Eighty-two per cent of Canadian executives believe that a response to climate change is imperative today and plan immediate increases on spending for climate change initiatives, according to the new report Action amid uncertainty: the business response to climate change, based on a survey from Ernst & Young.
"The willingness of corporations to invest in climate change initiatives despite the uncertain regulatory environment is extremely encouraging," says Melanie Steiner, Americas Market Leader for Ernst & Young's Climate Change and Sustainability Services practice. "Corporate leaders understand that there are a range of market drivers, such as evolving customer demands and equity analysts' growing interest in climate change performance, that are motivating action."
Steiner notes that more than 90 per cent of executives surveyed globally indicate that climate change governance rests with C-suite executives or board members. This reflects the growing strategic importance of climate change for many organizations who understand that climate change is not just a risk area but also an opportunity to reduce costs, increase revenue and gain competitive advantage.
Canadian participants in the survey agree, with 71 per cent of Canadian respondents indicating that their company already has an enterprise-wide climate change program targeting key business drivers, and another 11 per cent planning for implementation in the next 12 months.
Canadian respondents also compare impressively with their global counterparts; while globally, 70 per cent of those surveyed expect their companies' spending on climate change initiatives to increase over the next two years, Canadians ranked 12 per cent higher in this regard. And the investment will be significant, with nearly half of Canadian respondents planning to spend between 0.5 per cent to more than 5 per cent of their revenue on climate change initiatives. For a US$1 billion company, this represents an anticipated spend of US$5 million to US$50 million annually.
Canadian companies are taking a comprehensive approach, expanding their climate change efforts beyond the enterprise, through their entire supply chain. Forty-three per cent of respondents say they are working directly with their suppliers to help them reduce their carbon footprint, while another 29 per cent say they have begun such discussions.
Globally, the survey findings are predominantly consistent in all participating countries, with some additional trends emerging across all countries surveyed:
- Energy efficiency is a top global priority, with 82 per cent of respondents planning to invest in energy efficiency initiatives over the next 12 months.
- Customer demand is driving investment. Changing customer demands are driving corporate climate change activities according to 89 per cent of respondents. As a result, 65 per cent per cent of executives intend to focus their climate change investments on new products and services to respond to changing customer demands.
- Equity analysts are incorporating climate change initiatives into company valuations. Forty-three per cent of the senior executives surveyed believe that equity analysts currently include climate change-related factors in company valuations.
- Climate change is generating new revenue opportunities, such as developing more efficient products, building a portfolio of carbon assets, investing in clean development mechanism projects, clean technologies and innovative IT solutions.
- Government policies strongly influence climate change strategies. Ninety-four per cent of global respondents see national policies as important or very important in shaping their climate change strategies, with 81 per cent recognizing the importance of global or international policies.
The report is based on a survey of 300 global corporate executives across 16 countries. Ernst & Young commissioned the survey to provide a status update on corporate responses to climate change issues in 2010, the half-way point in the first commitment period of the Kyoto Protocol.
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