate. The reasons that they are making these emission reductions are decidedly strategic. They are searching for ways to be prepared for the long term should GHG emission reductions become mandatory, while at the same time attempting to reap near term economic and strategic benefits should that future not emerge or be delayed. Using examples of specific business actions, this paper will assess a series of ways in which this is being done.