Climate change is creating new business opportunities for companies. However, a recent review of sustainability reports suggests that companies are not taking full advantage.
Generally those companies that do report on opportunities focus on the area of carbon credits. However, companies that anticipate regulatory developments and changes in consumer demand, and respond by developing new products and services may be perceived as offering investors higher returns. Two thirds of the reports surveyed (31 out of 50) from a wide range of sectors described business opportunities related to consumer products, services or technologies arising from climate change. These tended to relate to energy efficiency and products with reduced carbon emissions.
Examples varied from new energy efficient computer chips and air conditioning for buses to new components for hybrid electric vehicles, and new cold-water washing powder.
In general, the reports identified the type of product, but provided little detail on revenues, role in the product portfolio, or importance for further business development. ‘The reporting was generally useful for indicating that innovations were taking place, but offered little insight into the financial implications of such new opportunities,’ says the survey.
Very few of the companies surveyed reported quantitatively or qualitatively on risks arising from climate change. Of the examples that were found, most were related to increased costs of energy (nine out of 50). A small number reported on risk related to legal action and long term climatic changes.
“The reporting was generally useful for indicating that innovations were taking place, but offered little insight into the financial implications of such new opportunities.
Some issues related to climate change present both risks and opportunities for organisations. These include financial instruments for managing climate change risk.
Issues of reputation and brand value are also relevant. This is evident in the oil and gas sector in particular, where some large companies publicise their actions to reduce emissions and their investments in renewable energy as part of their marketing campaigns.
Of the reports surveyed, very few companies explicitly reported on the link between climate change and company reputation or brand value, and where companies did report the examples were brief and indirect.
The survey, Reporting the business - implications of climate change in sustainability reports, was conducted by the Global Reporting Initiative and KPMG's global sustainability services.`