Finding strategic advantage through climate change action 2011 Themes and Highlights


From risk management to strategic advantage


Corporate sustainability efforts evolve over time. This journey is often undertaken initially to address imminent compliance and risk management concerns, such as regulatory, operational or reputational risk. As companies become more sophisticated regarding the business implications of climate change, their efforts often lead to increased efficiency, effectiveness, lower costs, and improved brand image, thereby gaining the attention of senior management. Once these benefits are recognized, many companies begin to consider how sustainability can be


incorporated into the overall business strategy to protect enterprise value and generate strategic advantage.


According to the results of the questionnaire, climate change has become an operational, fiscal, and strategic imperative for the S&P 500 companies, resulting in greater senior executive attention and focus. As illustrated in Figure 2, nearly 90% (292) of S&P 500 respondents indicated board or senior management oversight, indicating that climate change is viewed as a strategic imperative. This shift has been triggered by both external and internal factors.


A growing number of companies believe sustainability offers significant first-mover advantages, such as reduced operating costs, improved brand image, and greater market responsiveness.


This trend is reflected in the number of companies reporting integration of climate change into their overall business strategies and by those companies reporting monetary and other incentives for meeting certain emissions reduction targets. As shown in Figure 3, 54% (183) reported the use of monetary incentives related to climate change and 65% (219) of respondents reported integrated strategy. This equates to a year over year increase of 85% in respondents reporting integration of climate change into their overall business strategies.


Figure 1: The Sustainability Enterprise Value Continuum: Leading companies are gaining strategic advantage by embedding climate change action throughout their overall business strategies


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Risk Management • Investor/Public Pressure • Operational Risk • Reputational Risk • Regulatory Compliance


Operational Effectiveness • Operational Efficiency • Emissions Reduction • Product Efficiency


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Business Opportunity • Brand Enhancement • Market Leading • Product Innovation


Strategic Advantage


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