Despite the media hype and international focus on the United Nations Climate Change Conference in Copenhagen, retailers can set aside concerns about immediately changing sustainability programs to respond to the summit’s outcome. With nearly 190 countries participating, it was not surprising the group could not produce a consensus for concrete action. Consequently, retailers should keep their eye on what will be mandated closer to home.
“Keep your focus on the Environmental Protection Agency (EPA) and the House and Senate bills,” suggests Dave Stangis, vice president of corporate social responsibility and sustainability for Campbell Soup Company.
Now, this is practical advice.
In 2007, the Supreme Court ruled greenhouse gas qualifies as a pollutant under the Clean Air Act. This gives the EPA the ability to take regulatory action, with or without congressional approval. Given the Obama administration’s strong stance on greenhouse emissions in Copenhagen, EPA action is always a possibility.
The ability to trade emissions credits and give industry incentives to invest in energy efficiency and new technology may just be the best way to incent business and reduce greenhouse gases as opposed to developing and enforcing new EPA regulations. But that means Congress must agree on what this legislation should look like and move quickly.
This year, domestic legislation will tend to focus on the small number of highest emitting sources, especially utilities, according to Ryan Schuchard, BSR’s manager of research and innovation.
“Currently, the Clean Energy Jobs and American Power Act/ S. 1733/ Kerry-Boxer covers large stationary sources emitting greater than 25,000 tons/GHG/year, producers and importers of petroleum fuels, distributors of natural gas, producers of hydrofluorocarbon gases, and other large sources,” Schuchard said.
If this legislation is viewed in conjunction with EPA and state initiatives, there is the likelihood that upward pressure on costs would occur, especially when the entire supply chain is viewed and takes into account a retailer’s purchase of electricity, the vendor’s energy use, and even what customers spend to use the energy-consuming products purchased at a store.
Although this legislation does not directly affect retailers, it, along with other policies, could be affected at the national trade level. Consequently, there could be both risks and opportunities in this value chain as well, Schuchard added.
He anticipates a Senate vote by Easter. If a federal bill isn’t passed, the EPA will be more likely to take action.
In the interim, business is not sitting idly. Many companies recognize climate change as an important component in their corporate responsibility platform. In conjunction with the Copenhagen conference, organizations, such as Nike, Dow Chemical, Levi Strauss & Co., Eileen Fisher and Ben & Jerry’s, wrote to the president and urged his leadership to secure a robust international agreement. They went on to state that U.S. businesses are already doing their part by “creating innovative technologies and reducing their carbon footprint” as well as “implementing complementary efficiency and renewable energy measures.”
Wal-Mart continues to focus on its sustainability commitment and, Campbell Soup monitors its greenhouse gas emissions throughout the supply chain, including supplier performance, manufacturing and distribution.
Those organizations taking a proactive stance on greenhouse emissions realize that getting ahead of the legislation places them in a leadership role to help frame regulation, enhance their reputation as a good corporate citizen and impress investors. In fact, smart investors recognize the liabilities and the associated fines and penalties linked to climate destabilization and will be carefully monitoring a company’s position on this.
Investors aren’t the only ones watching. Retailers have many stakeholders and can be assured there are non-governmental watchdogs eyeing an organization’s rhetoric and policies to find vulnerabilities. Customers are speaking out and, at times, leveraging social media to make their environmental concerns about a company known.
Of course, one can’t overlook the reduction in greenhouse gas that occurs when energy use is reduced. And since using less energy also means reducing expenses, there is strong motivation for business to improve its performance in this area of operation.
Retailers with their own fleets can turn to truck manufacturers and businesses specializing in transportation to see these groups recognize both the business case and the goodwill generated by reducing fuel consumption. Volvo, for example, has joined the U.S. Environmental Protection Agency’s Climate Leaders Program, pledging to reduce emissions of greenhouse gases. They have also pledged to build CO2-neutral factories.
The EPA’s SmartWay initiative certifies tractors and trailers outfitted at point of sale with equipment that significantly reduces fuel use and emissions. SmartWay affiliation earns a business the ability to label its fleet as being progressive and committed to the environment through the reduction of carbon dioxide and nitrogen oxide emissions.
John Smith, president and chief executive officer of CRST, International, a major transportation and logistics company that participates in SmartWay, noted such programs are important because of the sustainability component and public commitment to the environment. However, he also emphasized the strong business case for fleets to improve fuel efficiency, which includes significantly decreasing truck idling.
“Fuel conservation saves money. This is very important in today’s environment, when we are all looking to reduce expenses,” said Smith.
He added that CRST and others in the trucking industry have been closely monitoring cap and trade policies and will continue to do so because “if you have to pay a tax, it impacts the cost of doing business.”
So whether you have your own fleet or outsource this component of your business, you must be cognizant of the legislation and regulations that could impact your operation directly or indirectly.
Copenhagen may have grabbed significant media attention and created much social media discussion. However, the best advice for retailers is to focus on domestic legislation and the EPA to see how legislative and regulatory changes could impact costs and operation.