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New Study Finds that Companies who Lead with Climate Action are Rewarded by the Market

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Is your company taking climate action? If not, you are making a mistake. A new study mentioned in a recent Anthropocene Magazine article shows that “companies that take concrete steps to respond to climate risk are rewarded by the market; those that don’t are punished.” However, this new study confirms what the GHG Protocol identified in 2011 as business risks and opportunities associated with climate change, which are as follows:

Climate RisksExamples
RegulatoryGHG emissions-reduction laws or regulations introduced or pending in
regions where the company, its suppliers, or its customers operate
Supply chain costs and reliabilitySuppliers passing higher energy- or emissions-related costs to customers; supply chain business interruption risk
Product and technologyDecreased demand for products with relatively high GHG emissions;
increased demand for competitors’ products with lower emissions
LitigationGHG-related lawsuits directed at the company or an entity in the value chain
ReputationConsumer backlash, stakeholder backlash, or negative media coverage
about a company, its activities, or entities in the value chain based on GHG
management practices, emissions in the value chain, etc.
Source: GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard

Climate risks are true business risks, but there are also real business opportunities associated with addressing climate action, and smart companies of the 21st century are enjoying the benefits, which are as follows:

OpportunitiesExamples
Efficiency and cost savingsA reduction in GHG emissions often corresponds to decreased costs and
an increase in companies’ operational efficiency.
Drive innovationA comprehensive approach to GHG management provides new incentives for innovation in supply chain management and product design.
Increase sales and
customer loyalty
Low-emissions goods and services are increasingly more valuable to
consumers, and demand will continue to grow for new products that
demonstrably reduce emissions throughout the value chain.
Improve stakeholder relationsImprove stakeholder relationships through proactive disclosure and
demonstration of environmental stewardship. Examples include
demonstrating fiduciary responsibility to shareholders, informing
regulators, building trust in the community, improving relationships with
customers and suppliers, and increasing employee morale.
Company differentiationExternal parties (e.g. customers, investors, regulators, shareholders, and
others) are increasingly interested in documented emissions reductions. A
scope 3 inventory is a best practice that can differentiate companies in an
increasingly environmentally-conscious marketplace.
Source: GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard

Customers are increasingly supporting companies that align with their values. Similarly, employees want to work for companies that align with their values. What do your customers and employees value? Climate action. Why? Because most people value abundance, beauty, honesty, and a sense of purpose, in addition to a spiritual connection with nature because we are all part of nature, not separate. In short, people protect what they love.

Not coincidentally, the same opportunities for climate action are also what make the business case for sustainability, and that’s what we do at Emerger Strategies. We help our clients easily make the business case for sustainability, which includes: mitigated risks, increased competitive advantage, increased customer loyalty, talent attraction and retention, and reduced costs. Take a look at our case study with RepYourWater, or the results we helped deliver for Z-Man Fishing Products and decide for yourself.

If your company needs help with Sustainability Measurement, Planning & Reporting, GHG Accounting, or obtaining third-party certifications such as Zero Waste or Climate Neutral Certified, please don’t hesitate to reach out, and let’s protect what we love, together! Check out our Sustainability Consulting Services.

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