All right, you can stop giving Al Gore awards now. We get it: We need to reduce pollution. It's often said that what gets measured gets managed, so if we're going to cut emissions of carbon dioxide and other climate-warming gases, we need to know exactly who's emitting what. A serious effort to address climate change will require most businesses to track and publicly disclose carbon emissions.
That sound you just heard was 1,000 accountants moaning in unison. In a post-Sarbanes-Oxley world, another complex reporting requirement sounds like a royal pain in the financials.
Yet some businesses--hundreds, actually--are already tracking and reporting their emissions, voluntarily. Are they hippie do-gooders? Or have they figured something out?
Efforts are afoot to put the power of law behind disclosure. In September, a group of shareholder activists filed a formal petition with the SEC asking that carbon disclosure be required by securities law. (The EPA is for sissies; real greens go SEC.) And at least one bill floating around Congress, the National Greenhouse Gas Registry Act, would require all businesses (save small ones) to report emissions.
For now, though, the pressure to disclose is coming from investors and nonprofits. The 500-pound gorilla is the Carbon Disclosure Project (CDP), an independent nonprofit that represents institutional investors with a combined $41?trillion under management. That many zeros gets your calls returned.
Still, you'd think the thing to do would be to avoid exposing your business's soft underbelly for as long as possible. After all, as concern over climate change increases, carbon emissions are becoming tangible risks. You're revealing your vulnerability to regulatory action, shareholder protests, and bad PR. Even if there were an upside to disclosure, there's no common tracking or reporting standard to follow.
So why are so many companies doing it? In short, because it's always better to know than not to know. If a nationwide carbon market is created in the next few years, as seems likely, businesses that have been tracking and reducing emissions will be favorably positioned. If it comes to regulatory compliance, they'll have a head start. And if green continues to be "the new black," they'll have good PR fodder.
Most important, though, every business that takes a hard look at carbon emission comes to see it for what it is: gaseous evidence of inefficiency. It costs money to create carbon dioxide, so cutting emissions slashes costs. From DuPont to
As energy guru Amory Lovins is fond of saying, when we begin to look for low-hanging fruit, we soon find that fruit already litters the ground at our feet. We're just not in the habit of seeing it. Carbon disclosure will bring those inefficiencies--those opportunities--to light. Far from fighting it, the smartest businesses are embracing it with zeal. Their accountants may not be happy, but their shareholders will be.