Climate Change Strategy: The Business Logic behind Voluntary Greenhouse Gas Reductions

Abstract

To date, the United States has declined to ratify the Kyoto Treaty to reduce greenhouse gas emissions. However, many companies are taking advantage of the lack of a mandatory U.S. GHG emission reduction program to set targets at their own pace and in ways that complement their own strategic objectives. Currently, as many as sixty corporations, with net revenues of roughly $1.5 trillion, have set voluntary reduction targets. Why are they doing this? Many of these companies are agnostic about the science of climate change or the social responsibility of protecting the global climate. The reasons that they are making these emission reductions are decidedly strategic. They are searching for ways to be prepared for the long term should GHG emission reductions become mandatory, while at the same time attempting to reap near-term economic and strategic benefits should new regulations not emerge.