New technologies and scientific research in climatology have become the basis for changing business strategies. Companies show their impact on the climate and offset emissions to prove their sustainability and gain customer and investor support.
Last year, at the International Economic Forum in Davos, climate change was named one of the most significant threats for humanity. Sustainability and climate action have ceased to be a problem of eco-activists and now demand to involve states and the private sector. The environmental changes carry significant risks both for the population and industry, and this fact cannot be ignored.
The only adequate response to the climate challenge is to reduce CO2 emissions
and support a low-carbon development model. Companies around the world were giving thumbs down to green ideas for years. The main argument was the high expense of clean technology. However, the significant reduction in environmentally friendly technologies - especially renewable energy - and the rising cost of greenhouse gas emissions have changed the picture. Today, companies are trying to invest in green technologies not only because it is ethical but also because it is profitable. The eco-friendly position has become a crucial part of business strategy, and companies strive to demonstrate their climate action and green initiatives.
According to the Global Commission on the Economic and Climate study
in 2018, global action to reduce greenhouse gas emissions could deliver $26 trillion until 2030. Other researches have shown that organizations that care about sustainability perform better
than those that neglect these indicators.
Some rating agencies evaluate the environmental performance of companies depending on the efforts they make to ensure that their activities are as accessible as possible for the planet. These ratings now play a key role in determining the producer's access to international markets.
Companies also take regulatory risks into account, realizing that the active efforts of governments to transition to a low-emission economy should be considered when planning business strategies. Therefore, the private sector is increasingly sympathetic to the carbon pricing policy and advocates stable regulatory regimes and long-term price benchmarks in this area.
Companies take significant risks when they refuse to consider their climate impact. Climatology is developing, and now it is possible to prove the direct dependence of natural phenomena on the activities of companies. A recent study
found that the damage from Hurricane Sandy in 2012 was increased by at least $8 billion due to anthropogenic climate change. Another study
found that human activity and related climate change are causing $67 billion in damage from Hurricane Harvey in 2017. Companies could soon face a new wave of lawsuits demanding responsibility for greenhouse gas emissions and climate change because of these advances in climate science.
Carbon and environmental reporting has emerged in addition to classic financial reporting due to the request from the public and authorities. It provides detailed information on the total greenhouse gas emissions from production assets managed by the reporting organization. Usually, it provides data on direct and indirect emissions of greenhouse gases, including production processes, energy consumption, and in some cases, emissions in the supply chain.
Requirements and best practices for disclosing the information on greenhouse gas emissions are contained in international standards and guidelines. The most famous are the international standards of the series ISO 14064, ISO 14067, GHG protocol. The disclosure of greenhouse gas emissions is also carried out through projects of various rating agencies and specialized organizations like TCFD
Some companies go further and propose to use blockchain technology to more clearly control gas emissions during production. Ford Motor, Honda Motor, and other manufacturing companies are in favor of developing international rules to monitor greenhouse gas emissions in the production of electric cars and traction batteries by 2022.
Mobi's open initiative
involves more and more members, including cloud giants like IBM and AWS. Mobi members already control up to 20% of the automotive market. The Mobi initiative proposes to use DLT (Blockchain) for these aims. At each stage of the life cycle, batteries will be counted in the global data system using a barcode. It will be almost impossible to counterfeit data in such a system, and it will help avoid scandals like Emissionsgate
The use of blockchain will improve the control of climate change. Accurate management and emissions control require close integration and interaction among all members of the chain. To coordinate, different organizations need to share real-time data. Blockchain will ensure transparency and traceability
, allow for audits and ultimately reduce carbon emissions throughout the production chain. Blockchain-based electronic certificates will contain data on the amount of energy produced and where and when emissions occurred. This data flow will determine the weak points in production that need to be improved to avoid greenhouse gas emissions.
Non-financial reporting and disclosure of greenhouse gas emissions are relevant tools for managing the risks associated with carbon regulation and changing consumer and investor behavior, influenced by international climate change prevention initiatives. However, the most important result of this work is to identify the main strategic objectives of climate risk management and the opportunities arising from the climate agenda.
When hazards and risks have become tangible, and when their causes are scientifically substantiated, the human impact on climate change cannot be ignored. Like any destructive force, climate change opens opportunities for companies that are ready for innovation and is preparing to exhaust companies that are not flexible enough in their strategy.
Companies need to understand that climate change is the biggest challenge facing the world in this century. Sustainable strategies
mean responsibility for their actions, focus not on immediate benefit, but on long-term and socially valuable work. Investors are also changing their minds about long-term returns, focusing on sustainability rather than net profit.