United States companies' top concern in the climate change debate is reducing carbon emissions, according to PricewaterhouseCoopers' “Appetite for change” survey. Of the climate change/environmental issues expected to most impact U.S. companies over the next two to five years, U.S. survey respondents ranked reduction of carbon dioxide emissions first (16 percent), followed by new regulation, second (13 percent); energy efficiency, third (12 percent); and legislation/new laws, fourth (11 percent).
“Although federal climate change legislation is uncertain in the short term, there are plenty of government and private sector initiatives driving companies to start reducing emissions now,” says Kathy Nieland, leader of the sustainability and climate change practice of PricewaterhouseCoopers LLP. “The Obama Administration recently announced that the federal government would reduce its own carbon footprint by 28 percent by 2020. If the government were to push down that requirement through its supply chain to all government contractors and suppliers, the impact on US business would be quite significant," she adds.
Responses mixed on impact of the environmental debate on business
Most U.S. survey respondents (87 percent) are convinced that change is likely over the next few years as a result of the climate change and environmental debate, with 28 percent calling those prospective changes significant.
Although more than half the respondents (55 percent) noted that the climate change and environmental debate has had an impact on the way their organization conducts business, a substantial plurality (45 percent) disagreed, saying the discourse has had little if no impact at all.
Although many U.S. businesses have already begun to respond to climate change, a significant number appears to be awaiting additional clarity on public policy toward greenhouse gas emissions, and most businesses expect that change to come about in the relatively near term, notes Nieland.
U.S. companies support tax incentives but find current incentives insufficient
While the debate continues over more comprehensive approaches to curbing greenhouse gas emissions, there is broad-based support for tax incentives for renewable energy and energy efficiency. In fact, 88 percent of American companies surveyed said that tax incentives were effective in encouraging businesses to reduce their environmental impact. Yet two-thirds of U.S. respondents (67 percent) said that tax incentives currently in place are not sufficiently motivating to change their business behavior to obtain them.
"While it is not surprising that companies prefer more tax incentives, it is noteworthy that only three companies in ten find the current incentives sufficient to change corporate behavior," notes Matthew Haskins, a PricewaterhouseCoopers tax partner in the sustainability and climate change practice.
Although companies show a preference for incentives, for most companies current levels of tax benefits are simply an "afterthought" to activities undertaken to further the carbon strategy, Haskins notes. "However, as companies become more sophisticated about integrating tax into their carbon strategy, we expect to see more projects where tax incentives play a key role in investment decisions."
U.S. businesses looking for clarity on climate change policy
One in four U.S. respondents (23 percent) said government should have primary responsibility for leading behavioral change around climate initiatives, rather than businesses overall or their own industry. In contrast, 44 percent of respondents globally said government should have primary responsibility in this area.
A significantly higher proportion of U.S. respondents (38 percent) want business/the market to have primary responsibility for leading behavioral change, compared with only 18 percent globally.
Nevertheless, a majority (56 percent) of American respondents do not feel that government engages effectively with business to ensure its environmental policies take industry views into account. Only 17 percent of U.S. respondents said they believe the government has a clear, unambiguous policy with regard to environmental economic instruments.
Nieland notes that U.S. respondents appear to be expressing a desire for clarity. She explains, "Companies are asking, 'What behavioral changes does government want from us? And how do we know when we did enough?'"
Currently, many U.S. businesses participate in voluntary programs under which they disclose their carbon emissions, but the US business community appears to be divided on whether voluntary agreements lead businesses to reduce their environmental impact, with 50 percent citing them as not very/not at all effective and 50 percent saying they are effective.
Notes Nieland, "Voluntary disclosure alone does not necessarily provide incentives to reduce emissions nor does it give businesses a guide to whether and when emissions reductions are expected of them."
Businesses increasingly looking for climate change opportunities
More than four in 10 (44 percent) respondents said the potential cost savings from introducing energy-efficient measures was "very influential" on their organization's environmental behavior.
"US businesses that make this connection recognize the benefits of what we call triple winners. Energy-efficient measures save money, lower a company's carbon footprint and qualify for carbon credits or accelerated depreciation – all at the same time," notes Matthew Arnold, a PricewaterhouseCoopers Advisory partner in the sustainability and climate change practice.
“Appetite for change: Global business perspectives on tax and regulation for a low carbon economy” is a comprehensive survey that examines the international business community's attitude toward environmental regulation, legislation and taxes. In almost 700 interviews, conducted in 15 countries, executives shared their perspectives on the impact of climate change, government's role in protecting the environment, preferred environmental policy tools, and ingredients necessary for a global climate change deal. A copy of the full report can be found at www.pwc.com/appetiteforchange.
