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saw in climate change the opportunity to do some re-branding with a vision that includes powering its facilities and fleet of vehicles with renewable energy, cutting back on waste and selling green products. Wal-Mart reportedly crafted their greening plan with the help of former Vice President Al Gore. Commitments include reducing GHG emissions by 2 per cent at existing locations and investing $500 million in environmental improvements each year moving forward.31

The CSR approach to managing risk involves engaging your critics and, ideally, forming partnerships with them. This is what many companies have done on climate change. Through HSBC's Climate Partnership, the bank works with the Climate Group, WWF and EarthWatch on projects to raise the awareness of employers about climate change. Nick Robins of HSBC describes this as 'old school philanthropy'. Other companies, such as J. P. Morgan, prefer a more direct approach. You just buy yourself a climate portfolio by purchasing one of the largest producers of carbon offset credits - Oxford-based Climate Care.

While in many examples of CSR the risk is to a company's reputation with its customers (think of the controversies that enveloped Nike or Starbucks), in climate change, one of the principal pressures comes from investors. Those with pensions or life insurance, the base for most of the world's investment capital, can potentially exert a far greater influence than consumers can. Prompted by the crisis in corporate governance exemplified by the Enron and Worldcom financial scandals, the response came in the form of an emphasis on reporting and accountability. Projects to get companies to measure and report on their GHG emissions were developed and flourished in the wake of these scandals. Underpinning these projects is the idea that what matters is what can be counted. A sceptical public wants to know that companies are in fact delivering on their commitments proclaimed in glossy brochures and expensive television advertisements. Systems of reporting and benchmarking are crucial to help persuade them.

The Greenhouse Gas Protocol, jointly created by the World Resources Institute and the World Business Council for Sustainable Development in 1998, is one such project. It is a corporate reporting and accounting standard, and now claims to be 'the most widely used international accounting tool for government and business leaders to

31 'Wal-Mart's legacy and environmental commitment'. See articles/walmart-environmental-legacy-commitment.html, accessed 19 December 2009.

understand, quantify, and manage GHG emissions'.32 Another is the Carbon Disclosure Project, which tries to get companies to actually report their emissions (see more on this in the next chapter). While for business this was merely another reporting responsibility, for the financial community, as we will see in the next chapter, it becomes an important risk-management tool.

Moves by the financial community to shed light on the corporate sector's emissions profile are paralleled by climate activists' attempts to reposition investments in fossil fuels as liabilities rather than assets. A report by Platform and Greenpeace warns of increasing financial risk for BP and Shell as a result of their investments in the Alberta oil tar sands in Canada. The sector now accounts for 30% of Shell's proven reserves. The report shows that 'tar sands represent not only an enormous threat to the climate, but also to the security of pension fund shareholders of the oil companies'. This is because of a number of factors which the report mentions as threatening the long-term profitability of the sector including: the prospect of low-carbon fuel standards, the rising cost of delivering gas to the tar sands, the unreliability of carbon capture and storage (projects to capture carbon dioxide from power station flue gases and put it back in the ground), the extensive clean-up operation and the potential future litigation from local communities. 'The idea that oil sands will enhance energy security is delusional', said Andrew Dlugolecki, Director of Andlug Consulting in the UK , and former director of general insurance at insurance giant CGNU. 'Investors should do all they can to challenge this misguided use of shareholders' money, which will make global warming worse, and instead call for a new approach that is based on the reality of climate change.'33

business risks from climate change itself

Of course it is also possible that climate change itself might force companies to change. Climate change is impinging upon business strategy through the physical impacts that climate change has upon how and where they conduct their business. Companies will thus need to adapt

32 'The Greenhouse Gas Protocol Initiative'. See, accessed 13 April 2009.

33 Platform, 'Oil giants "underestimating investor risk" on tar sands'. See http://www., accessed 19 December 2009.

and deal with various risks to their business. Should they withdraw from coasts or from increasingly flood-prone rivers? How should they build given increased risks from hurricanes?

