Climate Action - Assisting business towards carbon neutrality

Dr Aled Jones, Development Director at the Cambridge Programme for Industry

With an increased understanding about the scale of change required to tackle global warming, business, government and civil society need to work in partnership to address such change. Building these partnerships allows governments to implement policies that will drive the necessary change, and business to respond rapidly to these drivers in a positive way.

INTRODUCTION

EU Corporate Leaders Group representatives meet with  EU President Barroso.

There is no one ‘silver bullet’ that can halt climate change in its tracks. Action across all industry sectors and society is key, with barriers to progress being similar across each sector. For example, concern about the impact of action on competitiveness and growth is a major factor in organisations’ and countries’ unwillingness to commit to more ambitious goals and strategies. In many countries, businesses are lobbying hard against unilateral action to tackle climate change preferring to wait for international frameworks to set the agenda for long term strategies.

As presented in The Economics of Climate Change: The Stern Review, the costs of adapting to unconstrained climate change far outweigh the costs of mitigation. Action is required now to prevent the most dangerous aspects of climate change from becoming an unstoppable reality. Therefore, while an ambitious international framework is key to undertaking serious global action, lack of progress in this area should not prevent early action by leading organisations and countries. Such a leadership position in a developing market could result in huge rewards and benefits for those willing to take early risks.

There are several signs of this early leadership taking place, and opportunities in global markets are already leading to significant benefits. Finding ways to reduce the risk of taking a leadership position has been key and new and innovative partnerships between businesses and governments are taking shape around the world.

THE TREND TOWARDS GREATER TRANSPARENCY

Over the past few years there has been a noticeable shift towards greater transparency within the corporate sector. This is due to a number of different factors and influences including increased investor and media scrutiny over how issues, such as climate change, affect the long term value of an organisation as well as that organisation’s responsibility to customers and society as a whole.

The Carbon Disclosure Project, for example, now represents over US$40 trillion worth of investment and is encouraging multinationals to take a serious and open look at their exposure to carbon risk (both regulatory and physical). In 2006, 72 per cent of the world’s 500 largest companies responded to the Project’s request for information regarding greenhouse gas emissions data and the risks and opportunities presented by climate change. In addition to this, in 2005 the Influencing Power report by SustainAbility and WWF surveyed 100 of the world’s top companies and found a significant increase in transparency around lobbying activity over the previous five years.  

A growing awareness of climate change among consumers has also resulted in a significant increase in corporations reporting how they are helping to tackle climate change. A UK and USA consumer survey by Accountability and Consumers International found that 40 per cent of consumers distrust what they hear about global warming from businesses while a further 50 per cent do not know whether to believe corporate claims or not. However, 66 per cent of consumers felt that everyone needs to take responsibility for their personal contribution to global warming and there is a big opportunity for business to be more open and work with customers to enable them to be more ‘green’.

A STRATEGIC PRIORITY FOR BUSINESS

Being more transparent about actions concerning climate change and looking strategically at opportunities to take an early lead in this area should be a priority for business. Over the past three years all of the major consultancy firms have produced reports on the importance of businesses looking at climate change as a strategic issue.

There is clearly a potential for missed opportunities with most environmental and clean technology sectors seeing double digit growth rates over the past couple of years, or savings to the bottom line through energy efficiency measures. The importance that staff, customers and shareholders are increasingly placing on climate change issues also makes it a strategic priority for business.

Forum for the Future and the Universities and Colleges Admissions Service in the UK surveyed 54,240 young people applying to higher education in 2006. Of those surveyed, 80 per cent believed they will be personally affected by climate change in a negative way and only 20 per cent believed little or no change is necessary for human survival. With this in mind, attracting and keeping the best staff around the world is becoming increasingly difficult without a clear and proactive stance on climate change.

Evidence of companies moving towards such a proactive stance is borne out in a report by the audit, tax and advisory firm, KPMG, Climate Change Business Leaders Survey,’ April 2007. It showed that 51 per cent of the FTSE350 senior executives surveyed are now starting to develop strategies to deal with concerns around global warming.

BUILDING PARTNERSHIPS

To help businesses reduce the perceived risk in taking a leadership position on climate change, an increasing number of partnerships are being set up. Whether these call for national policies to underpin an organisation’s efforts (such as the US Climate Action Partnership), or enable a sector to share its knowledge and to work on combined strategies (such as the Institutional Investors Group on Climate Change), partnerships offer opportunities for real leadership to develop.

Two examples are summarised here. Both are part of the Prince of Wales’s Business & the Environment Programme (BEP) which was set up over 10 years ago to engage with senior leaders from across the business community and give them a global forum for exploring and debating the business case for sustainable development.  

