More companies worldwide are stepping up their environmental efforts, but the impact of their operations on the environment is also growing, says a new report on the state of green businesses.
The new 2013 “State of Green Business” report released last week by the GreenBiz Group finds that despite the increasing number of companies engaging in sustainability initiatives, progress has been hindered due to factors such as inefficiency in business operations and erratic weather.
Chairman and executive director of GreenBiz Group, Joel Makower, the report’s lead author said that this is the first time aggregated reporting data has been done for such a large collection of sustainability metrics.
The 84-page report, which was published in association with Trucost Plc. of London, tracked more than 30 metrics from greenhouse gas emissions to environmental research and development, to assess whether businesses worldwide are making progress in addressing global environmental concerns.
It measured the environmental efforts and impacts of 500 companies in the United States and more than 1,600 of their global counterparts.
The financial costs to the environment caused by the companies covered in the study exceeded $1 trillion in 2011.
The 2011 amounts were derived from companies’ individual and supply chain impacts, including carbon emissions, water consumption and waste.
The report said that erratic weather emerged as a major sustainability risk for many companies in 2012.
At the top of the list was Hurricane Sandy, which ravaged the US East Coast in October. Sandy shined a light on how well companies, cities and communities in one of the world’s richest countries were prepared to cope with an anticipated rise in turbulent, even violent weather, which is most likely linked to a changing climate.
The design and resilience of everything from roads and traffic lights to gas stations and hospitals came under scrutiny, according to the report.
The cost to business, in terms of disruption, relocating and rebuilding, was in the tens of billions of dollars.
Other weather-induced incidents, such as wildfires, typhoons, floods and droughts also took a toll. Wildfires consumed close to 10 million acres across the US mainland. In the Philippines, more than 300,000 people lost their homes when Typhoon Bopha struck in December.
Fifty major wildfires burned in central and southern Chile caused thousands to evacuate and leaving millions of dollars in infrastructure damages. A severe drought impacted more than 1,000 towns in Brazil, leading to “water wars” and massive livestock deaths.
Europe suffered its worst cold snap in a quarter century, killing more than 650 people, with the majority from Russia, Ukraine, and Poland. Floodings in southwestern Queensland and northern New South Wales in Australia led to the isolation of entire towns and the abandonment of thousands of homes.
Almost five million people were evacuated in China due to heavy rain and flooding, resulting in losses of $2 billion.
The economic toll from such events is growing, say experts. In the US, the National Oceanic and Atmospheric Administration calculated 11 extreme weather and climate events that reached the billion-dollar threshold in losses during 2012.
While that is down from 14 such events in 2011, the economic losses grew, from $60 billion in 2011 to $100 billion from Sandy alone. That makes 2012 the second costliest in 30 years.
Businesses, as part of their risk mitigation strategies, are just beginning to think about climate change and resource constraints like other business risks. They are starting to deploy strategies such as enterprise risk management, business continuity planning and scenario planning, the report stated.
“The cost of protecting natural capital creates strategic opportunities for businesses that can optimize resource use through supply chains and deliver innovative products and services. Applying a financial value to natural capital impacts provides business context and will spur progress through increased engagement,” Richard Mattison, CEO of Trucost Plc, said in a statement.
The report noted that there were a few areas of encouragement in the sustainability efforts of companies.
For instance, it noted that energy is being used more efficiently in companies based in the US and in other countries. A growing number of companies have also introduced paper recycling and waste water recycling.
“ While green power is still a minute slice of the total electricity pie around the world, it has made impressive strides over the past five years. Looking ahead, the International Energy Agency sees renewables’ fastest growth (not including hydropower) in onshore wind, bioenergy and solar photovoltaics, predicting a 14 percent growth for those technologies in each of the next five years,” the report said.
Click here to read the State of Green Business 2013.
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