Targets vary across units. DuPont, for example, expects the output of its titanium technologies division to double between 1990 and 2010. The goal is for the division increase energy use during this period by only 40 percent — a large task, because energy constitutes a significant percentage of the selling price of titanium dioxide. Other, less energy-intensive units will have even higher targets. So far, the titanium technologies unit is achieving its aim. “Inspirational goals call an organization to act beyond conventional boundaries,” says Craig Heinrich, leader of the global energy team for titanium technologies. “An easy goal fails to challenge the creative potential of the organization.”
5. Engage the organization. Employee buy-in is important. “The best technology only gets you so far,” says Vince Van Son, manager of environmental finance and business development for Alcoa. “Employees will devise innovative ways to achieve clearly stated goals when they understand the linkage with the company’s vision and value.” Alcoa, which formed its corporate climate change strategy team in 1997, has been a leader, reducing its direct GHG emissions to 25 percent below 1990 levels and garnering accolades as one of the top green companies in the world. Companies encourage employees in a variety of ways: Google, for instance, offers employees a subsidy to buy hybrid cars.
Senior leadership is crucial: “On a scale of one to 10, senior support is 11,” says Pat Atkins, Alcoa’s director of energy innovation. Some CEOs, like the members of USCAP, have put their reputations on the line by publicly taking the lead in environmental sustainability. Work inside the corporation is equally important: Alcoa’s Paul O’Neill, an industrial engineer turned economist and CEO and, later, Treasury Secretary under President George W. Bush, challenged company engineers to minimize the number of anode effects in operations — a check routinely used in the smelting process that produced high levels of perfluorocarbon gases, which is one of six focal GHGs. Although resistant at first, the engineers ultimately developed advanced cell control algorithms that have reduced emissions by more than 75 percent since 1990.
6. Formulate policy strategy. Companies are jockeying to shape legislation, at the state, national, and international levels. Although the electricity industry’s Washington trade group rejects any GHG cap, its chairman, Duke Energy’s Rogers, is an outspoken proponent of mandatory global-warming constraints. “The greatest risk we face is ‘stroke of the pen’ risk, the risk that a regulator or congressman signing a law can change the value of our assets overnight,” he says. To assure Duke’s place in the national policy debate, the company has instituted voluntary GHG-emission reductions.
In 2003, Alcoa executives testified on behalf of the McCain–Lieberman Climate Stewardship Act. The reason: Alcoa, which supports cap-and-trade systems in which regulatory limits are imposed if all gases are included, advocates legislation that takes into account actions by companies that precede legislation, and wants a 1990 baseline for determining allocations.
7. Manage external relations. Companies measure the costs of climate-related strategies in three ways: absolute, normalized, and financial return. Roughly 40 percent of the companies surveyed participate in voluntary external carbon trading programs such as the Chicago Climate Exchange (CCX). Executives at Baxter International, a supplier of medical devices and a founding member of CCX, explain that involvement in CCX will help the company withstand scrutiny of future emissions verification and trading programs, and in the meantime has attracted favorable press for its members.
“External outreach to NGOs, suppliers, customers, investors, regulators, even competitors, is critical to success,” says Andrew Hoffman of the Erb Institute. NGOs such as Environmental Defense, the World Resources Institute, and the Pew Center can promote technical research and advance public awareness. They “add legitimacy,” says DuPont’s Linda Fisher. They can also be partners, even at the beginning of the process. Environmental Defense, which helped Cinergy determine its voluntary baseline, serves ex officio as a member of Duke Energy’s GHG management committee, which oversees the allocation of $21 million.