In a social, economic and environmental context in which there is continually more evidence of the effects of climate change, companies and the private sector are increasingly aware of the need to implement business strategies that are aligned with sustainability and the reduction of greenhouse gas emissions – GHG in its production processes and/or services. It is no longer just a matter of achieving the highest economic profitability or improving the corporate image, but rather it seeks to include as part of such strategies a balance between economic, social and environmental aspects (sustainability), the measurement of the carbon footprint and the adoption of measures that contribute effectively to the fight against climate change. In this sense, this essay seeks to investigate the role that companies and the private sector in general play in facing this problem and what instruments they have for this purpose.
Why is it important to articulate companies and private sector with the strategies against climate change?
In the first instance, it is important to mention that climate change has a direct impact on product and service companies in general, since it affects their infrastructure, investments and finances; however, emphasis should be placed on productive companies, since these types of companies are the ones that cause the greatest generation of GHG emissions.
According to the CDP1 report The Carbon Majors Database 2017, globally emissions are concentrated in companies belonging to the fossil fuel sector. Without considering the contributions that other sectors make to GHG emissions, this condition is a clear and forceful indication that significant modifications are required in productive companies to achieve an adequate business-climate change articulation, and to reduce not only their vulnerability, that of its clients and its suppliers, but also its contribution to the problem.
On the other hand, optimal business environmental performance has great advantages, among which are included an improvement in operating processes, reduction of pollution, improvement in corporate image, access to international financing and also, considering the notable reduction of investment costs of renewable energies during the last 10 years, which according to Isaac et al., 2021 is up to 79%, a decrease in energy costs that are required for their processes.
How do companies articulate with actions against climate change?
Carbon Footprint- CF
One of the most widespread tools today for the development of business strategies and their articulation with climate change is the determination of the carbon footprint, which is “the measure of the impact of all greenhouse effect gases produced by the activities individual, collective, eventual and products in the environment. It refers to the amount in tons or kilos of carbon dioxide equivalent of greenhouse gases, produced on a daily basis, generated from the burning of fossil fuels for the production of energy, heating and transportation, among other processes” (Schneider & Samaniego, 2010).
If this concept is transferred to a strictly business level, “CF is an indicator of the amount of greenhouse gases (GHG) generated and emitted by a company or during the life cycle of a product throughout the production chain , sometimes also including its consumption, recovery at the end of the cycle and its elimination” (Frohmann & Olmos, 2013), therefore, the measurement of the CF of a product or service seeks to quantify or carry out an inventory of GHG emissions.
Quantifying GHG emissions has the objective of not only knowing in numerical terms the emissions that a company generates, but it also implies reducing them through the implementation of actions that can range from the modification in the production processes, to the requirement to the suppliers of raw materials, supplies, compliance with international environmental and/or climatic standards. In this line, it is worth noting that the measurement of CF and the actions that each company takes regarding the results obtained and their disclosure at the public level, are voluntary.
Sustainable Development Goals – SDGs.
Another way to articulate business management with climate change and sustainability in general is through the SDGs2, which “define global sustainable development priorities and aspirations for 2030 and seek to mobilize global efforts in around a set of common objectives and goals; They make an explicit call to all companies to apply their creativity and innovation to solve the challenges of sustainable development” (GRI et al., s.f.). In accordance with the SDG Compass document prepared by the GRI and other organizations, the SDGs can be a reference to outline, direct, communicate and report their objectives and strategies and achieve benefits such as the identification of business opportunities, an improvement in value corporate sustainability and strengthening relationships with stakeholders, among others.
Other ways of articulation
In addition to the measurement of the carbon footprint and the implementation of the SDGs, there are initiatives whose adoption is also voluntary, to promote the articulation of the business sector with climate change. Some of them are briefly mentioned below.
- Science Based Targets (SBTi): It is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI) and World Wild Fund for Nature (WWF). It offers accompaniment and technical resources to help companies set viable and appropriate objectives, promotes best practices, and supports the evaluation and validation of these objectives, to increase corporate climate ambition.
- Task Force on Climate Related Financial Disclosure (TFCD): This is a working group created out of the Financial Stability Board. Its objective is to develop recommendations so that voluntary financial disclosures related to climate are made, consistent, comparable, reliable, clear, efficient and that provide useful information for decision-making to lenders, insurers, and investors.
In conclusion, companies, particularly those belonging to the productive sectors, play a leading role in the face of climate change, since many of them contribute considerably to GHG emissions and, therefore, have direct responsibility for this problem. Although the tools discussed in this document, and in general, are voluntary, aspects such as corporate image and reputation or the possibility of accessing financing based on evaluations in terms of sustainability and climate change, among other factors, increasingly encourage more for the private sector to turn towards the adoption of these tools as part of its vision and business strategy; however, it is advisable that the public or governmental sector adopt regulations that further promote this type of initiative.
In this sense, from the Secretariat of Climate Change, Sustainable Development and Innovation, of the Ministry of Environment and Sustainable Development of Argentina, the “Agreement for Climate Action” has been promoted, which is a space for public-private interaction of the National Cabinet of Climate Change (GNCC), which was launched in October 2022 and aims to recognize and strengthen the climate action of the private sector aimed at meeting the national goals established in the National Plan for Climate Change Adaptation and Mitigation ( PNAyMCC)” (MAyDS 2023). Although it is not binding, it is a first step for the future formulation of public policies that articulate private initiatives and contributions determined at the national level.
Carbon Disclosure Project. (2017). The Carbon Majors Database—CDP Carbon Majors Report 2017.
Frohmann, A., & Olmos, X. (2013). Huella de carbono, exportaciones y estrategias empresariales frente al cambio climático. CEPAL.
GRI, UN Global Compact, & WBCSD. (s. f.). Brújula de los ODS- La guía para la acción empresarial en los ODS.
Isaac, R., Mandará, H., Redes, E., & Echeverría, R. (2021). Energías Renovables en Argentina Desafíos y Oportunidades en el contexto de la transición energética global. KPMG – Cámara Argentina de Energías Renovables.
MAyDS. (2023, junio). Comenzó el plan de trabajo 2023 del acuerdo para la acción climática. https://www.argentina.gob.ar/noticias/comenzo-el-plan-de-trabajo-2023-del-acuerdo-para-la- accion-climatica-0
Schneider, H., & Samaniego, J. L. (2010). La huella del carbono en la producción, distribución y consumo de bienes y servicios. CEPAL. https://repositorio.cepal.org/bitstream/handle/11362/3753/S2009834_es.pdf