The Carbon Market

The International consensus is resoundingly clear and the majority of the world believes climate change to be real, caused predominantly by human activities, and that it will have devastating consequences for ecosystems and human lives unless we act swiftly to reduce greenhouse gases (GHG) emissions. Whether one believes in manmade global warming or not is irrelevant; climate change has now been monetized and the markets are here to stay.

For many top organizations, climate change is already being factored into business planning and strategy. Of the Financial Times 500 global companies who recently reported to a Carbon Disclosure Project study, 76% already have emissions reductions targets in place. In the United States, over a dozen pieces of climate change legislation that would establish a GHG emission reduction cap and trade program have been introduced in both the Congress and Senate, with the Warner/Lieberman bill seen as the clear front runner.

Further, all three remaining Presidential Candidates have clearly stated that climate change exists and they intend to support legislation for a cap and trade system once elected. Even as a U.S. program is still in the early stages of development, individual U.S. states have already taken significant steps to introduce regional cap and trade systems, such as the Regional Greenhouse Gas Initiative (RGGI) in the Northeast, the Western Climate Initiative (WCI)/California's AB32, in western U.S., and Governor Charlie Crist's Executive Order in the State of Florida.

There is also a Voluntary Carbon market that has seen explosive growth in the U.S., where both companies and municipalities are beginning to take steps in reducing their carbon footprint in anticipation of the pending mandates, or to just become more environmentally friendly. Lauralee Martin, CFO of real-estate company Jones Lang LaSalle said managing her company's carbon footprint was a "nightmare...worse than the horrors of Sarbanes-Oxley."

A sustainable approach to business affects the bottom line in three basic ways: It decreases operational and manufacturing costs through better energy and resource management and waste reduction; it increases revenue through developing and offering new "green" products and technologies; and it increases profits by developing positive P.R. and a stronger brand. According to Consumers International and AccountAbility, 30% of US consumers would rather do business with companies that are working to reduce their contribution to global warming.