Whether or not you agree with the science, it's hard to deny that climate change is becoming big business. Companies in all sectors of the economy are adopting green practices, the Securities and Exchange Commission now requires that publicly traded firms disclose climate change risks, shareholders are requesting carbon footprint calculations, and there is even a new term on Wall Street—climate exposure—that describes the effect of climate change on companies and industries.
Insurance companies are offering weather futures, which have been purchased by farmers for decades to help them hedge against extreme weather patterns, and are now being devoured by utilities, wind farms, and solar parks that are looking for protection against low wind and weak sunlight that will reduce output.
This shift towards sustainable business is not always driven by altruistic motivations. As often as not, practical business decisions are being made that respond to higher costs for energy, water, and raw materials. When supply chains dry up because of drought or real estate gets submerged due to rising sea levels, developing environmentally appropriate practices becomes a pretty good idea, regardless of executives' opinions about climate change.
As more businesses are affected by eco-disaster, the forces of capitalism become the environment's biggest champion, cutting through politics and ideology and driving businesses to preserve themselves by making sustainable choices. Every business that relies on natural resources for raw materials faces risks that will result from a warming world.
While I'd love to continue to paint a rosy picture of an ever more benevolent Wall Street, climate change decisions are actually causing a schism within businesses that are being forced to trump the relentless short-term drive towards quarterly earnings with long-term thinking about the environment.
As Duke University behavioral economist Dan Ariely says, "Climate change is a problem that is perfectly designed to make people do nothing: it happens far in the future; its effects will be felt most greatly by other people; and the efforts of any one individual are miniscule."
Unfortunately, there are many companies that are paying lip service to climate change, creating elaborate marketing campaigns to show how green they are, while simultaneously paying millions of dollars to lobbyists to ferociously fight against bills in Congress that will address our climate needs, improve our energy outlook, and reduce our carbon emissions.
It's clear that the oil and coal industries have a lot to lose when climate, energy, and carbon emissions legislation is passed. The building industry, in contrast, will undoubtedly win, as increased requirements for enhanced performance will drive demand for insulation, renewables, and other energy efficient products.
The verdict is still out about how companies will reconcile their short and long term demands. No matter how they get there, by luck or skill, it's the companies who can reach the intersection of carbon neutral business practices and traditional capitalism, or "Carbon-alism", that will assuredly win.
For more information about important topics related to green building and sustainability, follow me on Twitter at SaraGBM.