13.4.2 Corporate and NGO actions
Corporations and NGOs, including industry associations and environmental advocacy groups, have started a variety of programmes and initiatives to address GHG emissions. The various factors leading corporations to adopt voluntary environmental action have been explored in the literature (Lyon and Maxwell, 2004; Thalmann and Baranzini, 2005). While some companies have attributed these actions to sustainable development goals or environmental stewardship policies (Margolick and Russell, 2001), it is often difficult to separate these goals from economic motives (Kolk and Pinske, 2004). Less controversial is the notion that companies adopt voluntary initiatives to create financial value in one form or another (Lyon and Maxwell, 2004).
There are both political and non-political drivers of corporate voluntary environmental action. Political drivers include a desire to pre-empt or influence future regulation. For example, trade associations in 30 countries have sponsored codes of management practices, the objectives of which are partly intended to forestall the imposition of government mandates (Nash and Ehrenfeld, 1996). Alternatively, corporations may adopt voluntary initiatives to influence future regulation in ways that improve their strategic positions. By adopting environmental technologies or other strategies ahead of regulatory mandates, corporations can signal to regulators that these alternatives are practical or relatively cost-effective (Reinhardt, 1999). Hoffman (2005) finds that some companies have adopted internal emissions trading schemes or GHG measurement programmes to gain expertise that will help them influence future national or international policies. A related motivation for voluntary action is the desire to manage the risks of future regulations by taking action that would increase profitability or protect a company’s competitive position in the event of future regulatory mandates (Margolick and Russell, 2001).
Non-political drivers of voluntary corporate environ-mentalism include the desire to reduce costs through practices that also have environmental benefits (sometimes known as ‘eco-efficiency’). Esty and Porter (1998) discuss how the desire to reduce energy or material costs drives corporate voluntary action, although this point of view is subject to some debate (Palmer et al., 1995; Porter and van der Linde, 1995). Hoffman (2005) and Margolick and Russell (2001) describe a variety of actions taken by US and Canadian companies to reduce GHG emissions while also reducing energy and operational costs.
Companies may also adopt environmental initiatives to appeal to green consumers, environmentally conscious stakeholders or even their own employees. Reinhardt (1998) discusses how this approach can take the form of companies differentiating their products by their environmental performance. Other companies have identified market opportunities for new products from potential GHG gas regimes (Reinhardt and Packard, 2001; Kolk and Pinske, 2005). In terms of the composition of the stakeholders, Maxwell et al. (2000) find that firms located in US states with a higher per capita membership in environmental organizations had more rapid reductions of toxic emissions. Margolick and Russell (2001) and Reinhardt (2000) report that corporate managers cited employee retention and recruitment as reasons for taking voluntary action.
Voluntary corporate-wide emissions targets for GHGs have become particularly popular. For example, Hoffman (2005) finds that as many as 60 US corporations have adopted corporate GHG emissions reduction targets and that some of these companies have participated in one of several partnership programmes run by NGOs (see Box 13.9). Under many of these programmes, companies develop a corporate GHG inventory and adopt an emission target. These targets take different forms, including absolute targets and intensity targets based on emissions or energy use per unit of production or sales (Margolick and Russell, 2001; King et al., 2004). Corporate targets have also been implemented with internal trading systems, such as those operated by British Petroleum (Margolick and Russell, 2001; Akhurst et al., 2003) and Petroleos Mexicana (PEMEX) (Bygrave, 2004).
Box 13.9 Examples of private partnerships and programmes
Business Leader Initiative on Climate Change (BLICC): Under this initiative, five European companies monitor and report their GHG emissions and set a reduction target. See http://www.respecteurope.com/rt2/BLICC/
Carbon Disclosure Project: Under this project, 940 companies report their GHG emissions. The project is supported by institutional investors controlling about 25% of the global stock markets. See http://www.cdproject.net
Carbon Trust: The Carbon Trust is a not-for-profit company set up by the UK government to reduce carbon emissions. The Trust provides technical assistance, investment funds and other services to companies on emission reduction strategies and for the development of new technologies. See http://www.thecarbontrust.co.uk/default.ct
Cement Sustainability Initiative: Ten companies have developed ‘The Cement Sustainability Initiative’ for 2002–2007 under the umbrella of the World Business Council for Sustainable Development. This initiative out-lines individual or joint actions to set emissions targets and monitor and report emissions.
Chicago Climate Exchange: The Chicago Climate Exchange is a GHG emission reduction and trading pilot programme for emission sources and offset projects in the USA, Canada and Mexico. It is a self-regulatory, rules-based exchange designed and governed by the members who have made a voluntary commitment to reduce their GHG emissions by 4% below the average of their 1998–2001 baseline by 2006. See http://www.chicagoclimatex.com
Offset Programmes: Braun and Stute (2004) identified 35 organizations that offer services to offset the emissions of companies, communities and private individuals. These organizations first calculate the emissions of their participants and then undertake emission reduction or carbon sequestration projects or acquire and retire emission reduction units or emission allowances.
Pew Center on Climate Change Business Environmental Leadership Council: Under this initiative, 41 companies establish emissions reduction objectives, invest in new, more efficient products, practices, and technologies and support actions to achieve cost-effective emissions reductions. See: http://www.pewclimate.org/companies_leading_the_way_belc/
Top ten consumer information system: This NGO-sponsored programme provides consumers with information on the most efficient consumer products and services available in local markets. The service is available in ten EU countries, with plans to expand to China and Latin America. See http://www.topten.info
WWF Climate Savers: The NGO World Wide Fund of Nature (WWF) has build partnerships with individual leading corporations that pledge to reduce their global warming emissions worldwide by 7% below 1990 levels by the year 2010. Six companies have entered this programme. See http://www.panda.org/about_wwf/what_we_do/climate_change/our_solutions/business_industry/climate_savers/ index.cfm
Levy and Newell (2005) describe how the business sector, sometimes in partnership with NGOs, has initiated environmental certification or standardization regimes to fulfill a quasi-governmental role or to augment the role of governments. One of the most widely-used examples of this type of standard setting is the Greenhouse Gas Protocol, an initiative organized by the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI) to develop an internationally accepted accounting and reporting standard for GHGs (WRI/WBCSD, 2004). The WRI/WBCSD reporting standard has been used by corporations, NGOs and government voluntary programmes. The International Standards Organization (ISO), based on the WRI/WBCSD, has adopted standards for the reporting of GHGs at the company and project level.
Other standardization or certification efforts have been formed to support markets for project-based mechanisms or emissions trading. For example, the International Financial Reporting Interpretations Committee (IFRIC), which is the interpretive arm of the International Accounting Standards Board (IASB), has issued guidelines on financial accounting for emission allowances. The International Emissions Trading Association, together with the World Bank Carbon Finance Group/Prototype Carbon Fund have developed a validation and verification manual to be used by stakeholders involved in developing, financing, validating and verifying CDM and JI projects.