Feb 22 2008
Why Bother Tracking Greenhouse Gas Emissions?
In a free market system, the profit motive is considered to be the main reason why businesses exist. The concept is that everything a company does, now and into the future, is aimed at the ultimate goal of earning a profit. Even apparently altruistic corporate social responsibility initiatives have the ultimate goal of ensuring the company’s financial success by burnishing its image, creating loyal customers and employees, or otherwise paying off in future profits.
If that’s true, then why would companies bother tracking – or beyond that –
reporting their greenhouse gas (GHG) emissions?
There are many rational reasons not to track GHG emissions, such as:
- too many other business priorities
- no government requirement to report
- takes staff time to gather and analyze the data
- emissions estimation process is confusing
- publicly reporting emissions may make the company a target for activists
- too many different reporting agencies and protocols
- cost of membership in a GHG registry and cost of data verification, where required.
Yet, the number of companies voluntarily participating in the California Climate Action Registry (CCAR) doubled during the last year. As of 2/15/08, there are 327 members.
Clearly one of the driving forces behind this membership growth is impending regulation. In September 2006, Governor Schwarzenegger signed into law California Assembly Bill 32 (AB32), the California Global Warming Solutions Act. This act calls for a reduction by 2020 of GHG emissions to 1990 levels. Among other things, AB32 mandates reporting, with the details of “who, when and how” to be specified by the California Air Resources Board (CARB) of the state’s Environmental Protection Agency. In December 2007, CARB issued its proposed mandatory reporting regulation specifying which business segments must begin reporting in 2009.
So, the vast majority of new CCAR members were likely motivated by the belief that, sooner or later, they would have to start reporting their emissions.
Still, a handful of other companies signed up, too. We asked Gary Gero, the interim president of CCAR, why. Gary acknowledges that the main reason companies join CCAR is a “risk management strategy.” Even companies not initially required to report see regulatory compliance on the horizon. They are searching for answers and ways to move forward. They know they must understand their inventory of emissions and devise plans to deal with it. CCAR offers help, tools, education and a community of other companies facing the same challenges.
Interestingly, once CCAR members begin tracking their emissions, they start to look at the financial implications, begin to monetize their emissions and start to identify operational inefficiencies and monetize them. According to Gary, “A lot of businesses may be tentative at first, but as soon as they start tracking their emissions it’s like putting their toe in the water and finding out it’s not so bad in there.”