New Year’s resolutions may date back millennia, perhaps as far as early Babylonian times. In the modern era individuals may make solemn commitments to lose weight or exercise more. Meanwhile, organizations set about to achieve quality and environmental objectives while maintaining or improving financial performance metrics. Fortunately, when it comes to climate change resolutions, organizations—and individuals—can often achieve win-win outcomes. In this spirit Futurepast offers its Top Five Climate Change Resolutions for Organizations in 2010.
We rank as number five the establishment of an organizational inventory of greenhouse has emissions. For leading organizations, GHG inventories are not new. However, getting one is the place to start for organizations that have put off formal consideration of the carbon intensity of their operations and products. An inventory allows companies, governmental units, and other types of organizations the chance to quantify how much carbon dioxide equivalent gases they emit on an annual basis. The inventory is broken down by type of emission, such as Direct Emissions from stationary and mobile combustion, as well as process and fugitive emissions. Another category is Energy Indirect Emissions, which acknowledge how an organization’s demand for purchased electricity or steam frequently causes utility companies to combust fossil fuels to produce the energy an organization needs. A third category of accounts is Other Indirect Emissions which includes emissions associated with both the upstream supply of raw and processed materials an organization uses as well as the downstream effects of the products and services it furnishes to the market. Transportation of these materials, goods and services typically are also included in the upstream and downstream calculations. Definitely, if your organization doesn’t already have one, now is the time to establish an accurate and verifiable GHG inventory.
Number four on our list of resolutions for the New Year is to obtain information from your supply chain about the carbon intensity of their inputs to your organization’s activities. Leading companies like Walmart have pioneered in this field, and more and more market leading organizations understand the importance of doing so. It comes down to sustainability. Simply put, organizations that are not able to reduce their carbon footprint in the coming years run the risk of falling behind their competitors and losing market share. This is bad for them, their customers, and other stakeholders. Now that market leading organizations have inventoried their carbon emissions and considered ways to reduce them, the next logical place to look is in the upstream part of the value chain.
Our number three resolution is to use the organization’s inventory to set emission reduction targets. An inventory allows organizations to see clearly where their most carbon-intensive operations or activities lie. Armed with this information, objectives for performance improvement can be set. This typically occurs at the highest level of the organization during periodic exercises known as “management reviews.” Top management sets the direction, assigns responsibilities and time frames, and allocates the resources necessary to achieve the targeted improvements.
Futurepast’s second most important resolution for organizations this year is to communicate its GHG performance and improvement objectives to stakeholders. The audience for this communication is both internal and external. Employees must understand the message so they can take needed actions to meet the organization’s climate change objectives. Suppliers need to know what part of the value chain the organization has identified as bearing the highest potential for targeted emission reductions, so they may rise to the challenge and deliver them. Customers are an important audience as well, because increasingly they will make business-to-business or consumer decisions based upon least intensive carbon options, when all other factors are equal. Last but not least, the investor community has a growing desire to know how the organizations they own are meeting the climate change challenges of the twenty-first century. Indeed, in some cases, climate change disclosures may already be called for in securities regulations in those cases where a publicly traded company has determined that a reasonable person could be influenced by its climate change risks and management’s decisions about how to address them.
This year we cap our suggestions for resolutions with our number one recommendation: Reduce the carbon footprint of your organization’s activities and products. Implement actions that reduce consumption of energy, squeeze carbon emissions from the upstream supply chain, and reduce the carbon footprint of products over their life cycles. Increase the efficiency of lighting and heating/cooling systems, optimize distribution networks, reduce packaging, and improve recyclability. Encourage employee car-pooling, transit use or biking to work. Like the individual that goes on a diet and exercises more, organizations that produce equivalent products and services that use less materials and energy will gain an edge in the competitive marketplace and augment its appeal to customers. And in the classic win-win way, it will achieve these benefits while benefiting the organization’s bottom line.