With public awareness of the environment at an all-time high, the US presidential candidates are overlooking a critical issue: carbon management will inevitably become an operational and financial challenge for US businesses, their shareholders, and their customers.

In their current party platforms on the environment, both Senators McCain and Obama avow their passion for finding solutions to global warming. However, neither offers solutions that are rapid or profound enough to address the most critical need: create an immediate cure for the global economy’s addiction to cheap carbon-based fuels.

Obama and McCain talk about reducing our dependence on non-renewable resources, but they should be focused on eliminating that dependence. Abatement and mitigation programs will not provide solutions to our long-term environmental challenges.

Real change boils down to this: the new president must design and implement a carbon management program that rewards innovators who demonstrably reduce their carbon outputs, and penalizes those who are profligate carbon generators.

The guidelines for auditing carbon outputs and achieving carbon use neutrality exist, courtesy of the World Resources Institute. America lags behind European, Canadian and Asian jurisdictions that are moving fast on carbon reduction and new energy sources. Some governments have already imposed carbon neutral deadlines.

Take for example, British Columbia, Canada, where all government and quasi-government organizations must be carbon neutral by 2010. To be compliant, they will require an auditable inventory of their greenhouse gas emissions and programs to reduce those emissions. They will offset the remaining emissions by paying hard cash at a rate of $25 per metric tonne of carbon. The incentive, of course, is to fast-track carbon reductions – by 33% – so that the costs of offsets are minimized.

Any robust Carbon Management program must offer a blend of:

• Carbon taxes, which directly tax carbon consumption. Avoid carbon consumption and avoid the tax. Taxation can be paired with income tax credits that reward retrofitting, GHG reduction innovations, use of renewables and other ways the avoid carbon consumption.
• A cap-and-trade system, which is supported by the candidates and gives organizations carbon credits to trade if their greenhouse gas emissions fall under their caps. This turns carbon into a commodity.
• Offsets, as in British Columbia. To reach carbon neutrality, organizations will pay a predetermined fee to offset the greenhouse gases they generate.

To date, sustainability issues like carbon management have been driven by progressive and financially successful organizations, and influential consumers demanding change. It is time for a meaningful push – and the candidates are missing an opportunity to talk about carbon management in the campaigns.

Companies ignoring their carbon footprint are not managing corporate risk. It’s a liability issue of growing importance for partners, vendors, customers, and institutional investors. The same can be said of governments. Failure to take the necessary steps will undermine their ability to compete in a rapidly changing global economy.

The companies that are succeeding at the carbon reduction game make the issue integral to their operations and reap the brand benefits from being a substantive green leader. They also have the Chief Executive Officer championing the cause.

Regardless of the candidates’ resolve to champion carbon management, corporations and voters must take heed of the very real trends. By embracing sustainable operating strategies today, they will ensure that they are part of the solution and that they are protected as we enter a carbon-constrained future.

Ian Edwards is our lead consultant in New York.

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