[Editor's Note: To celebrate the launch of our second annual State of Green Business Report, every day for the next two weeks, we'll be running through one of the big trends that are shaping the future of the greening of mainstream business. You can download the report for free from GreenBiz.com.]
The year 2008 will likely be looked back upon as a time when carbon emissions became core to mainstream business. Of course, companies had been warming to the realities of climate change for years, with many firms making significant commitments and reductions in their greenhouse gas emissions. But things have heated up. Perhaps it was the 2008 U.S. presidential elections, in which the major candidates pledged to -- finally -- bring the U.S. into the community of nations in recognizing the need for carbon regulation. Perhaps it was the impatience of major corporations seeking to engender regulatory certainty into their strategies and investments. For whatever reason, climate change has finally become a business imperative.
As in years past, companies continued to make substantive commitments to reduce their carbon footprints. A wide range of companies -- Alcoa, AMD, Best Buy, Cisco, Deloitte, DHL, Hess, JohnsonDiversey, JPMorganChase, Matsushita, andMerck, just to name a few —variously promised to slash emissions, increase reporting, or hew to a set of climate principles.
But 2008's climate stories revealed a deeper truth: Carbon is now, and probably forever, part of the corporate landscape. Demands came from outside companies -- U.S. investors filed nearly twice as many shareholder resolutions with companies that could encounter adverse business impacts from climate change -- and from companies themselves: Levi Strauss, Nike, Starbucks, Sun Microsystems, and Timberland partnered with the nonprofit Ceres to create a business coalition to lobby Washington for stringent climate change legislation. In December, deep into a global banking crisis, five major global financial institutions agreed to adopt a new framework to guide the sector toward addressing and managing climate change across their products and services.
One center of activity was California, which released its Climate Change Draft Scoping Plan, a wide-ranging proposal for reducing greenhouse gas emissions to 1990 levels by 2020 using a variety of measures that will touch every sector of the state's economy. But it wasn't all as Draconian as it seemed: Cutting greenhouse gas emissions in California will likely boost the state's economy, create thousands of green collar jobs, and increase personal income, a state analysis found. Another center of climate activity was in Europe, where the European Parliament environment committee laid the groundwork for an aggressive climate change roadmap that will guide its 27member states through 2020.
Part of the new corporate climate involved more disclosure to consumers about the carbon content and impacts of their purchases. In the U.K., a new standard was released to help companies there assess the environmental impacts of their goods. One exemplar was the supermarket chain Tesco, which began labeling products with information related to their greenhouse gas emissions. Japan followed suit, saying it would introduce carbon footprint labels for consumer products ranging from laundry detergent to beverages. In the U.S., California made it mandatory for cars to be labeled with global warming scores, figures that take into account emissions from vehicle use and fuel production.
All of which represents a huge business opportunity -- $300 billion annually in goods and services aimed at battling climate change, a sum surpassing the biotech and software sectors combined, according to one study. Another financial impact may be in CEO paychecks: As climate change moves to the forefront of corporate awareness, one study found leading U.S. businesses starting to tie the non-financial performance of their companies to their compensation metrics.