If 2007 was the year when international scientific consensus on climate change became clear, 2008 is the year when it has become a mainstream consumer issue.

The then Secretary of the Victorian Department of Environment and Sustainability, Professor Lyndsay Neilson, announced more than two years ago that government has moved beyond the debate about global warming and is now concerned with developing appropriate responses. Whilst debate continues in many circles, mainstream business and academia has followed the same course, in response to the weight of public opinion on this issue.

It is difficult to recall a subject that has entered the mainstream of political, social and commercial thought with the same impact and increasing momentum as has concern about the consequences of climate change. Australians have the highest per capita carbon footprint of any member of the OECD. Emissions are increasing twice as fast as in the USA and Japan and up to 5 times as fast as in Europe. This results largely from Australia's unique geography and small population. Nonetheless, it requires an urgent response and the Australian public is now demanding leadership from its politicians, and is increasingly coming to expect the same from the business community.

The methodology for achieving the broader aims of reduced emissions remains the subject of vigorous and legitimate debate. In recent times we have seen the release of the Garnaut Report and the Federal Government's White Paper on Climate Change. It would appear that some form of global trading in carbon credits is destined to be adopted as the most appropriate response, although the framework and detail of such a trading scheme is far from established.

The former Howard Government argued that adoption by Australia of a levy (in the form of a carbon tax) on our carbon producers, without a global commitment to the same regime, would place Australia at a significant competitive disadvantage, and place an unfair burden on our primary producers and heavy industry. By extension, it is argued that individual businesses may suffer financially if they elect to adopt potentially costly environmental measures.

For businesses that compete internationally, the consequences may indeed be significant. However, for businesses competing in the domestic market, there is a legitimate body of opinion suggesting that recognition of sustainability will confer economic and financial benefits on a business. Factors supporting this view include the following:

  • The Australian public now demonstrates a high level of concern for the effects of climate change (stemming immediately from concerns about the adequacy of our water supplies.) To the extent that they are consumers and customers, the public is increasingly inclined to differentiate in favour of businesses demonstrating a level of social concern and responsibility.
  • The demographics of public opinion on this issue indicate that Generations X and Y have the strongest level of interest in and concern about environmental factors. Most of our current employees and virtually all of our future employees will fall within those demographic bands. To that extent, "green" businesses may become the employer of choice in the increasingly competitive market for skilled labour.
  • Conversely, employee retention may improve in those businesses, eliminating the massive and often underestimated costs of recruitment and induction of new employees. It is generally recognised that it costs between 50% and 100% of an employee's annual salary to replace an employee. If the rate of a company's staff turnover can be reduced by as little as 5%, the resultant savings are likely to exceed the total cost of achieving carbon neutrality. (Note that this will vary according to the size and individual circumstances of each enterprise.)
  • Adoption of sustainability practices will create a cleaner and more positive work environment, which may result in a direct and material improvement in productivity.
  • Corporate branding opportunities may arise from the early adoption of carbon neutral or other socially responsible practices.
  • As with the Quality movement of the 1990s, many corporations may refuse to deal with organisations that are not certified to be carbon neutral.
  • Valuable networking opportunities can be favourably exploited by businesses that become leaders rather than followers within their own industry sectors.

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