Four out of five firms want more green regulations

Just a day after the CBI's climate change task force urged the government to deploy "the full range of public policies" to help them tackle climate change, a new survey has revealed that over 80 per cent of firms globally believe more regulation is needed to help them tackle climate change.

The research from law firm Clifford Chance was based on interviews with over 100 senior executives at large companies in the US, UK, Europe and Asia, and found that 81 per cent of respondents believed more regulation is needed to drive firms' response to climate change.

A similarly high proportion predicted that climate change regulation would affect their businesses more over the next few years, while just over a quarter identified climate change as a significant risk to their operations.

There were also signs that this risk is beginning to impact investment and merger and acquisition (M&A) decisions, with nearly a quarter of respondents identifying climate change as a factor in M&A decisions, and seven per cent claiming they have considered disposing of part of their business owing to its exposure to climate change-related risks.

Brian Hall, head of Clifford Chance's environment group, said that the shift in business leaders' traditional laissez faire stance was significant but also understandable. "Businesses setting their strategies on climate change want to see clarity in governmental policy and thinking so that they avoid uncertainty, " he explained. "They are sending clear signals about the need for fair and consistent regulation on this issue, ideally based on a coherent global approach."

Environment partner Nigel Howorth said that the calls for greater and more consistent regulation were being largely driven by fears that competitors in more lax regulatory environments could steal a march on them. "There is a real sense that they want a level playing field," he said. "They don’t want to face a price of carbon, for example, if some of their rivals don’t face the same cost. "

However, Howorth added that many firms saw any increase in green regulations as having a positive impact and helping to present them with commercial opportunities. "Around 60 per cent of those surveyed had looked at developing products and services related to climate change and there is a feeling that demand and commercial opportunities will arise as a result of more climate change regulation."

The findings come just a day after the CBI's task force on climate change, consisting of 18 of the UK's largest companies, including BT, Barclays, Npower, BP, Tesco and British Airways, similarly called for wider co-operation between business, government and consumers. The task force's report urged an overhaul of green legislation, including the rapid expansion of carbon pricing initiatives, such as the European Emissions Trading Scheme (ETS), and a "fundamental redesign" of the tax system to deliver more green taxes.

Observers welcomed the report as marking an end to the business community's "kneejerk" opposition to environmental legislation and providing further confirmation that UK firms increasingly understand and accept the risks and opportunities associated with climate change.