Wednesday, September 05, 2007

Harvard Business Review asks how reporting helps manage climate risk

To round out a threesome of unprecedented media interest in GRI recently (see previous two posts this week) the Harvard Business Review was in touch to talk about what everyone is talking about - climate change.

The editor wondered how reporting could play a role in helping companies strategically manage risks and opportunities associated with climate change. Here were some perspectives I shared.

Lagging indicators: The starting point for navigating the risks of climate change is to first understand what impact the company’s operations, products and services are having on the environment. By knowing their own ‘carbon footprint’ with certainty, companies can start to take action to reduce their impacts. Benefits of measuring and reporting include realizing cost savings due to energy efficiency, to remain one step ahead of regulation, and to protect brand value by showing accountability and responsibility for environmental responsibilities.

Real time indicators: The climate change issue is so prominent that companies cannot afford to seem like they are not actively looking at their own impacts and helping to shape a more positive future. Benefits of reporting on these indicators include earning and maintaining a license to operate in the public domain, demonstrating a leadership position on one of the most pertinent issues of our time, and earning customers and clients by differentiating the company in the marketplace as responsible on this issue.

Leading indicators: Scientists tell us that climate change will alter our climatic patterns and our physical landscape. Reporting on forward looking indicators lets a company tell its story about how it is going to adapt and innovate to mitigate risk that climate change could cause – such as emerging risks to places where the company has operations, or risks to resources the company is dependant on (e.g., forests or agriculture), and risks associated with rising energy costs. Leading indicators also help the company show how it will capitalize on new market opportunities afforded by climate change – such as introducing new products and services that do not rely on fossil fuels, or engaging in carbon trading.

Search GRI indicators here.

Honesty note:
The Economist and Business Week contacted me this week, but I have to admit that the editor from Harvard Business Review contacted me about three months ago to talk about sustainability reporting and climate change. Since I am on a roll blogging big media interviews this week I couldn't resist adding it to the list. Look for the HBR interview in this October's issue.

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