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Last week, Democrats in the U.S. Senate called off their efforts to craft comprehensive climate change legislation, a bill that would have put a price on carbon via a cap-and-trade mechanism. It's another in a series of disappointing moves by the Senate of late, but that's a topic for another time.... Instead I'd like to argue that the lack of cap-and-trade legislation won't actually affect the behavior of most businesses all that much, since they are pursuing energy efficiency and other steps toward sustainability for other reasons.
Our ongoing surveys of businesses around the world reveal that the potential for cost-reduction is the primary motivation for green IT and sustainability investments and initiatives. Reducing energy-related operating expenses in particular was cited by almost 70 percent of survey respondents in our latest reading of April 2010 (see chart below). And we found that other drivers, like improving brand perception (cited by 35 percent of respondents) and simply doing the right thing for the environment (28 percent), are cited more frequently in our survey results than regulatory compliance (17 percent).
In fact, complying with present or prospective regulation has been declining as a motivation for sustainability initiatives over the last 3 years. The figure below shows what's really driving green actions (click on the image to see a larger version).
What's going on here? Our half-full perspective is that businesses are finding business rationales for investing in sustainability. Rather than regulation being imposed from without, companies are finding reasons from within to improve their environmental postures.
Their actions are driven by self-interest -- appeal to customers, improve margins, increase operational efficiency -- and are therefore more likely to be driven deep into the fabric of corporate policies and practices. So while we would rather have seen the Senate step up to responsible climate change legislation, and that would undoubtedly be an incremental spur to corporate action, we remain optimistic that sustainability programs are becoming part of mainstream business operations for most companies and institutions. The same week that the Senate punted on legislation, the executive branch announced that it will reduce indirect GHG emissions by expanding telecommuting and teleconferencing options for federal employees.
The federal government is the single largest energy consumer in the U.S. economy, and as such, its influence as an implementer of sustainability programs, as a role model for state and local governments, and as a purchaser of green technology products and services, will have more influence over the next few years than any climate change would have had.
Chris Mines is a vice president and research director at Forrester Research, advising tech industry strategists. He leads a research team that predicts and quantifies growth and disruption in the technology industry, focusing on the economics and business models of IT suppliers, and emerging trends in technology adoption. Currently, his research is centered on the role of information technology in enabling sustainability initiatives and improving corporate environmental responsibility.
Glass is half-Full
This is a very encouraging report, Christopher. I hope it's not just some PR job with the data obtained from selected sources.
But really, isn't this the way it's supposed to be? The invisible hand of Supply/Demand is working. As more and more folks understand the value of sustainable practice in all economic activity, the demand for such accountability will rise, and the supply of companies who are willing to let their bottom line reflect that accountability will rise as well.
Thanks for the upbeat report.
Carey Rowland, author of Glass half-Full
I agree with Carey
This is a perfect example, as Carey points out, of how the market can regulate itself without big government getting involved. Cap-and-Trade is just a tax, a redistribution of wealth like Healthcare. However, it will truly reduce what is referred to as GHG's because it will drive many businesses to failure or overseas and add their employees to the ranks of the unemployed. They will no longer produce GHG's. The former employees will no longer drive into work and that eliminates more GHG's.
Mr. Mines states in his article that he is disappointed that Cap & Trade didn't pass but goes on to descibe how it isn't needed to reduce GHG's. Seems odd. Is he actually disappointed that more redistribution will not occur? Is he disappointed that we won't be driving more business into bankruptcy or to third world countries? As I said, seems odd. I don't think he should be inserting his politics into this. According to his bio, his team's research is supposed to be "...centered on the role of information technology in enabling sustainability initiatives and improving corporate environmental responsibility." A noble endeavor, Mr. Mines, but please try to keep it objective.