Abstract of the Arcus Sustainability Study
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Regulatory confusion
Companies expect to find themselves mired in a multitude of potentially conflicting regulations. In the absence of Canadian government participation in the Kyoto Protocol, some regions have taken their own actions on climate change issues. As a result, due to potential of a variety of regulatory regimes, companies expect to find themselves forced to operate under different rules in the different regions in which they operate. They expect substantial challenges to adapt standards throughout a company and are concerned about exposure of the company to unforeseen events that will affect its long-term planning on strategic decisions like capital outlays.
Reputation Related Risks and Opportunities
Although most consumers do not currently consider climate change to be a front-burner issue, companies expect it to become a mainstream consumer concern in the near future. In part, climate change is expected to gain visibility among consumers in the coming years through the impacts of media reports on severe weather, increased regulations, political debate, and an increase in products marketed as climate-friendly. As climate change gains awareness among consumers, companies expect to find themselves at a disadvantage if competitors manage to take the lead in promoting a positive image for their brand on the issue. Although reputation damage from climate change issues are considered difficult to quantify, companies in some sectors expect to lose market share if they are seen to be behind competitors in addressing climate risks. A number of companies from a range of industries are already promoting themselves as environmentally friendly and, specifically, climate change-friendly. Those successful at convincing consumers of their efforts to mitigate climate risk have a higher expectation of increases in market share at the expense of those companies seen as lagging in commitment.
Business is not keeping up with the changing public mood
Less than 5% of executives admit that their organizations monitor their overall carbon footprint and just 4% have a carbon reduction plan in place. Although these numbers look set to rise rapidly, nearly one-half of firms have no intention of implementing carbon-reduction plans within the next three years.
Business is reacting to reputation risk, not exploiting business opportunities
Consumer behaviour, environmental campaigns and investor demands are doing little to drive change in this area, although the investor community is starting to adjust. Niche markets exist that exploit carbon concerns, but the major factor motivating business is reputational. Some companies say that customers have consideration for companies that lead on carbon issues. They also believe that doing the “right thing” will have some sort of competitive advantage.
Companies do not expect the costs to be high
Businesses engaged in carbon reduction are spending a small percentage of their operating expenses in this area. By 2010, more than half of these executives expect these efforts to either impose no costs on their business, or else result in a net positive impact, mostly through savings on energy bills and increased sales for enhanced brands. Just 10% think it will have an overall negative impact on costs, with the balance unsure.