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Survey Says: US Businesses Conflicted about Adopting Climate Change Practices

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RISMEDIA, Sept. 27, 2007-While U.S. businesses are concerned about compliance costs related to climate change legislation, those same companies still believe that the federal government should be doing more to combat global warming, according to a new survey sponsored by leading law firm Pillsbury Winthrop Shaw Pittman.

Though 60% of survey respondents said they worry about compliance costs related to climate change rules, 56% of private company respondents (and 66% of public ones) think the federal government should do more to help reduce or limit global warming, including the development and use of alternative and renewable energy.

“This reflects the dilemma that Congress and Americans as a whole face,” said San Francisco partner Michael Steel, co-head of Pillsbury’s Climate Change and Sustainability practice. “Most people would like to see greenhouse gas (GHG) emissions reduced to help curb the effects of climate change, but serious questions remain about how best to do it and pay for it.”

Steel said that these questions may help explain why some companies may be struggling with what type of green practices to employ, therefore delaying adoption, even as they are increasingly aware of environmental issues, including global warming.

Fifty-seven percent of those surveyed say that in the past 12-24 months they have switched to using or selling more recycled materials or products, and nearly 49% have reduced their use of electricity. Another 48% participate in programs to properly dispose of computers and other technologies that leak radiation and other contaminants.

“All of these practices do contribute positively to the environment, but ideas will be needed to significantly reduce greenhouse gases, such as the ideas coming out of states such as California, New York, Massachusetts and others,” said Steel.

Just 23% of those surveyed have upgraded or converted to cleaner technologies or equipment, while 21% have reduced their use of fossil fuels. “This may simply reflect that it often takes time for businesses to recognize that a train is coming down the tracks right at them. But with more than 50 climate change bills recently introduced in Congress, companies may need to get onto the express track much faster,” said Steel.

One solution may be for companies to conduct an energy audit of usage and efficiency as such audits usually identify some low hanging fruit and can reduce electricity costs. Companies, particularly those that do business on a national or multinational level, should consider conducting a comprehensive audit to determine if they are in compliance with federal, state or relevant laws of foreign countries, suggests Washington D.C. partner Sheila Harvey, co- head of Pillsbury’s Climate Change and Sustainability practice.

“Only 13.3 percent of survey respondents have conducted such an audit, which provides companies not only with an analysis of their compliance, but also offers recommendations on what appropriate technologies and other green practices they can adopt to make compliance easier,” said Harvey.

“The good news is that of those companies that have adopted one or more green practices, 64 percent say the switch has not raised operating costs, and one quarter report that their costs of operations have actually been reduced, which may be an indicator that many companies can adopt greener business methods without affecting profitability.”

The survey was conducted by the Research and Analysis Center of the U.S. Chamber of Commerce. Nearly 600 American businesses participated in the survey, which is believed to be the first to assess the impact of climate change issues across all industries and U.S. company demographics today, gathering responses from small family-owned businesses, large public multinationals and every size company in between.

Harvey added that what surprised her most about the survey was how closely the responses from large multinationals matched those of family-owned businesses.

“For instance, 28 percent of public companies responding to the survey would prefer one federal law governing climate change rules while 22 percent favor individual state laws. Among the private companies, 31 percent would prefer one federal law and 19 percent individual state ones. We actually expected that public companies would favor a federal law over individual state rules because it generally costs far more to comply with numerous differing rules than a set of consistent laws and regulations,” said Harvey.

As for recent proposals around carbon trading, both public and private companies surveyed expressed disinterest. Just two percent of those surveyed have invested in carbon credits, and 25% of the respondents, mostly smaller business owners, were not familiar with any carbon credit program, which suggests far more education about carbon trading may be warranted for it to succeed as a viable alternative for emissions-heavy companies.

However, when it came to new opportunities that climate change issues may offer, 35% of those surveyed responded favorably.

“The market is clearly open to a vast range of climate change opportunities. A recent report issued by The McKinsey Quarterly noted that renewables account for more than 30 percent of power generation investments globally,” said Harvey. She added that a March 2007 report issued by CleanEdge stated that VC investors poured more than $2.4 billion into clean energy technologies in 2006, nearly tripling the amount of investment over the previous year.

Pillsbury commissioned the survey in honor of the one-year anniversary of its Climate Change and Sustainability practice, which takes a multidisciplinary approach to climate change issues, drawing on lawyers from Pillsbury’s energy, environmental regulation, litigation, public policy, project finance and corporate practices. As pressure to curb GHG emissions increases around the world, companies are concentrating on their sustainability policies and grappling with how to manage their own GHG emissions and related litigation risks. The practice also helps companies identify and secure financing for new opportunities such as alternative power projects or biofuel developments.

Pillsbury plans to repeat the survey periodically to track the progress U.S. businesses are making.

For more information, visit http://www.pillsburylaw.com/climatechange/survey07.

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