Supply Chain

Monetary Savings on Carbon-Emissions Cuts Sank in 2013

Regulatory uncertainty and diminishing returns on old programs were to blame.
David McCannJanuary 23, 2014

If you get turned on by both corporate profits and saving the environment, here is some good news: The percentage of companies that reaped savings from greenhouse gas emissions-reduction programs took a solid forward step in 2013.

But curb your enthusiasm. The average amount of savings, among companies that saved, crashed hard.

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These findings come from a new report, “Collaborative Action on Climate Change,” by Accenture and CDP (which originally stood for Carbon Disclosure Project), a U.K.-based not-for-profit that helps companies measure, disclose, manage and share environmental information.

A coal power plant in Germany spews greenhouse gas.

A coal power plant in Germany spews greenhouse gas.

Companies responding to the worldwide, CDP/Accenture survey included 64 members of CDP’s supply-chain program and 2,804 of those members’ suppliers. The proportion of respondents reporting monetary savings from carbon emission programs crept up by 3.4 percentage points compared with the 2012 survey, reaching 32.5 percent. But among those that saved money, the average amount they saved was down a whopping 44 percent.

“We’re seeing fewer large, big-bang emissions-reduction projects and more short-term investments focused on a quicker but smaller payback,” says Gary Hanifan, Accenture’s managing director of global sustainable supply chain services.

The overriding reason for the pullback is a lack of clarity on how new, worldwide environmental regulatory efforts will play out. “We’ve gotten plenty of feedback from almost every sector that that’s the top reason,” Hanifan says. “Companies are unsure whether they’re going to be actually investing in something that can differentiate them or in something that’s going to be a ‘me-too,’ regulatory requirement.”

Hanifan also suggests that the current trend of smaller-budget projects is a trough that will fade away as the regulatory uncertainty eases. Even so, the next generation of large projects may be more difficult to execute than the last one and take longer to generate significant savings. “It may be that a lot of the bigger but easier-to-do projects with low-hanging fruit are done and that there will be a longer-term payback on the costs of new programs that are harder to do,” Hanifan says.

At the same time, he adds, companies may be misdirecting their emissions-reduction investments. For example, in the automotive and components industry, just 1 percent of investment was directed at behavioral-change projects, like providing education and training on sustainability. But such efforts generated 19 percent of CO2 savings.

Meanwhile, transportation-related projects — aimed at either reducing the environmental footprint of vehicle fleets or influencing employee use of transportation — accounted for 10 percent of investment but delivered just 2 percent of emissions reductions. “Companies in that sector should take that latter investment and put it into behavioral-change projects,” Hanifan says.

(Click here for a video that gives some perspective on the annual volume of carbon emissions in a single large city.)

Photo: Wikimedia Commons