Carbon, Risk, & Uncertainty

Interesting guest blog at HBR by Bob Lurie on the risks and uncertainties posed by carbon taxation, and their importance to all businesses and business strategy:

While the US Government is working on the fine print of a new carbon regulatory system, one thing is clear: we are all going to face a new tax. It’s important that business leaders avoid the mistake of thinking this will be a new burden assessed on just a few, like the chemical industry and power utilities. Carbon is ubiquitous — part of every industry, and indeed, every human activity — from pharmaceuticals to farming to family field trips. This tax is inescapable, yet where and how hard it will hit is very hard to predict.

…[It is] essential that you view this new carbon economy not as a set of regulations you need to follow, but as an opportunity to separate yourself from those who don’t understand the implications of the new rules as well as you do.

This is about competitiveness, not compliance. Understanding the implications is a strategic imperative. And because the changes are going to be big, the time is now to develop your strategic intent and prepare for a new operational playbook.

…Let’s agree that the rationale for reducing carbon is critically important. But let’s also acknowledge the effects on business will produce outcomes that feel arbitrary and unfair.

There are big changes ahead. It will take a while for the new carbon rules to go into effect, and for businesses as well as regulators to figure out their full implications. But the impacts are large enough so that you should use this grace period to assess how the carbon tax will influence your strategy. If you take too long to move, you may get buried.

URLs:

http://blogs.hbr.org/leadinggreen/2009/07/carbon-taxes-unpredictable-impact.html