Canadian executives planning to spend green: Ernst & Young

Despite economic conditions and regulatory uncertainty, businesses are investing in climate change

TORONTO, May 26 /CNW/ - Eighty-two percent of Canadian executives believe that a response to climate change is imperative today and plan immediate increases on spending for climate change initiatives, according to the new report Action amid uncertainty: the business response to climate change, based on a survey from Ernst & Young.

"The willingness of corporations to invest in climate change initiatives despite the uncertain regulatory environment is extremely encouraging," says Melanie Steiner, Americas Market Leader for Ernst & Young's Climate Change and Sustainability Services practice. "Corporate leaders understand that there are a range of market drivers, such as evolving customer demands and equity analysts' growing interest in climate change performance, that are motivating action."

Steiner notes that more than 90% of executives surveyed globally indicate that climate change governance rests with C-suite executives or board members. This reflects the growing strategic importance of climate change for many organizations who understand that climate change is not just a risk area but also an opportunity to reduce costs, increase revenue and gain competitive advantage.

Canadian participants in the survey agree, with 71% of Canadian respondents indicating that their company already has an enterprise-wide climate change program targeting key business drivers, and another 11% planning for implementation in the next 12 months.

Canadian respondents also compare impressively with their global counterparts; while globally, 70% of those surveyed expect their companies' spending on climate change initiatives to increase over the next two years, Canadians ranked 12% higher in this regard. And the investment will be significant, with nearly half of Canadian respondents planning to spend between 0.5% to more than 5% of their revenue on climate change initiatives. For a US$1 billion company, this represents an anticipated spend of US$5 million to US$50 million annually.

Canadian companies are taking a comprehensive approach, expanding their climate change efforts beyond the enterprise, through their entire supply chain. Forty-three percent of respondents say they are working directly with their suppliers to help them reduce their carbon footprint, while another 29% say they have begun such discussions.

Globally, the survey findings are predominantly consistent in all participating countries, with some additional trends emerging across all countries surveyed:

    
    -   Energy efficiency is a top global priority, with 82% of respondents
        planning to invest in energy efficiency initiatives over the next 12
        months.

    -   Customer demand is driving investment. Changing customer demands are
        driving corporate climate change activities according to 89% of
        respondents. As a result, 65% percent of executives intend to focus
        their climate change investments on new products and services to
        respond to changing customer demands.

    -   Equity analysts are incorporating climate change initiatives into
        company valuations. Forty-three percent of the senior executives
        surveyed believe that equity analysts currently include climate
        change-related factors in company valuations.

    -   Climate change is generating new revenue opportunities, such as
        developing more efficient products, building a portfolio of carbon
        assets, investing in clean development mechanism projects, clean
        technologies and innovative IT solutions.

    -   Government policies strongly influence climate change strategies.
        Ninety-four percent of global respondents see national policies as
        important or very important in shaping their climate change
        strategies, with 81% recognizing the importance of global or
        international policies.
    

The report is based on a survey of 300 global corporate executives across 16 countries. Ernst & Young commissioned the survey to provide a status update on corporate responses to climate change issues in 2010, the half-way point in the first commitment period of the Kyoto Protocol.

About Ernst & Young

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For further information: Brooke Morris, [email protected], [phone]; Marie-Ève Graniero, [email protected], [phone]