Carbon Action

Carbon Action is demonstrating how investment in energy efficiency and carbon reduction can be profitable. Through sending an annual “ask” to heavy-emitting companies, Carbon Action is motivating key players to come up with new ways of tackling and mitigating climate change by showing how this increases the bottom line. The initiative is helping companies develop more resilient, sustainable, and low-carbon business models.

Fast facts:

254 institutional investors with $19 trillion in assets agreed to participate in 2013;
Reported reductions in greenhouse gas emissions totaling 169 million metric tonnes of carbon dioxide equivalent;

The problem

Companies largely believe that they have to make a choice between emission reductions or higher financial returns. But in the face of rising energy costs, reducing a company’s emissions can actually result in higher profits. Efficient management of energy therefore offers a win-win: lower carbon emissions and higher returns for shareholders. Although companies that set targets are far more likely to achieve emission reductions, it’s often the case that they lack information and guidance on how emission reduction targets can drive internal investment.

The solution

Carbon Action initiates this discussion with institutional investors, explaining the clear environmental and economic benefits of emission reduction actions. The annual letter and email to the CEOs and boards of the world’s highest emitting companies include asking them to: make year-on-year emission reductions; disclose emission reduction targets to both their shareholders and the general public; and invest in carbon reduction and energy-efficiency projects that have a positive investment return. For the 2013 ask, the tremendously high response rate of 80% demonstrates that companies are getting the message.

Helping the planet

The Carbon Action initiative delivers reduced greenhouse gas emissions. Due to the transformational nature of the initiative, many of the carbon reduction and energy-efficiency projects go beyond incremental change and contribute to long-term sustainability.

Helping people

As businesses implement emission reductions, this trickles downs to the local communities where they operate. For example, reducing pollution makes for healthier living environments, and less greenhouse gas emissions prevents global warming as well as the associated risks for people.

Scaling up

Climate Action has already grown its business model and extended its impact on companies: support has steadily grown from just 35 investors in 2011 to 254 in 2014. As part of a strategic plan, the Carbon Action initiative will expand even further over years to come. Carbon Action also publishes results showcasing the latest data and insights on how companies are mitigating climate change, generating potential for the project to further spread. Similarly, findings and results from the Carbon Action initiative have been widely reported in the media. Investors can also replicate the activity by encouraging companies to do more in terms of energy efficiency and carbon reduction in their own interactions.