Sustainable Investing: Carbon Winners and Losers

Businesses, investors, governments and consumers are being inundated with complex and conflicting data about climate change and the efforts to address it.

So what parts of this new economic paradigm will fundamentally change your life, finances and workplace? It's something CNBC contributor Terry Tamminen addresses in his upcoming book, "Cracking the Carbon Code: The Keys to Sustainable Wealth in the 21st Century." 
In the book, Tamminen examines how companies are dealing with their carbon footprints, the same information investors need to know if they have hidden in their portfolios liabilities "so vast that companies 'too big to fail' will soon be dropping in value or even from the marketplace altogether."

Here, Tamminen shares with us some of the companies that are prepared to withstand the growing impact that carbon will have on their bottom lines. And some that haven't.

Where are the "safe" investments, and how can you make sure there aren't hidden liabilities in your portfolio? As Tamminen says, "everyone with money to make or lose needs to understand how to crack the Carbon Code."

Click ahead to see some of the potential winners and losers in the new age of carbon awareness.

By Constance Parten
Posted: 23 April, 2010

Source: "Cracking the Carbon Code: The Key to Sustainable Wealth in the 21st Century" by Terry Tamminen

Visit: www.terrytamminen.com

Carbon Call: Potential Loser

"Airlines with old fleets will be in trouble," Tamminen says. "Northwest/Delta and American Airlines have the oldest, most gas-guzzling fleets in the sky and it takes time to convert those aging assets to more fuel-efficient ones."

Carbon Call: Potential Loser

In the fairly carbon resilient oil and gas sector, ExxonMobil was declared an industry laggard in 2009 on the CERES Climate Watch List.

"High carbon transportation fuels ... can't reduce the carbon footprint of their products in any meaningful way. In fact, the carbon content of these fuels is increasing over time and will therefore increase your carbon footprint if your business depends on them," Tamminen says.

Carbon Call: Potential Loser

"In the fast food industry, there is no greater head-in-the-sand carbon laggard than Burger King. Not only does the chain rely on beef and fossil-fueled energy (for cooking fuel, transportation and electricity for heavy-duty refrigerators and lighting), but they consistently score among the lowest in terms of taking action to measure and reduce their carbon footprint," Tamminen says.

The company has actively opposed carbon laws and markets, including using store signage to declare "Global Warming is Baloney."

Carbon Call: Potential Loser

This privately-held international food producer and marketer employs 138,000 people in 67 countries and had $116.6 billion in sales and other revenues in FY2009, making it one of the largest US-based corporations in the world.

"Cargill and other industrial agriculture companies whose customers are highly dependent on water and growing seasons, but have done little to prepare for changes coming due to climate change related impacts" won't fare well, Tamminen says. "Their environmental record overall suggests a deer in the carbon-powered headlights."

Carbon Call: Potential Loser

Unlike commuters who have choices when gas prices spike, package businesses "have no alternatives when it absolutely, positively has to be there overnight," Tamminen says. "As a carbon price is added to these fuels, companies like FedEx, UPS, DHL...will need to reduce their dependence on fossil fuels dramatically to stay profitable."

Carbon Call: Potential Winner

"Energy efficiency control companies like...Comverge are helping companies find that money in the cusions and are growing their businesses in the process," Tamminen says.

Carbon Call: Potential Winner

"You wouldn't think you can teach an old dog new tricks, but $26 billion, 100-year-old Alcoa has aggressively pursued sustainability goals for the past generation," Tamminen says. "The company recognized that not all greenhouse gases are created equal, so while it made efficiency improvements and took other carbon-busting steps across the board, it focused on the gases that were creating the most diproportionate carbon footprint."

Carbon Call: Potential Winner

"Energy-efficient lighting will be a major part of carbon cutting," Tamminen says. "Lighting Science Group is the one to watch, because it has the technology and price breakthroughs that are far ahead of the competition — so far ahead that several of the major lighting brands are licensing the technology from LSCG to make their own LED products."

Carbon Call: Potential Winner

Sun Microsystems, a wholly-owned subsidiary of Oracle, found numerous ways to shrink its carbon footprint, but then even more clever ways to manage it, Tamminen says.

The software giant cut overall Scope 1 and 2 emissions by about 4 percent in the second year since it began measuring. It may not seem like much "but a steady 4 percent decline will keep the company well ahead of regulators," Tamminen said.

Sun added money to the bottom line by cutting energy use by more than 50 million BTUs with measures like HVAC upgrades and lighting retrofits. The company then focused on business travel and air freight, cutting business travel 2 percent from 2007 to 2008, and reduced the weight of its products and improved logistics so products don't travel longer routes.

"In all, Sun cut emissions from that source by a third in one year," Tamminen said.

Carbon Call: Potential Winner

Unilever scientists developed ice cream that can be stored and transported at room temperature, drastically improving their carbon footprint.

"Think about the energy required to freeze ice cream, transport and store it in freezers at grocery stores, and keep it cold until you're ready to consume it. All of that energy, and related carbon footprint, is reduced to just the energy you need to chill it before serving.

"Unilever was shrewd enough to see that their carbon tipping point was fast approaching because of the pace of regulation and consumer demand. Applying the carbon code to everything in its supply chain showed Unilever management that, while their own operations generate about four million tons of carbon emissions per year, the total carbon burden in their products, including all lifecycle parts of the supply chain, bring that total closer to 400 million tons per year."