Business Risks and Opportunities in a Carbon Surge Economy

Business now operates within a carbon surge economy: Carbon surge -- rapidly rising concentrations of atmospheric greenhouse gases --  is rapidly raising the risks and cost of doing business. Extreme weather tied to the carbon surge is reducing business revenues by disrupting customer access to stores and websites. Increasing evidence of climate change tied to the carbon surge is pushing consumers, especially the millennial generation, to question what they buy and who they buy from.

This consumer shift is threatening utility revenues while growing the sales of smart, energy efficient technologies. The net result is the emergence of an economy defined and shaped by carbon surge.

Carbon surge evidence

The World Meteorological Organization’s latest report finds that a carbon surge in climate-changing emissions has pushed atmospheric CO2 concentration to 142 percent of the pre-industrial era, with methane and nitrous oxide levels at 253 percent and 121 percent of pre-industrial levels. The ocean’s ability to absorb greenhouse gases may have reached its limits -- with ocean acidification now at levels unseen for over 300 million years.

Carbon surge’s threat to business costs

A carbon surge economy is a costlier place to do business. Examples of how carbon surge and the inceased incidence of extreme weather are increasing business costs include:

• Rising electricity and fossil fuel costs tied to increased regulation of climate changing pollution;


• Increased commodity costs, plus increased price volatility, as extreme weather events disrupt or destroy supplies;


• Increased property insurance tied to the increase in extreme weather damage claims;


• Lost productivity due to electrical service disruption;


• Lost productivity due to storm and weather related worker attendance disruptions.

Carbon surge economy reshaping management best practices

A carbon surge economy has become a business management reality. The carbon surge is reshaping how a business manages risks and costs. For example, a recent study by Business Forward found that a single hour of extreme weather disruption at an automobile assembly plant costs $1,250,000. This scale of cost is a principal driver in the auto industry's increased focus on sustainable best practices, lean manufacturing and zero waste/emissions technologies.

Businesses around the world, including Apple, Dupont and Walmart, are developing new business best practices that address the risks and costs created by carbon surge. These businesses are pioneering the development of green business supply chains to reduce costs tied to extreme weather. Proven lean manufacturing techniques are being applied across industries to re-engineer factories and offices. Their experiences are that zero waste and zero net emissions investments not only reduce environmental impacts but also costs.

Companies are also beginning to add the cost of carbon surge into their financial decisions: Today at least 150 worldwide companies, including ExxonMobil, Google and Microsoft, use an assumed carbon tax in their planning and capital assessment processes.

Winning business in a carbon surge economy

The news is good for those businesses that can develop carbon surge solutions. Pioneering technologies -- ranging from electric cars to smart thermostats to onsite solar systems -- are gaining economies of scale that are enabling price-competitive alternatives to carbon-based fuels and technologies. A green economic revolution has already begun. The potential is that by 2017 a sustainable global economy of lower carbon and zero carbon solutions will achieve $10 trillion in world commerce -- equal to 20 percent of the global commerce.

Competitive advantages will accrue to businesses that can implement solutions to carbon surge. These businesses will have lower costs. They will have increased service reliability. They will better align with customers seeking solutions to “in me, on me and around me” costs created by carbon surge.

Here are three steps every business should pursue to win competitive advantage in a carbon surge economy:

1. Net Zero Energy (NZE) Building Design. NZE buildings are designed so they consume from the fossil-fueled grid no more than what the building can self-generate from onsite renewable power systems. Energy efficiency and smart technologies, including real-time integration of onsite batteries and renewable generation systems, are key NZE design features. A NZE building design holds the potential of lower operating costs, especially as utilities raise their rates to pay for carbon surge impacts like increased power plant emissions regulations and the costs of grid disruptions caused by extreme weather. Every business should begin the path toward making their building NZE by investigating LED lighting, exploring if your utility allows rooftop solar panels and retaining a “green” architect experienced in space design alternatives that promote energy efficiency. If you lease your space, then approach your landlord about a “green lease” that addresses issues of energy efficiency and utility reliability.

2. Green Supply Chain. Reducing carbon in business supply chains and product designs is proving to not only reduce environmental impacts but also costs. Evidence continues to grow that green supply chains operate at a lower cost, and the green supply chain is emerging as a business best pratice. Many business suppliers stand ready to help their customers learn about and implement proven green best practices that will save money and reduce environmental impacts.

3. Green Teams. Engaging work associates through green teams is a proven best practice for lowering costs and generating creative ideas that will win customers. Today’s millennial generation work associates are searching for meaningful engagement from their work. They want to be part of the solution in improving the health of people and the planet. There are now proven best practices for structuring green teams of work associates to motivate them to design and implement ideas that will reduce business costs, reduce business risks tied to environmental impacts and develop new paths for winning customers.

Image credit: Flickr/Elizabeth Stilwell

Bill Roth is an economist and the Founder of Earth 2017. He coaches business owners and leaders on proven best practices in pricing, marketing and operations that make money and create a positive difference. His book, The Secret Green Sauce, profiles business case studies of pioneering best practices that are proven to win customers and grow product revenues. Follow him on Twitter: @earth2017