Creating a common platform  

In late 2006, BEP and the Prince of Wales met with a group of Chief Executives from the insurance sector. The intention was to provide a trusted forum to enable them to consider the role they might play in encouraging more climate-friendly behaviour both within the industry and among its customers. While it was acknowledged that the insurance industry has already been playing a leadership role in understanding the risks associated with climate change as well as developing responses to that risk, it was clear there was an opportunity for an even stronger leadership position to emerge.

On September 13th, 2007 the ClimateWise principles were launched in London with 37 companies signing up. These principles aim to enable development of innovative products and solutions across the whole spectra of insurance products and to share insurance-sector best practice. This will enable the sector to work with its customers (both business and individual) at reducing the effects associated with climate change over the long term. Working together as an industry to develop these types of products and to establish an open position on climate change reduces the overall exposure to business risk while clearly communicating to others the reasons behind the need for a change in the industry.

Creating political space

The Prince of Wales’s Corporate Leaders Group on Climate Change (CLG) brings together business leaders from major UK and international companies who believe there is an urgent need to develop new and longer term policies for tackling climate change. The CLG thinks that taking serious action is not only important to prevent the worst aspects of climate change but also makes good business sense. The first output from the group was a letter to the UK Prime Minister in the run up to the G8 Summit in Gleneagles in 2005. The letter argued that investing in a low carbon future should be, “a strategic business objective for UK plc as a whole” and pointed out that at present, “the private sector and governments are in a ‘Catch 22’ situation with regard to tackling climate change, in which governments feel limited in their ability to introduce new climate change policy because they fear business resistance, while companies are unable to scale up investment in low carbon solutions because of the absence of long-term policies”.

The CLG aims to break the ‘Catch-22’ deadlock. In partnership with the UK Government, it works to strengthen domestic and international progress on reducing greenhouse gas emissions – seeking the backing for this effort from other British businesses, the UK public and international governments and businesses.

By developing a high level political strategy with well-positioned messages, the CLG has emboldened senior politicians to make decisions on climate policy which go further than they would have otherwise done. Indeed, UK Government insiders report that the CLG has had a direct impact on policy-making decisions relating to the UK’s EU Emissions Trading Scheme National Allocation Plan targets and the 2006 UK Energy Review.

The current members of the UK CLG are:

ABN AMRO	BSkyB	Johnson Matthey	Sun Microsystems
Anglian Water Group	Centrica	LloydsTSB	Tesco
AXA Insurance	EOn	Reckitt Benckiser	Thames Water
B&Q	F&C Asset Management	Shell	Unilever
BAA	John Lewis Partnership	Standard Chartered Bank	Vodafone

 

 

ENABLING A STEP CHANGE IN RESPONSE

The CLG was set up to create political space for Government action on climate change and the ClimateWise principles were developed to reduce the risk of an entire industry sector in changing working practices to help tackle this issue. Both initiatives allow governments to build on the case for change and develop policies that push forward this change.

The CLG has succeeded in creating political space and has started to dismantle the ‘Catch 22’. While the CLG has not been, and should never be, solely responsible for getting policy decisions made, the group, in conjunction with other organisations, has started to make a significant positive impact on policy making in many of the areas addressed by its June 2006 letter to the UK Prime Minister. The test of the ClimateWise principles will be in their implementation over the next couple of years.

Bold leadership on climate change has the potential to deliver significant economic benefits – through improvements in economic performance, increased energy efficiency, improved growth as a result of technological innovation, greater energy security and access to significant global export markets for low carbon technologies. There are a range of technologies and services that could give any organisation a leading position in these new markets. While there is no one ‘silver bullet’ that can halt climate change in its track, there is more than one opportunity to be taken.

Author

Aled Jones is Development Director at the Cambridge Programme for Industry where he is in charge of Climate Change and Energy. He is part of the Secretariat for the Prince of Wales’s Corporate Leaders Group on Climate Change, sat on the development group for the ClimateWise Principles and is Director of the Climate Leadership Programme.

Organisation

The University of Cambridge Programme for Industry (CPI) works with senior leaders internationally to help them understand and respond effectively to the most significant social and environmental challenges that face their organisations now and in the future. Our work supports the mission of the University of Cambridge, which is to contribute to society through the pursuit of education, learning and research at the highest international levels of excellence. Our alumni network of leaders extends to nearly 2,000 individuals from over 400 organisations in more than 40 countries. CPI has managed the Prince of Wales’s Business & the Environment Programme for the past 14 years.

Enquiries

Dr Aled Wynne Jones MA FIMA
Development Director, Climate Change
Cambridge Programme for Industry
University of Cambridge
1 Trumpington Street, Cambridge, CB2 1QA
Tel: +44 (0)1223 342100
E-mail:

 

Picture credit: Aled Jones