BOSTON (Reuters) - Chief executives can no longer brush off concerns about climate change but need to start figuring out how global warming — and regulations intended to curtail it — will affect their businesses.
So asserts “Climate Change: What’s Your Business Strategy?” (Harvard Business Press, $18), a new book due out May 1.
“You can remain completely agnostic about the science of climate change but still recognize its importance as a business issue,” write authors Andrew Hoffman and John Woody.
Their slim 97-page volume doesn’t delve into the science of climate change, which suggests that, by burning fossil fuels and releasing greenhouse gases including carbon dioxide, humans are warming the earth, potentially setting the stage for enormous changes in weather patterns.
Rather, they presume that human responses to climate change — primarily in the form of regulations that raise the cost of emissions — will affect how businesses operate.
Smart CEOs will respond by developing a way to measure their company’s “carbon footprint” — the emissions caused by heating buildings and transporting goods, for instance — finding ways to reduce it and then taking a role in lobbying to influence what new environmental regulations look like.
“I’m talking to those who think, well, the science isn’t there and I’m going to continue to stall — big mistake,” said Hoffman, a professor of sustainable enterprise at the University of Michigan, in a telephone interview.
“Let’s take all the environmental language out of it, let’s take all the moral language out of it, the ‘Do the right thing’ language out of it, and simply say, brass tacks, if you’re a business, this is a business issue,” Hoffman said.
Climate change will also create opportunities, in the form of new demand for green products, which is attracting new investment, the authors note.
“In green building and alternative energy, there is money to be made,” Hoffman said. “That’s where (investors) are going and if you’re not thinking about this, you’re missing out on these capital flows.”
The authors cite U.S. industrial heavyweights General Electric Co and DuPont Co as companies that took on climate change directly and found opportunities to both cut their costs and develop projects that appeal to businesses and people concerned about sustainability.
Those companies stand out in part because U.S. CEOs generally trail their European Union counterparts in engagement on this issue, Hoffman said.
“The EU has been under a carbon regime and so they’re much more used to addressing this,” Hoffman said. “But there’s a cultural issue too ... There is, I think, within the general public within Europe a greater sense of the scientific evidence around climate change and the need to respond than there is in the United States.”
Taking climate change seriously — and taking steps to reduce a company’s emissions and other environmental impacts — also gives it a better chance of having influence on future national and international regulations on emissions.
“Regulation is coming. If you want a seat at the table to influence what that regulation should be, you’ve got to get on this now,” Hoffman said. “It may even be too late.”
Editing by Frank McGurty.