Survey shows business contradiction on climate change

By staff reporter

- Last updated on GMT

Related tags Climate change Sustainability Industry

A recent survey of executive opinions on climate change found that
the majority regard it as a strategically important issue - but
more than a third said it is seldom or never considered when
actually developing strategy.

The survey, conducted by the consultancy in December 2007, included 2192 executives from a range of industries around the world.

Forty per cent were split between manufacturing and finance, with others hailing from energy, business service and high tech industries.

Although the findings, published in The McKinsey Quarterly , do not break out food manufacturing from industry at large, the figures give interesting overall context for the measures that are being taken by some multinationals in the sector.

The McKinsey consultants who carried out the survey found that, overall, 60 per cent of executives regarded climate change as strategically important, particularly when it comes to product development, investment planning, and brand management.

Almost half added that it is important for purchasing and supply chain management.

In general, they were optimistic about the business prospects of addressing climate change, with 61 per cent saying that good management of the issue could help boost profits.

However according to authors Per-Anders Enkvist and Helga Vanthournout, there is a big gap between opinion and corporate action on climate change.

"Fully 44 per cent of CEOs…note that climate change isn't a significant item on their agendas," they wrote.

"Furthermore, many respondents report their companies consider climate change only occasionally at best when managing corporate reputation and brands, developing new products, or even managing environmental issues."

Interestingly, 82 per cent of respondents said they expect some form of regulation on climate change in their country in the next five years.

Six out of ten said they expect this to be in the form of technical standards, while nearly half expect a carbon cap-and-trade system or a carbon tax.

"Regardless of the type of regulation respondents anticipate, however, they broadly agree that the effects of any regulation on profits are more likely to be negative than positive, although even more - some 40 per cent - expect there to be no material effect," wrote the authors In manufacturing, however, as well as energy, executives said they expect regulation of any kind to have a negative effect on profits.

The European Commission is presently developing two policies on environment-related issues for manufacturing - the Sustainable Consumption and Production (SCP) policy, which deals with environmental impact and Sustainable Industrial Policy (SIP), on resource use.

The Confederation of the Food and Drink Industry said at the end of last year that to these policies should take account of economic conditions when setting environmental and production sustainability targets for industry.

"The CIAA considers it vital for the success of SCP that all relevant stakeholders be fully involved in the process, including farmers, manufacturers, the transport sector, retailers, consumers, waste managers and others," the organisation said.

"Each actor along the chain has to take responsibility for his direct sphere of influence and should actively cooperate with other life-cycle partner to address sustainability issues affecting the entire food chain."

The CIAA also said it does not support discrimination between 'good' and 'bad' products on purely environmental grounds.

"Consumers base their purchasing decisions on a wide range of key parameter, including health, nutritional composition, convenience, fitness, life-style and cultural affiliation," the CIAA argues.

"Instead of discriminating against certain products and reducing consumer choice, SCP should be built on the principle of continuous improvement, based on innovation and the proliferation of best practice and technology."

The CIAA also supports adding information on all relevant product characteristics, including their environmental performance.

But such consumer information should be "science-based, meaningful and verifiable, understandable and not misleading and contributes to improved environmental conditions in a cost-efficient manner".

"Voluntary stakeholder initiatives, private public partnerships, self-regulation, or co-regulation should be considered on a case-by-case basis in support of both SCP and better regulation and competitiveness," the CIAA stated.

The SCP should not hamper EU industry's capacity to compete on world markets, the CIAA stated.

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