March 24, 2008

‘Radical Greening’ One Of Top Strategic Business Risks

“Radical greening” is one of the top 10 strategic business risks for 2008, according to a new study (PDF) by Ernst & Young. For the property/casualty insurance industry, and the utilities industry, potential climate change will have a critical impact. Overall, it’s the greatest strategic risk for the insurance industry. Other industries that will feel a medium to high impact include oil & gas, consumer goods, real estate, and automotive, according to the report.

Companies should be aware that the hazards of potential climate change might actually be more imminent than is commonly understood. “We may see physical climate surprises as well as an increased policy response that is more abrupt than most firms are currently planning for,” the report states.

In terms of carbon caps, the report says that the imposition of fixed percentages of renewable power can expose severe strategic errors of corporate judgment.

The pace and extent of this new ‘green revolution’ is hard to predict - but what is almost certain is that some firms will get the right fuel mix, real estate portfolio, or carbon footprint, while others will go either too radically green or, more likely, not green enough.

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