CEOs Preparing for Climate Change Legislation

November 26th, 2008 Robert Johnson

A few days ago, I blogged on a major political shift in Washington D.C. that would increase the likelihood of the U.S. adopting a sweeping new climate change proposal during the upcoming session of Congress.

It didn’t take long for the effect of that seismic shift to reach corporate boardrooms. During last week’s Wall Street Journal CEO Council meeting, corporate chief executives shared their perspectives regarding passage of proposed climate change legislation by 2010, and the types of policies they would prefer to ensure that enterprises can achieve anticipated emissions reduction goals.

Most surprising was an observation by Duke Energy CEO James Rogers, who said the current economic climate “offers the perfect opportunity to start, not an excuse for inaction. This is just the time, because we’ll get a more reasoned approach” to economy-wide regulation. However, he cautioned, that the effort “won’t be cheap, and it won’t be easy.”

The majority of executives polled at the meeting favored a cap-and-trade scheme that encourages emissions reductions through the establishment of a commodity exchange in which companies would purchase credits for carbon emissions levels over a government-designed ceiling.

The group also advocated policies mandating that 10 percent of the total U.S. auto fleet should consist of zero-emissions vehicles by 2020; 50 percent by 2030. Nissan CEO Carlos Ghosn said that goal would require manufacturers to start producing electric cars similar to a model that is being developed by Renault. The French car company hopes to mass-market the vehicle by 2010.

The group’s other recommendation was to develop revised energy efficiency policies, from more stringent building codes to new laws that would provide incentives for utility companies to save, not generate, more power.

These are savvy CEOs who understand that the political climate throughout the U.S. now favors aggressive measures to address climate change. Some of those companies, including Duke Energy, have made the necessary investments in information technology so that they will be properly positioned to transform regulatory compliance activities into a powerful driver for competitive advantage. Companies that want to reduce costly non-compliance risk exposure will want to start planning now.

Tags: cap and trade carbon emissions ceo council climate change legislation duke energy emissions reduction

Entry Filed under: Operational Risk Management, Sustainability, Greenhouse Gas Emissions, Corporate Responsibility, Corporate Governance, Governance, Risk and Compliance (GRC), GHG Regulations and Voluntary Reporting