There is growing evidence that companies in sectors vulnerable to climate change, sectors such as tourism and agriculture, for example, are factoring climate change scenarios into their calculations about location and corporate strategy. Barclays Capital for example screens investments according to whether the costs they might face in adapting to climate change will affect Barclays' bottom line. The largest bank in emerging markets, HSBC, is alert to the effect climate change could have on economies where it invests, in particular on port cities such as Mumbai and Shanghai, where it has many billions of dollars worth of assets. There is also some evidence of companies funding adaptation projects as part of their CSR strategy.34 How far the private sector will go in helping to foot the bill for the $85 billion some think is needed to finance adaptation by 2015 is unclear,35 but key development actors such as the UK government's Department for International Development are trying to get the private sector on board through their Task Force on Adaptation.

limits to greening business

Amid the hype about the opportunities that climate change presents for business, it is worth recalling that climate change presents a different type of challenge for many companies. The rather tired formula of 'win-win' opportunities, which underpins the 'business case for sustainable development', hits its limits with climate change. There are some zero-sum situations. There are trade-offs and there will be losers.

Climate change raises awkward questions about the sustainabil-ity of the fossil fuel companies that have underpinned the growth and development of the global economy over the last two centuries. It challenges us to decouple growth from increasing energy use. Whereas tackling ozone depletion was about doing different business, tackling climate change is potentially about doing less business.36 This doesn't make it

34 Conversation with Chintan Shah, Vice-President and Head of Strategic Business Development, Suzlon Energy India, 4 July 2008, Potsdam Germany.

35 N. Robins, HSBC, 'Financing the Transition to a Low Carbon Economy', Linacre lecture, 14 January 2008, Oxford University.

36 I. H. Rowlands, The Politics of Global Atmospheric Change (Manchester: Manchester University Press, 1995).

easy to convince your shareholders of the need to get tough on climate change. Indeed most of the future scenarios for energy security that a company like Shell uses do not anticipate an actual drop in emissions, only a levelling off. A world of constraint is not yet one many leaders recognise, it seems, despite the rhetoric. Energy security rather than climate change continues to be the key driver for many. And while this may cause some to seek reductions in oil use, for others it may simply drive projects to expand oil drilling into new areas like the Arctic.

Moreover, though a number of leading multi-nationals are under pressure to deliver on their green rhetoric and do want to reduce their liabilities, it is true that for most companies, most of the time, in most parts of the world, climate change is a non-issue. This is especially the case for small and medium-sized enterprises (SMEs) that constitute over 90% of the volume of economic activity that takes place. These are not generally preoccupied with climate change except when buyers such as Wal-Mart make demands of them. Rarely do SMEs have the resources to comply with demanding standards or to launch elaborate PR initiatives. Whereas BP spent $200 million on convincing the world that it is 'Beyond Petroleum', almost as much as it actually invested in renewable energy in the same period,37 smaller companies, even where they are making important contributions, do not have a loud enough voice to shout about it.

Climate change also presents some companies with difficult trade-offs where reducing their carbon emissions, for example, may conflict with other elements of their own corporate strategy for good PR. Nowhere is this clearer than in the debate about food miles. The UK-based supermarket Tesco, for example, promised to label all its products according to their carbon footprint. But they then have to face the issue of how to square this commitment with others to support poorer farmers involved in fair-trade schemes, who are reliant on exports to supermarkets. These are the areas that lie beyond the comfortable zone of easy 'win-win' solutions. If handled the wrong way, they could easily be win-lose.

If action on climate change has to be justified in terms of a business case for action and relies upon CSR-type pressures to drive corporate responses, we are left with the issue of what happens in those parts of the world where such pressures do not exist. It would be a

37 See P. Driessen, 'BP - Back to Petroleum', Review - Institute of Public Affairs, 55(1) (2003), 13-14.

brave NGO indeed that spoke out in China about the climate performance of the country's China National Oil Company, Gazprom in Russia, or the Saudi government within that country. Indeed, a new trend in the business community in Europe and North America is to argue that in the absence of commitment to CSR initiatives from these competitors, their own commitment to CSR is untenable and unprofitable. Just as companies have made such arguments about the need for universal climate policy instruments to eliminate competitive advantages for those not subject to regulation, the same argument may be made about voluntary action on climate change.

looking forward

What is the overall picture? The first thing to note is that it is very hard to paint such a thing, which in itself presents a problem: what is the net worth of all the voluntary commitments from business? No one really knows. Different benchmarks over different time-frames covering different gases complicate a comprehensive assessment. Those who have tried conclude as much.38

