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drought in Brazil

COP21: Strong Climate Policy Leads to Lower Business Costs, CEOs Say

drought in BrazilTwo new draft texts for a climate deal were released today at COP21, with additional drafts expected to follow as governments negotiate a global climate deal in Paris. Business leaders, meanwhile, continue to step up their efforts to influence climate policy.

CEOs of seven apparel companies — Levi Strauss & Co., Gap Inc., VF Corporation, H&M, Eileen Fisher, Adidas Group and Burton Snowboards — yesterday issued a statement urging government leaders to reach a strong climate change deal. They called for ratchet mechanism and other measures to ensure tangible pollution reductions and pledged to reduce their own emissions.

“Drought, changing temperatures and extreme weather will make the production of apparel more difficult and costly,” the statement says. “Climate change mitigation and technological innovation are vital to the health and well-being of those who make and use our products, as well as the future supply of materials needed to make those products.”

The statement follows a full-page ad in the Wall Street Journal earlier in the week signed by more than 100 companies that asks the US government to: seek a global climate deal in Paris that keeps global temperature rise below 2 degrees C; achieve or exceed national emissions reduction commitments, and; support investment in the low-carbon economy in the US and abroad.

Victoria Mills, a managing director of corporate partnerships at Environmental Defense Fund wrote a blog post about the ad and told Environmental Leader that there’s a simple reason why businesses are advocating for climate policy at COP21.

“The reason hundreds of companies are calling for a strong climate deal in Paris is simple: they want to avoid the risks, costs and instability of a warming world,” Mills says. “These companies see their businesses thriving in a low-carbon future, and they want to get there as quickly as possible.”

Unilever: Eco-Efficiency Saves $438 Million

Unilever spokesman William Davies told Environmental Leader that the cost of inaction is greater than the cost of inaction. Last week Unilever announced it will become “carbon positive” in its operations by 2030.

“In the last decade, the world spent $2.7 trillion more on natural disasters than usual; the same disasters are costing Unilever around €300 million ($328 million) a year,” Davies says.

Meanwhile, Unilever and other firms are saving money and increasing profits by investing in environmentally sustainable measures, Davies says. “Eco-efficiency measures in our factories have saved us over €400 million ($438 million) since 2008,” he explains. “ Consumers are demanding it too — last year our most sustainable brands grew twice as fast as the rest of the business. Sustainable solutions make business sense. More than half of the Fortune 100 companies are saving in aggregate around $1.1 billion per year from emission reduction initiatives.”

VF Corp: $25 Million Savings on Low-Carbon Initiatives

Ceres’ spokesperson Meg Wilcox points to last year’s Risky Business report, which highlights economic risks to industries from climate change.

“Businesses face a range of costs associated with climate change, such as physical impacts to buildings and infrastructure (i.e. from flooding, severe storms or drought), and supply chain disruptions (e.g. agricultural impacts), loss of business from severe weather,” Wilcox says.

Ceres today hosts a panel at COP 21 titled Corporate Climate Leadership In Action with investors and business leaders taking strong climate actions, including pollution reductions, renewable energy sourcing or public advocacy for strong climate policies.

VF Corp., one of the companies speaking on the panel, “can already point to $25 million in savings that it has accrued by investing in energy efficiency and other low carbon initiatives,” Wilcox says.

Mars: Clean Energy Cuts Electricity Costs

Another panel presenter, food company Mars, highlights cost savings from investing in clean energy. Kevin Rabinovitch, global sustainability director at Mars, told Environmental Leader reducing the company’s carbon footprint leads to lower costs.

“For nearly a decade, we’ve been working toward meeting our own measurable, science-based sustainability goals,” Rabinovitch says. “These include a commitment to eliminate fossil fuel use from our operations by 2040.” To achieve this goal, Mars built a 118-turbine wind farm in Texas, called the Mesquite Creek wind farm, which now generates the equivalent of 100 percent of the electricity needed to power Mars’ US operations.

“It’s an example of how we are contributing to our sustainability goals in a way that is also cost-effective for the company,” Rabinovitch says. “The fact is, it’s no longer a cost to business to switch to renewable energy. In many places the economics are now equal to or better than fossil energy, and the comparison will become even more favorable over the next few years. This is the clean little secret of a sustainable business: preserving the climate can also save you money.”

EcoVadis: Target Your Supply Chain

Strong climate policy can also help reduce supply chain costs, says Pierre-Francois Thaler, co-founder and co-CEO of EcoVadis, which is hosting a panel at COP21 today titled Driving Global CO2 Reductions Through Sustainable Supply Chain.

“With 90 percent of the world’s investments currently managed by the private sector, the best way to make real progress in sustainability and reduce the impact of climate change is to act through the supply chain and get the world’s top companies to implement a sustainable procurement program,” Thaler, says. “The leverage these companies have on suppliers is tremendous. On average, a large company spends about 55 percent of its revenue on purchased materials, and 80 percent in supply chain activities. This type of investment in a supply base can drive significant supplier engagement, and the trickle-down effect of getting these global companies on board with sustainable procurement can be monumental as they can encourage sustainable behavior across tier 1-3 suppliers and ultimately the entire supply chain.”

Photo Credit: drought via Shutterstock

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