Environmental agendas take back seat to corporate survival

Despite the government’s efforts to push the environmental agenda in 2008, companies will be too focused on survival this year to worry about green issues, new research suggests.

Research company Verdantix says CFOs will block spending on climate change and concentrate on the “usual routine for recessions” ­ making redundancies, slashing capex and investing only where high rates of return are guaranteed.

CFOs will cut back on discretionary spending, corporate climate change strategy will slip down the agenda and investors will baulk at high-risk ventures. The recession will hit capex on energy efficiency equipment and items such as onsite wind turbines, as well as climate neutrality, voluntary offsets and sponsorship of not-for-profits, says Verdantix’s David Metcalfe.

Watered down policies
Verdantix expects policymakers to water down ‘green’ regulation as recession takes hold. “Policymakers will come under pressure to delay the short-term imposition of ‘carbon costs’ on industry”, says Metcalfe. “With unemployment rising, politicians will strike compromises with industrialists on the tightness and timing of emissions caps.”

This could mean a temporary reprieve for companies struggling to meet the cost and compliance efforts of improving efficiency. Verdantix says the ‘climate change sector’ should rebound in 2010, and this will bring a refocus on climate legislation, the financial impacts of carbon and sustainable investment.

“We are optimistic about the prospects for the post-recession climate change sector based on the combination of reduced policy uncertainty, proven benefits from global sector leaders’ climate change programmes, a clear financial impact from carbon reduction and cash-rich investors seeking sustainable investment,” says Verdantix’s Rodolphe d’Arjuzon.