Cutting carbon is good business

Green businessBloomberg News reports that companies serious about climate change have outperformed the wider market by 10 percent over the last five years. CDP, a UK nonprofit, tracks hundreds of companies and grades them "based on how aggressively they are setting and meeting carbon goals, and on how forthcoming they are about this work":

CDP's Carbon Performance Leadership Index (CPLI) is composed of companies that lead their peers in managing and reporting the carbon pollution from their own operations and supply chains.... In the five years since the CPLI first launched, the index beat both the Bloomberg World Index, which tracks the largest companies across sectors by market value, and the Dow Jones Sustainability World Index.

In short, reducing the use of carbon is good business, and many companies are helping their bottom line while helping the planet. CDP calculates that the return on investment of carbon reduction activities is 33 percent, providing a complete payback for green costs in just three years. 

Many businesspeople mistakenly believe that spending money to move from carbon-based to renewable energy hurts their profits. CDP demonstrates that the reverse is true: green business is profitable business.

It might seem, on the basis of this report, that those of us in the climate movement would do better to encourage Chevron and Peabody Coal to diversify and reduce their carbon footprint rather than to work for divestment. Nothing could be further from the truth. 

Shareholder engagement with fossil-fuel companies is futile, since they have staked their entire business plans on finding, extracting, selling, and burning fossil fuels. The small investments they tentatively made in renewables a few years ago have been reduced to almost nothing today. As CDP's chief executive puts it:

Energy companies struggle to really put themselves on a path of a low-carbon transition. Their core business is very carbon-intensive.

Divestment is the only appropriate strategy for oil, gas, and coal companies. They will not change their spots.

For the rest of the business world, a complementary strategy is effective: we can publicize the fact that going green for the climate goes green for their profits too. 

Photo courtesy of uncene/Flickr (Creative Commons license)

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