How the Climate Accord Could Affect Small Businesses

Will the historic climate accord have an impact on your small business? As countries vow to cut greenhouse emissions, stringent guidelines regarding energy consumption may trickle down to small businesses.
December 16, 2015

In a landmark agreement on December 12, 196 nations agreed to commit to reducing greenhouse gas emissions with the intention of curbing global warming. Countries from around the globe, including the United States, made history by adopting the Paris Climate Agreement at the United Nations Framework Convention on Climate Change.

“The agreement comprises 29 articles and has been reported as signaling a massive shift toward low-and zero-carbon emissions technologies and services that governments and businesses will voluntarily undertake,” says Anilla Cherian, author of Energy and Global Climate Change: Bridging the Sustainable Development Divide.  

A major collaborative breakthrough on an issue that has stymied world governments for decades, the deal not only has the potential for impacting the state of the environment, it may also significantly affect business, according to Paula DiPerna, special advisor to the Carbon Disclosure Project (CDP) and former vice president for International Affairs for the Cousteau Society.  

“The Climate Accord is the most important and beneficial action to reach the U.S. economy in a long time, because it offers an opportunity for the economy to refresh, rebuild, redesign and re-envision almost all of our economic processes and infrastructure,” says DiPerna, who attended the event in Paris.

“This means small businesses that understand the demands for a low carbon economy stand to gain as the economy shifts to a carbon diet," she adds. "As a result, green thinking enterprises will be much in demand, particularly those that can offer new pathways to energy efficiencies. Those small businesses that can market themselves as part of the solution and then deliver those solutions in an affordable, timely manner [may] be successful.”

Unprecedented Business Opportunities

Small businesses focused on offering sustainable energy in developing countries may have significant opportunities, Cherian believes. “Small businesses focused on wide ranging, clean energy solutions, innovative services and tools that enable universal access to sustainable energy in developing countries are at the forefront of harnessing new opportunities. Businesses that are well-positioned and oriented to take advantage of the enhanced promotion and use of renewable energy technologies, services and systems in [locations such as] Africa are advised to get a head start.”

Whereas the required energy changes may prove challenging for large companies dependent on producing high levels of carbon dioxide, small businesses like tech startups have the potential to thrive, suggests Karin Miller, author of Global Values: A New Paradigm For A New World. “The energy industry will attract new innovators and startups, which makes for great small-business opportunities,” she says.

Green thinking enterprises will be much in demand, particularly those that can offer new pathways to energy efficiencies. Those small businesses that can market themselves as part of the solution and then deliver those solutions in an affordable, timely manner [may] be successful.

All businesses have the potential for benefiting from the focus on reducing carbon emissions, DiPerna claims. “Industrial designers, architects, engineers, accountants and project managers stand to profit, as well as carpenters, plumbers and solar panel installers,” she says. “Also, wealth advisors and managers who understand the green economy will be in an ideal position to attract and advise clients on how to minimize risks and maximize benefits of the shift toward the carbon diet.”

Climate Accord Drawbacks for Small Business

Due to the ramifications of not complying with carbon emission rules, many large companies that use small-business suppliers may begin scrutinizing supply chains to ensure energy efficiency, DiPerna notes. “It is likely that procurement departments for cities and large companies will move away from suppliers who do not contribute to the overall carbon diet. Procurement departments are likely to ask more questions about how a given supplier can help buyers meet low carbon requirements.”

Effectively handling the climate accord ramifications takes preparation, claims Scott Brennan, president of BOLDbreak, Inc. and author of The Surging Team: 10 BOLDskills for Accelerated Team Success.

“Wise business owners prepare an annual business plan that includes a SWOT [strengths, weakness, opportunities and marketplace threats] analysis. This challenges company leadership to understand their company’s current strengths and weaknesses and also any outside or marketplace factors which could pose a threat to the company,” Brennan says. “New EPA regulations can significantly increase costs and may even push a product out of the market. Companies that develop what I call a surging team culture can engage their employees at all levels, including business plan development, and will be in the best position to not only survive but to thrive with the new energy requirements.”

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