3% GHG Reduction ‘Could Save Firms $780 Billion’
If US businesses act now to reduce greenhouse gas emissions by an average of 3 percent annually, they can save up to $190 billion in 2020 alone, or $780 billion over 10 years, according to a report by World Wildlife Fund and CDP.
According to The 3% Solution: Driving Profits Through Carbon Reduction, reducing carbon emissions by 3 percent annually from now to 2020 – equivalent to cutting total annual GHGs in 2020 by 1.2 gigatonnes of CO2 from 2010 levels – is enough to put the US corporate sector on track for a 25 percent reduction against 1990 levels. This reduction pathway is consistent with the lower end of what the Intergovernmental Panel on Climate Change says is needed by 2020 to help avoid a global temperature increase of 2 degrees Celsius above pre-industrial levels.
The report shows that four out of five companies from the S&P 500 that report their emissions to CDP see bigger financial returns on their carbon reduction investments than their overall capital investments, making reallocation of their capital expenditures a sound business decision.
To unlock the billions of dollars in cost savings, on average the US corporate sector would need to invest 3 to 4 percent of its capital expenditures each year on low-risk, profitable carbon reduction projects, the report says.
To help companies reach these goals, the report also includes a Carbon Target and Profit Calculator, which provides a guide for companies to set emission reduction goals and to claim their share of the savings.
The analysis also introduces the Carbon Productivity Portfolio, a set of five actions built upon the experiences and successes of leading companies that form a new strategic approach to maximizing business value and carbon reductions.
WWF and CDP recommend that companies interested in capturing these savings do the following:
- Run the calculator and set or revise a carbon reduction target to claim the company’s share of the savings.
- Reallocate capital to deliver better returns at lower risk.
- Translate the savings to the company’s bottom line.
A report released by World Wildlife Fund, Calvert Investments and Ceres in December shows that most of the world’s largest companies aren’t waiting on governments to embrace renewable energy and lower emissions. The report shows that a majority of Fortune 100 companies have set a renewable energy commitment, a greenhouse gas emissions reduction commitment or both. The trend is even stronger internationally, as more than two-thirds of Fortune’s Global 100 have set similar commitments.
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