3 min read • Sustainability

Arthur D. Little: Climate change creating competitive opportunities now

<p>New report warns that companies must rethink their business models to survive an uncertain future</p>

A new report by Arthur D. Little urges businesses across all sectors to consider the cost of carbon when planning for long-term growth, or risk losing out to sustainability-savvy competitors and new emerging market players.  In
"Ensuring survival: Business models in a low carbon world," the consultancy's Energy and Sustainability practices argue that in 2009, the carbon agenda will leave no business untouched, through multiple direct and indirect routes - from brand recognition, to the cost-base, to investors' perceptions of value.
Beginning with the assertion that "carbon is an unstoppable steamroller," the report identifies the drivers that will push a steady increase in the price of carbon, and explains why even low-emitting industries must identify the risks and opportunities presented by a low carbon economy.
"Whether in emerging or developed markets, companies with innovative solutions to thrive in a low carbon economy will have a competitive edge; this applies both domestically and as they expand globally," reflects Richard Clarke, Director of Arthur D. Little's Global Sustainability Practice. "Conversely, companies that do not take this on board will lose their competitiveness, as the cost of carbon drives up operating and raw material costs, and leads to supply-chain inefficiency."
As the investment community re-assesses the sources of risk and reward based on anticipated environmental regulation, carbon exposure is emerging as a key risk indicator. Leaders charged with safeguarding and growing company value must explicitly communicate how carbon costs factor into their investments, business models, and growth strategies.
The report urges CEOs to rethink what corporate sustainability means to their future business models and:

  • Separate public policy rhetoric from genuine developments;
  • Figure out how to exploit or mitigate the impact of a rising cost of carbon;
  • Understand how investors will factor in both direct and indirect impacts from climate change;
  • Consider implications of carbon to technology, marketing, and supply chain strategies, among others.

"The narrow view of a sustainable business - one that simply doesn't damage the environment - has been losing currency for years," concludes Peter Hughes, report co-author and a Director of Arthur D. Little's Global Energy Practice.  "In a low carbon world, a sustainable business is one that keeps growing despite increasingly intertwined threats over natural resources, shifting centres of political power, and long-term societal changes.  No business can reasonably put off considering these material implications any longer."
The Ensuring Survival report is now available for download at
http://www.adl.com/ensuringsurvival

3 min read • Sustainability

Arthur D. Little: Climate change creating competitive opportunities now

<p>New report warns that companies must rethink their business models to survive an uncertain future</p>

DATE

October 2011

A new report by Arthur D. Little urges businesses across all sectors to consider the cost of carbon when planning for long-term growth, or risk losing out to sustainability-savvy competitors and new emerging market players.  In
"Ensuring survival: Business models in a low carbon world," the consultancy's Energy and Sustainability practices argue that in 2009, the carbon agenda will leave no business untouched, through multiple direct and indirect routes - from brand recognition, to the cost-base, to investors' perceptions of value.
Beginning with the assertion that "carbon is an unstoppable steamroller," the report identifies the drivers that will push a steady increase in the price of carbon, and explains why even low-emitting industries must identify the risks and opportunities presented by a low carbon economy.
"Whether in emerging or developed markets, companies with innovative solutions to thrive in a low carbon economy will have a competitive edge; this applies both domestically and as they expand globally," reflects Richard Clarke, Director of Arthur D. Little's Global Sustainability Practice. "Conversely, companies that do not take this on board will lose their competitiveness, as the cost of carbon drives up operating and raw material costs, and leads to supply-chain inefficiency."
As the investment community re-assesses the sources of risk and reward based on anticipated environmental regulation, carbon exposure is emerging as a key risk indicator. Leaders charged with safeguarding and growing company value must explicitly communicate how carbon costs factor into their investments, business models, and growth strategies.
The report urges CEOs to rethink what corporate sustainability means to their future business models and:

  • Separate public policy rhetoric from genuine developments;
  • Figure out how to exploit or mitigate the impact of a rising cost of carbon;
  • Understand how investors will factor in both direct and indirect impacts from climate change;
  • Consider implications of carbon to technology, marketing, and supply chain strategies, among others.

"The narrow view of a sustainable business - one that simply doesn't damage the environment - has been losing currency for years," concludes Peter Hughes, report co-author and a Director of Arthur D. Little's Global Energy Practice.  "In a low carbon world, a sustainable business is one that keeps growing despite increasingly intertwined threats over natural resources, shifting centres of political power, and long-term societal changes.  No business can reasonably put off considering these material implications any longer."
The Ensuring Survival report is now available for download at
http://www.adl.com/ensuringsurvival