Bad weather may cloud the picture
Financial Times, 14 October 2004 – Fiona Harvey explains why extreme weather conditions have put global warming on top of the political agenda and how business can gain a competitive advantage by acting to reduce emissions.
Climate change will be one of the items at the top of the agenda when the UK takes over the presidency of the European Union and G8 next year, promises Tony Blair, the UK prime minister.
His enthusiasm for the subject reflects growing public concern that “extreme weather events”, such as storms, droughts and floods, could be the result of human action changing the planet’s weather systems.
Some scientists dispute the research on climate change and its conclusions but a growing body of evidence suggests that human action – in particular, the increasing amount of carbon in the atmosphere, mainly as the result of the burning of fossil fuels – is leading to warmer temperatures and greater unpredictability in some aspects of weather.
Tackling climate change must involve all businesses, as economic growth is the driver of increasing carbon consumption. As developing countries grow they require more and more energy. For these reasons, dramatic change would be required in business practices to bring down global greenhouse gas emissions to those of even a few years ago.
But as “a reduction in growth is not an acceptable path to a lower carbon world, given the challenge that energy is needed to alleviate poverty,” says Bjorn Stigson, president of the World Business Council for Sustainable Development, new ways have to be found to enable developing countries to grow without putting too much strain on the environment. He says: “We need to break the current direct link between standards of living, energy consumption and carbon emissions.”
One way of doing this is for governments to impose costs on businesses depending on the amount of greenhouse gases they emit, sometimes known as a climate change levy, to encourage them to become more efficient. Businesses that emit less greenhouse gas than their peers can be rewarded with carbon “credits” that they can trade with others, to effectively reduce their levy.
Yet some businesses are favoured over others in regulatory regimes, argues Andrea Kaszewski of WWF, a green lobbying group. She says: “There are perverse subsidies in some areas, like aviation. Aviation fuel is effectively subsidised, but the aviation industry ought to be paying more than normal people because they pollute such a lot.”
Even without government involvement, many businesses are seeking to reduce emissions as a way of cutting their operating costs.
Paul Fleming, professor of energy management at the Institute for Energy and Sustainable Development at the UK’s De Montfort University, says there are numerous ways in which companies can take simple steps to reduce their emissions.
He lists energy efficient lighting, more efficient motors and drives in manufacturing plants, better building insulation, and a reduction in redundant pipework as easy ways in which companies can cut their energy use.
These measures can also bring other benefits. He cites the case of a company that gained greater productivity from its workforce when it installed energy efficient lighting, because the improved illumination made working mucheasier. “If lots of businesses took steps like these, it would have a real effect on climate change,” says Prof Fleming.
Before businesses take such steps, they can analyse their emissions in order to figure out where their reduction efforts may be best placed, says Jed Jones, consultant in KPMG’s sustainability advisory services.
“This is a vital step, yet there are many companies that do not have emissions data that can be verified. Often, these companies are the most vociferous opponents of any measures to control greenhouse gas emissions.” Meanwhile, companies in regimes that do regulate emissions tightly may win out over companies in countries that rely on voluntary reductions, argues Robert Casamento, partner at Deloitte. “In five years’ time, European companies will have a new emissions reduction capability more advanced than Exxon and other US companies, which are not investing at the same rate as their European rivals,” he says.
Companies that have taken a lead in reducing emissions, according to new research from the non-profit Climate Group, include Deutsche Telekom, which reduced its carbon dioxide emissions by 65 per cent between 1995 and 2002; 3M, which has achieved a 35 per cent reduction on emissions from 1995 levels; Swiss Re, which will cut operational greenhouse gas emissions by 15 per cent by 2013; and the Canadian Forest Products Industry, which is now reporting greenhouse gas emissions at 28 per cent below 1990 levels.
Some energy companies, which by the nature of their business are responsible for large amounts of global emissions, have also taken a lead in projects to reduce climate change.
Kurt Hoffman, director of the Shell Foundation, points to projects from the Bus Rapid Transit system in Mexico City to the development of more efficient, low-cost stoves as examples of where Shell, in partnership with other organisations, is helping developing countries progress without escalating their emissions dramatically.
Another option for companies seeking to cut emissions is to investigate using timber frame to build their offices. Though architects often do not think of wood as suitable for office construction, Gerry McCaughey, chief executive of Century Homes, cites the case of a five-storey bank in Navan, in Ireland, recently built with a timber frame.
Building houses with wooden frames instead of concrete can almost halve the greenhouse gases used in their construction and operation in some cases. Wood also acts as a store for carbon, as trees take up carbon dioxide from the air as they grow.
If any of these measures are to have much effect on climate change, they will need to be taken quickly.
Anne Lauvergeon, chairman of the executive board of Areva, the French nuclear group, told a recent conference: “(The energy cycle) is like a supertanker. It takes time to change direction, so you must anticipate. Otherwise the consequences may spiral out of control.”
Copyright 2004 The Financial Times Limited
Financial Times (London, England)
Author Fiona Harvey
Publication Date 14.10.2004
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