In this installment of the globalEDGE Mega Trends in Business series, we take a look at how global businesses are responding to climate change. Day by day, governments the world over are increasing collaborative efforts against climate change by solidifying various international deals and agreements. With this, regulatory pressure is mounting on multinational companies to ensure that their practices meet environmentally-friendly standards. Several firms are answering the call and taking active stands against the threat of climate change, framing it as a business issue as well as an environmental one. Some corporations are forming coalitions across countries to reach a common consensus on necessary action. Others are shifting their business and investment practices in order to adapt to government legislation. Whatever the process, it is clear that climate change will be an unavoidable factor in future global business practices.
One major effort was led by the Financial Stability Board (FSB), an international organization that helps oversee the global financial system. The organization is chaired by Mark Carney, current governor of the Bank of England. On December 14, the FSB met with the goal of making climate-related disclosures a mandatory part of corporate financial filings. With former New York City mayor Michael Bloomberg at the helm, the G20-mandated FSB panel published a report called "Recommendations of the Task Force on Climate-relate Financial Dislosures". The report sets specific outlines for making these disclosures an established corporate practice in 2017. Bloomberg has been an ardent activist on climate change for years, having previously co-founded a climate research organization called the Risky Business Project. This institute recently released a report titled "From Risk to Return: Investing in a Clean Energy" that stresses the need for drastic reductions in greenhouse gas emissions. The paper also highlights the benefits of business investment in clean power: new jobs, savings on the expensive costs of fossil fuels, and growth in the global utility and transportation sectors.
While such international coalitions will become increasingly prolific, steps to battle climate damage are being taken at the national level as well. Sweden included two tax provisions in their 2017 budget. One will cut the VAT rate charged on repairs for small goods like bicycles and clothes, and the other will offer a tax refund to citizens who choose to get repairs on home appliances such as dishwashers and stoves. The goal of these cuts is to encourage people to be less wasteful with their use of everyday items and spur long-term sustainable consumption. The government of Ontario, Canada is developing an app to automatically transfer emissions and performance data from citizen vehicles directly to the government. The data would then be used to reward drivers who significantly reduce their amounts of emissions. Ontario is also adding a tax of 4.3 cents per litre of gasoline. Meanwhile, China's government once again promised to aggressively combat their greenhouse emissions. According to Matthew Kuhn, China's desire to fight climate change may stem from its desires to deplete air pollution, involve itself in export markets for green technology, and increase its legitimacy in the world forum.
2017 will set a firm stage for international efforts to combat climate change. With these efforts, world governments are attempting to prove to their corporations that fighting climate change is not only environmentally-friendly, but financially and economically beneficial. The investment in the fight against climate change will undoubtedly be a prominent business trend in the future.