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There are three main categories of risk:
- Natural capital – This risk threatens the natural resources or capital that many businesses rely on for raw materials (forests, fisheries, agriculture) or indirectly (real estate, tourism, retail, restaurant). For example, even if your business does not depend directly on natural capital you still need to ask about your suppliers and customers.
- Government policies – There is a risk that policies will influence the market to favour less greenhouse gas-intensive businesses, products and services.
- Customer and Public Pressure – Whether you sell business-to-business or directly to consumers, your customers increasingly prefer climate-friendly products.
In February 2005 the Kyoto Protocol became international law, signaling the first concerted step towards a global commitment addressing climate change. Under this agreement, thirty industrialized countries, including Canada, are legally bound to reduce emissions by an average of 5.2% from their 1990 levels by 2012.
In May 2006, the Canadian Environment Minister declared that the Government of Canada no longer endorses or promotes the Kyoto Protocol emission targets saying they are too ambitious. (1)
In 2007, the Province of Manitoba released Beyond Kyoto, their action plan for achieving their commitment to meeting the Kyoto target. Within this plan is a section titled Business Opportunities: Low-carbon profits. (2)
Economics has emerged as the key driver for companies that are taking action on climate change. (3) Whether you are driven to change because of the risks to your businesses bottom-line (internal) or because the government forces you to make a change (external), there are ways that climate change puts pressure on your business to reduce greenhouse gas emissions.
- reduce costs
- increase the quality of products and services
- diversify products and services
- stimulate innovation
- increase employee motivation
- personal commitment and responsibility to community
- manage risk and liability
- maintain or increase market share
- customer or consumer demands for “greener” products
- profitability and access to capital
- shareholders demanding accountability and transparency
- competitive advantage by setting the trend or following the market leader
- government regulations