WASHINGTON (Dow Jones)--Many companies that have developed a strategy for addressing climate change anticipate that a federal law regulating greenhouse gas emissions could take effect as early as 2010, according to a new report the PewCenter on Global Climate Change released Wednesday.
Thirty-one large corporations that the PewCenter sees as having a history of addressing global warming concerns - including Alcoa Inc. (AA), DuPont (DD), Royal Dutch Shell PLC (RDSA) and Whirlpool (WHR) - were surveyed for the report.
The report aims to highlight the thinking behind corporations that have already committed to climate change strategies.
"Nearly all companies in this report (90%) believe that government regulation is imminent and 67% believe it will take effect between 2010 and 2015," the report said.
Thus, most of the companies found that they no longer can afford to go without a plan to reduce greenhouse gas emissions, said the report entitled "Getting Ahead of the Curve: Corporate Strategies That Address Climate Change."
"A growing number of companies believe that inaction is no longer a viable option," it said. "All companies will be affected to varying degrees, and all have a managerial and fiduciary obligation at least to assess their business exposure to decide whether action is prudent."
The report aims to serve as a manual, that could help and maybe even prompt other firms to develop effective plans to reduce greenhouse gas emissions.
"Sustainable climate strategies cannot be an add-on to business as usual; they must be integrated with a company's core business activities," it said.
The issue of climate change is a controversial one on Capitol Hill, where lawmakers carry varying views about how to regulate Earth-warming pollutants that could potentially lead to extreme weather patterns.
Some argue that Congress should approve a market-based program that sets limits on pollutants like carbon dioxide, while other lawmakers and the White House promote only voluntary measures for dealing with climate change.
Critics of a mandatory program argue that carbon caps could favor the nuclear industry but hurt the coal industry because of the greenhouse gases emitted when the fossil fuel is burned for electricity generation.
Meanwhile, concerns about climate change are growing across the country, the report said. For instance, as of July 2006, 266 mayors had signed the U.S. Mayor's Climate Protection Agreement, under which officials press for policies that would substantially reduce greenhouse gases and urge Congress to pass bipartisan greenhouse gas reduction legislation.
At the same time, companies opposed to a "patchwork quilt" of state and regional climate change regulation are coming out more strongly in favor of a national policy.
In Congress, the climate change debate has intensified over the past few years. In 2005, 54 senators supported a non-binding resolution sponsored by Sen. Jeff Bingaman, D-N.M., that called for a national, mandatory, market-based program to reverse the growth of greenhouse gas emissions.
Additionally, the report pointed out that companies like Goldman Sachs (GS), Bank of America (BAC), JP Morgan Chase (JPM) and Citigroup (C) have adopted guidelines for lending and asset management aimed at promoting clean energy technologies. And eight states and New York City have sued five large power companies, demanding that they cut emissions of carbon dioxide.
"All of these developments create an increasingly compelling case for corporate action on climate change," the PewCenter report said. "The intersection of fiduciary responsibility and climate risk is coming into focus."
The report found that one of the first steps a company needs to take to adopt a climate change strategy is to inventory sources, types, and the magnitude of emissions. Most companies surveyed had inventoried their emissions of several greenhouse gases.
Companies should then consider how operations and sales could be affected if limits were set.
"The most effective climate-related strategies connect GHG (greenhouse gas) reductions with a company's core business strategy," the report said.
According to the report, Shell emitted enough CO2 equivalents in 2005 from its own operations as well as downstream use of the oil and gas it produces to represent 3.6% of the global fossil-fuel CO2 emissions in any year and more than that of the entire U.K.
Still, the report highlighted the oil company for taking early action to develop a climate change strategy. Following a study in 1998, Shell aimed to match standards outlined in the Kyoto Protocol of a 5% reduction in greenhouse gas emissions by 2010, the report said, noting that the oil producer's business case was based on the idea that a market-based greenhouse gas emissions program will be developed that eventually will give carbon a value. Among other things, Shell now captures methane gas and uses it to enhance well production and feed power plants instead of flaring it, the report noted.
Source: Maya Jackson Randall, Dow Jones Newswires; 202-862-9263; Maya.Jackson-Randall@dowjones.com