The picture then, is, perhaps inevitably a mixed one. We find evidence of significant shifts in rhetoric and evidence of genuine commitments to reduce emissions and invest in technologies and projects that reduce GHG emissions. Some corporations also seem to be taking climate change seriously as something which impacts upon their core corporate strategies, rather than an issue their PR departments can deal with. At the same time, it is not uncommon to see bold initiatives on climate change alongside actions which have the reverse effect. While BP went to considerable lengths to re-brand itself as 'Beyond Petroleum', it has been at the forefront of those companies making the most of the extraction of oil from the Alberta oil sands. These represent the largest source of oil outside of Saudi Arabia, whose extraction implies a highly polluting process - to say nothing of the emissions from burning the oil once it is out of the ground. Likewise airlines increase their fuel efficiency while simultaneously increasing the number of flights they make.

Rising oil prices and policy momentum around further action on climate change keep the issue relatively high on the agenda of

38 P. Mann and D. Liverman, 'An empirical study of climate change mitigation commitments and achievements by non-state actors', conference on the Human Dimensions of Global Environmental Change, Amsterdam, 24 May 2007.

executives. Interestingly, as many companies point out, the price of carbon per se is not a key determinant of their overall corporate strategy. This is something conceded even by companies that place great faith in market prices triggering low-carbon transitions. The broader health of the economy will also be a determinant of how far and how fast corporations feel able to move on climate change.

Drivers of change often include regulation, technology and market prices, but also entrepreneurial individuals and supportive corporate cultures. Would BP have moved on climate change in the absence of John Browne's leadership? Possibly in the end, but probably not when they did. Is it likely that Willie Walsh's tenure as Chairman of British Airways will signal a retreat from some of the bolder promises contained in the company's climate change programme? Possibly, but he can't be seen to be retracting too much. How important is the fact that Nicholas Stern, author of the influential Stern Review on the economics of climate change,39 is an advisor to the Chairman of HSBC, in explaining why this bank has taken a relatively proactive position on climate change? Individuals, even within vast corporate enterprises, can generate significant and widespread change.

Looking at the history of CSR and corporate philanthropy, it is easy to see that fear of regulation has not been the only driver of change. In nineteenth-century England, the appalling conditions documented by Friedrich Engels in The Condition of the Working Class in England 40 prompted demands for a Factories Act, but other companies such as Cadbury built their reputation on corporate philanthropy and a concern for the welfare of their employees.

The extent to which regulation is a key driver differs by sector. While oil and aviation are relatively regulated, other sectors are less so. This, combined with ownership and financing structure, has an impact on a company's ability to think strategically and in the long term. For many companies, 2020 or 2030 is the longest time-frame they can imagine. There is an important implication here for policy. Targets set for 2050 or thereafter need to be supplemented by targets closer to home if they are to enter the calculus of corporations today.

The main conclusion of course is that companies are hugely unevenly affected by climate change, and so transitions towards a lower carbon future will inevitably involve a cross-section of sectors

39 N. Stern, The Economics of Climate Change (Cambridge: Cambridge University Press, 2007).

40 F. Engels, The Condition of the English Working Class (London: Penguin, 1987).

from industrial and financial capital. We will return to the issue of what such coalitions might look like while outlining different future scenarios for climate capitalism in Chapter 10. But it is clear that the sorts of responses we have seen to date make perfect sense as either good CSR or risk-management strategies. In most cases they are not intended to serve as the basis for a transition to a post-carbon future. Some companies are trying to align climate change with their core corporate strategies, but such enterprises are the exception rather than the rule.

The challenge remains how to move from the politics of tokenism and displacement to the construction of a low-carbon economy. This entails more and more companies seeing economic opportunities in such an economy. It thus means the design of regulations and broader governance structures which enable them to realise these opportunities. This is one way of seeing the whole apparatus of the 'carbon economy' which we discuss in the next few chapters - a regulatory structure which creates opportunities for companies both to make money in the carbon markets themselves, and also, by transforming their incentives, to seek out the opportunities in low-carbon development. It may be these opportunities, more than many other factors, that will persuade businesses that their future lies in a low-carbon economy, and that risks they accept now will be rewarded in the future.

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Solar Panel Basics

Global warming is a huge problem which will significantly affect every country in the world. Many people all over the world are trying to do whatever they can to help combat the effects of global warming. One of the ways that people can fight global warming is to reduce their dependence on non-renewable energy sources like oil and petroleum based products.

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