The Business Case for a Low-Carbon Economy

Companies are designing new "green" business models which will complement the outcome of international climate change negotiations.

 

A new OECD report, Transition to a Low Carbon Economy: Public Goals and Corporate Practices, highlights decisions companies are taking to fight climate change and recommends government actions to encourage them.

 

“A number of front-running companies have grasped the challenges and opportunities of moving towards a low-carbon economy,” says OECD Secretary General Angel Gurria. “Our report shows that 'green' and 'growth' go together. Substantial green investment makes economic sense and can support effective climate policies.”

 

The report, which covers OECD countries as well as China, India and South Africa, draws on national experiences and a survey of companies worldwide to assess business strategy on climate change.

 

Today 400 of the Global 500 companies measure and report their GHG emissions. Though this is an important step towards managing emissions, there are no internationally-agreed standards for corporate GHG emission reporting so results are neither comparable nor credible. Governments could solve this problem by agreeing international corporate GHG accounting methodologies.

 

To reduce emissions, nearly all 61 of the 63 companies taking part in the OECD survey said energy conservation was an obvious first step. By using less energy, Dow Chemical saved US$4 billion over 11 years while DuPont saved US$3 billion over 15 years.

 

But the report shows also that challenges remain and companies could support green objectives even better when supported by the appropriate framework and the right incentives. For companies to go further and adopt more ambitious measures - reduce waste, adopt low-carbon technologies, and shift to renewable energies - stronger government policy measures are needed, including putting a price on carbon.

 

Companies building new green business models need to better involve consumers and suppliers. According to three quarters of the companies surveyed, governments could help by promoting good practices, raising awareness and enhancing consumer demand for low-carbon goods and services.

 


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