IMA Pulse

Global Warming: How Has It Affected Your Company?

By Raef Lawson, PH.D., CMA, CPA, CFP, CFA
January 19, 2017
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Global warming is a topic that increasingly appears in the news. Regardless of one’s beliefs on this issue, it has the potential to impact companies’ operations through changes in governmental regulations, new reporting requirements, necessary operational changes, and more.

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IMA® (Institute of Management Accountants) conducted a survey of senior finance professionals in November 2016 to gauge members’ thoughts on global warming and its impact on their companies.

 

A total of 65% believe that global warming is having a significant impact on our environment. Only 29% of respondents believe it isn’t having an effect, with the remaining 5% unsure.

 

More than two-thirds (68%) of our respondents believe that global warming should be addressed. As expected, of those thinking global warming shouldn’t be addressed, the majority were of the opinion that it isn’t occurring. Other reasons suggested for not addressing global warming included, among others, “that the cause is pollution in other countries,” “because we can’t fight the weather,” “there are other bigger issues to address,” and there are “too many variables that are noncontrollable.”

 

Companies are sometimes accused of “greenwashing”—claiming to engage in sustainability efforts more than they do or only to the extent that they also increase profits. This notion is inconsistent with the views of IMA members. When asked “To what extent do you believe organizations should engage in practices that promote environmental sustainability?”

  • 69% said to the extent there is an appropriate balance between their organization’s economic, social, and environmental goals,
  • 12% said to the extent they don’t diminish long-term company profitability, although short-term profitability may be negatively impacted,
  • 8% said to the extent that they also contribute to short-term company profitability, and
  • 8% indicated something else.

 

Not only do respondents believe global warming is occurring, 62% indicate it has affected their business in a significant way, with the remaining 38% indicated it hasn’t yet affected their business. The most common impacts include:

  • The need to change operations to decrease the pollutants their company produces (27% of respondents)
  • The need to change energy sourcing (24%)
  • Encountering increased costs due to more stringent government regulation (24%), and
  • Incurring increased cost of inputs (23%).

 

To address global warming, companies are taking a variety of steps, including:

  • Increasing energy efficiency (39%)
  • Implementing sustainability performance measures (24%)
  • Implementing stricter controls on output of pollutants (20%)
  • Measuring their carbon footprint (20%), and
  • Encouraging green commuting (telecommuting, carpooling, park and ride, etc.) (20%).

 

Companies are engaging in a wide variety of additional sustainability-related initiatives, including investing in renewable energy sources and increasing recycling programs.

 

Environmental issues are clearly becoming a more central concern to companies: 24% report an impact on their profitability from these issues (while 53% didn’t).

 

Global warming is affecting companies throughout our economy. As might be expected, organizations in the transportation, communication, and utilities industries were most likely to report being affected (60%). These were followed by companies engaged in wholesale/retail trade (50%), healthcare organizations (33%), educational institutions (29%), and manufacturing companies (17%).

 

The results of this survey show that the majority of IMA members believe global warming is occurring, that it’s starting to affect firms’ profitability, and that companies are meeting this challenge through a variety of operational changes. Perhaps it’s time for YOUR organization to consider how it needs to address this issue if it hasn’t started doing so already!

 



Raef Lawson, Ph.D., CMA, CPA, CFP, CFA, is professor-in-residence and vice president of research and policy at IMA. You can reach him at (201) 474-1532 or rlawson@imanet.org.
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