Inbox: Capital climate solutions

As result of uncertainties around climate change policy, most businesses remain unwilling to commit significant sums to reducing their greenhouse gas emissions.
Companies have adopted “capital light” approach, where any investments need to be modest and provide quick returns in terms of cost-savings or boosts to brand and reputation. While this is sensible business strategy, in particular as we emerge from the global financial crisis, clever capital spending can help business cope with climate change, says Rory Sullivan an internationally recognised expert on climate change and investment and author of Corporate Greenhouse Gas Management: From Operations to Strategy.
“Companies need to treat climate-change-related risks and opportunities in similar manner to other business risks and opportunities. That is, they should assess how climate change may affect their business and, based on this assessment, make decisions that allow them to manage these risks.”
Sullivan says the single biggest opportunity companies have to future-proof their businesses and create longer-term value is when they invest capital. This can be into new projects, new products or upgrading existing equipment. If climate change is factored into these decisions, it maximises the likelihood that companies will make decisions that create real business value over the long term.
“Companies that are recognised as successful innovators consistently emphasise how much time and effort they have invested in testing new technologies and new approaches. This means that when it comes to the point where they need to make investments they fully understand the financial and technical implications of their choices, and of the options that they are rejecting.
“Developing this level of knowledge and expertise requires that organisations purposively and deliberately look for opportunities to take actions that fall outside the search for efficiency.” M