By Ethan I. Thorpe, Michael Vandenbergh, and Zdravka Tzankova, Vanderbilt University
Even as the federal government moves to cut climate rules, many companies are still feeling pressure to be environmentally friendly. They must respond to concerns from customers, investors, workers, and local communities, all of whom care about the planet. These groups understand that if businesses don’t act on climate change, the costs could rise too high due to extreme weather and rising temperatures.
Interestingly, a survey by global management firm Kearney found that over 60% of chief financial officers plan to invest at least 2% of their revenue in sustainability in 2025. This shows a shift in how companies see their role in addressing climate change. Many realize that abandoning their climate initiatives would hurt their reputation and finances.
Our research on private environmental governance reveals that companies are taking significant steps on their own to promote sustainability. This progress is crucial, especially in a politically divided environment where government action sometimes lags.
Sustainability Equals Profit
Businesses have long known that going green can save them money. For instance, in the late 1980s, McDonald’s partnered with the Environmental Defense Fund to tackle waste. They reduced waste by 30%, saving around $6 million each year. This not only helped the environment but also boosted their profits.
Similarly, Maersk, one of the largest shipping companies, is striving to cut carbon emissions by one-third by 2030, aiming for net-zero emissions by 2045. Meeting these goals will help them stay efficient and competitive in a changing world.
Recent statistics show a trend toward renewable energy. Companies like Meta and Google have invested almost $2 billion in renewable projects, even without government mandates. They recognize that sustainability is not just a trend; it’s a smart business move.
Measuring Emissions
Many companies are voluntarily measuring and reporting their greenhouse gas emissions, regardless of government mandates. Nearly 25,000 companies, covering two-thirds of global market capitalization, report their emissions to the nonprofit CDP. This is similar to keeping fitness logs to track health progress. It helps businesses understand their impact and plan for future risks. What’s more, about 12,500 smaller companies are also submitting emissions data.
California has initiatives to promote reporting, and other states are discussing similar rules. Even with pushback from the federal level, many companies will still navigate this complex landscape. The European Union is also tightening its climate disclosure requirements, emphasizing that companies must prepare for a more sustainable future.
Climate Resilience in Supply Chains
Managing supply chains with climate risks in mind can streamline operations and reduce future disruptions. Approximately 80% of major companies set environmental requirements for their suppliers. For example, Walmart successfully eliminated one billion tons of carbon emissions from its supply chain within seven years by collaborating with its suppliers. This not only benefited the environment but also helped streamline their operations.
Keeping Stakeholders Happy
Customers and employees increasingly expect businesses to take action against climate change. Surveys show that more than two-thirds of Americans support climate action. Patagonia, known for its sustainable practices, ranked third in a customer experience survey, highlighting that eco-conscious decisions can enhance brand loyalty.
Moreover, lenders and insurers are also pushing for greener practices. Many have committed to stopping funding fossil fuel projects and are offering incentives for businesses that reduce emissions. A study indicated that climate change could increase insured losses by 5% to 7% annually, prompting insurance leaders to advocate for more aggressive climate actions within the industry.
In conclusion, while government action is critical, private companies are stepping up as influential players in the climate battle. Their efforts can help mitigate the impacts of climate change and buy time for more significant political changes to happen. These actions show that sustainability is not just a burden; it’s a vital path to a resilient and profitable future.
This article is republished from The Conversation under a Creative Commons license. Read the original article.