December 10, 2007 08:00 ET

Deloitte: Minimal Government Direction and Executive Leadership Root of Lacklustre Greenhouse Gas Emissions Management

Deloitte survey finds Canadian companies recognize the issue but lack the strategic impetus to implement meaningful climate change

TORONTO, ONTARIO--(Marketwire - Dec. 10, 2007) - Lack of executive accountability, together with ongoing regulatory uncertainty are the two key factors explaining why Canadian companies are slow to adopt climate change strategies, according to a recent Deloitte survey, Managing greenhouse gas emissions, released today.

The second annual Deloitte survey of Canadian emitters shows that while 94% of respondents possessed a general awareness of GHG emissions issues, only 18% had secured executive-level involvement, and less than a quarter (24%) had established a budget for reducing GHG emissions.

"While it's encouraging that the issue of climate change and sustainability is at least on the executive radar screen, the current low level of executive engagement is worrisome," says Valerie Chort, national leader of Corporate Responsibility & Sustainability services at Deloitte. "To have an impact, climate change and sustainability must be designated as governance and strategic issues requiring CEO commitment and boardlevel attention. Without senior leadership, a company's climate change policy is likely to fragment into a series of ad hoc activities that don't address the full range of climate change issues - from mitigation and adaptation to new opportunities."

Although the impact of climate change cuts across multiple business areas, responsibility for developing GHG policies usually falls to the head of environment or sustainability. Fifty percent of companies surveyed assigned responsibility at this mid-tier management level. This lack of senior involvement may explain why there has been little strategic alignment of the organization's GHG emissions reduction efforts with its overall business strategy. While three-quarters of the companies surveyed have completed an emissions inventory and many (55%) have even publicly released the results of their emission management programs, just over a quarter (28%) of respondents felt they had successfully integrated their emissions management efforts with their business strategy.

One of the biggest challenges facing carbon emitting companies is the uncertainty related to potential government regulations governing carbon emissions. According to the survey, the most frequently cited obstacle to the development of a GHG emissions management plan is regulatory uncertainty. Forty-three percent of companies considered regulatory uncertainty as a significant barrier towards implementing a comprehensive GHG emissions management strategy, compared with just 20% who considered 'cost to implement' to be the primary barrier. Tax incentives, energy efficiency standards, emissions limits and emissions trading with intensity-based caps were considered to be the preferred public policy tools to help guide firms through their response to climate change.

On a more optimistic note, many Canadian companies are seeing the upside - 56% of companies see climate change as an overall opportunity with energy efficiency cost-savings, innovation, new technologies, new market opportunities and emissions trading being cited as potential opportunities. According to Chort, companies that take an ad hoc risk-based approach miss those opportunities. That's why taking a holistic and strategic view of the entire company can make a positive impact on both the environment and the bottom line.

"Despite the regulatory uncertainty, those executives who act now to take a strategic and comprehensive approach to climate change and sustainability are seizing competitive and brand advantage over those who wait," says Chort.

About the survey

Managing Greenhouse Gas Emissions: Mitigating Risks and Uncovering Opportunities is the second annual Deloitte survey of Canadian emitters. This year's survey comprised responses from 54 leading Canadian organizations from a wide range of industry sectors including oil and gas, manufacturing, power generation, financial services, transportation and telecommunications. The survey was conducted online, with senior executives during the period July 23 to September 7, 2007.

About Deloitte

Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting and financial advisory services through more than 7,600 people in 56 offices. Deloitte operated in Quebec as Samson Belair/Deloitte & Touche s.e.n.c.r.l. The firm is dedicated to helping its clients and its people excel. Deloitte is the Canadian member firm of Deloitte Touche Tohmatsu. Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective subsidiaries and affiliates. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms have any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names "Deloitte," "Deloitte & Touche," "Deloitte Touche Tohmatsu," or other related names. Services are provided by the member firms or their subsidiaries and not by the Deloitte Touche Tohmatsu Verein.

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