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Business and Climate Change lecture given in March 2009 to students on my CSR course as part of the Birkbeck College Corporate Governance and Ethics MSC. Birkbeck is a college of London University.
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Business and Climate Change
Birkbeck College, University of London, March 12 2009
Lecture to MSC Corp Gov and Ethics Class. Toby Webb, course [email protected]
Business and Climate Change The future?
Business and Climate Change Climate change: The facts (well, some of them)
• Climate change is happening!
• It's definitely man-made, whatever else nature is doing
• Research shows accelerated warming since 1950
• Earliest rough measurements began around a century ago
• Some species: Costa Rican frogs, already extinct due to CC
• Pre-industrial levels were around 280 PPM in 1750 (guesswork extrapolated from 1850)
• Earth currently at 380-90 PPM CO2
• Top ten years in highest ever temperatures since 1990
Business and Climate Change Extreme weather is here to stay…
Business and Climate Change
• If we stabilize at 400 PPM: 50/50 chance of 2 Degree rise
• BUT only pollution (aerosols reflecting solar radiation) is keeping us below 400 PPM now!
• At 550 PPM there is a 50/50 chance of a 3 Degree rise, (which could be 4.5-5 if wrong)
• Currently: Headed for 2-3.5 degree rise in next fifty or so years
• This could rise to 5-12 degrees by 2099 (different temps in different areas, season and latitude dependent)
• IPCC says "peak carbon' date is 2015 = Copenhagen negotiations in 2009 vital as Kyoto set to expire!
Business and Climate Change Extinct in the wild soon?
Business and Climate Change
• Signs: Lowest ever recorded Arctic sea ice in 2008
• Some say summer sea ice (supports Polar Bears) may go in ten years (IPCC had said 100 years!)
• Many earlier predictions on CC are now being brought forward, some changes accelerating
• Feedback loops: Output from an event or phenomenon in the past influences the same event/phenomenon, increasing speed of change
• In 100 years: possible one meter rise in sea levels world-wide: Huge rise in flooding, disease, migration
Business and Climate Change
Your insurance will cost more…
Business and Climate Change What will GHG's and global warming affect?
• Temperatures / Rain Pattern / Sea Levels / Glaciers (60,000 retreating) / Ice Caps / Sea Ice / Extreme Weather events
• By 2080 UK could be seeing up to 4.5 degree rises in Summer months: Huge impact on agriculture, water, health
• Increased risk of conflict: Bangladesh, climate refugees, Darfur, African agriculture, water shocks)
• Ocean acidification: impact on coral, fish stocks, sea biodiversity
• Agriculture will be hugely affected: Tropics and poles see more rain. Semi arid areas will see less (Mediterranean)
• Global biodiversity will change, species will die out, natural resources will be affected
Business and Climate Change Tuvalu: Potential climate refugees
Business and Climate Change
• Goal should be to limit rise to 2 degrees above pre-industrial levels(1750, 280 PPM)
• Reality will be more like 4 degree rise: Suggestions are: Mitigate for 2, prepare for 4
• OECD nations (the richest!) need to cut CO2 output by 80% by 2050
• UK only country to have passed laws mandating this, BUT:Keep changing the targets: E.G. 26% by 2020, then 34% by 2020, then 42% by 2020
• 50% global reduction in CO2 needed by 2050 to aim for 2 degrees. Unlikely to happen!
• EU target is to cut emissions by 30% on 1990 levels by 2020 (Poland all coal!)
• IPCC's budget is tiny! $30 million a year: what GE spends on R&D every 3 days!
Climate change: The predictions
Business and Climate Change Kilimanjaro: Lot less snow – and national parks
Business and Climate Change McKinsey scenarios:
1) No change in policy = temp rise up to 7 degrees / 1-2 billion people overwhelmed / 4 bn people at risk RE water / total ice cap melt / Amazon may die
2) Dev nations lead the way, spend $350 bn per year by 2030 = sea levels rise / low level islands threatened / hunger increases slower than scenario 1 / Canada and Northern Europe become more productive / Major increase in extreme weather events
3) Global action, spend is $565 bn per year by 2030 = World warms only 2 degrees / hotter areas suffer on crop yields / some ice at poles remains / increase in bad weather and floods, but manageable / tropical disease spread is significant, but limited
Business and Climate Change Bangladesh: Heading north?
Business and Climate Change The future agenda: policy
• Need to value ecosystem services (forests, wetlands, mangroves, peat bogs, clean air etc)
• Externalities need to be internalised (cost of running coal plant don't include pollution)
• Science and technology will be vitally important
• Tackling emissions from agriculture v difficult area due to politics and trade disputes!
• Voluntarism in environmental progress has not been seem to work. Solutions both regulatory, structural and incentive based
Business and Climate Change Maldives: Looking to move…
Business and Climate Change
• Governance structures are vital: OECD nations need to tighten up, developing nations must understand the challenge
• Technology transfer to developing nations (China, India, Brazil etc) will be vital. IP disputes must be resolved
• Energy subsidies, structures of energy market and investment must be reviewed: Renewables growth needs to be massive
• Other key areas: Coal use / Vehicles / Agriculture / Carbon capture and storage / Forestry / Nuclear / Switching coal to gas
The future agenda: policy
Business and Climate Change Ethiopia: Farming issues…
Business and Climate Change The future agenda:
• Electric vehicles and electrified transportation systems: Toyota, Hybrids, plug in cars...
• Decarbonised electricity: power generating firms and CCS
• Decentralised power generation: renewables
• Big solar technology (concentrated solar power, mirror farms): big energy firms and start ups need serious incentives
• Improvements to what we have: insulation, efficiency gains: British Gas, utility, DIY firms
• Biofuels: second generation (non food crops): BP, many others..Shell's energy scenarios interesting. Search EthicalCorp.com for article
Business and Climate Change Business a big climate factor
Business and Climate Change The future agenda:
• Carbon capture and storage has to play one of the biggest roles. BUT is still in infancy. Nothing coming online until at least 2020
• Only test projects exist: Canada, Algeria, Norway, China, but technology mostly used to take out oil! Uses lots of water and power
• Dozen EU demonstration projects under way in EU. RWE building power plant with CCS built in
• If CCS is problematic, or does not work - what then?
Sources: ClimateChangeCorp.com / Tyndall Center / Hadley Center /Professor Bob Watson, Chief Science Adviser, DEFRA, Head of Tyndall Center. March 10 2009
Business and Climate Change
Biodiversity not just on land…
Business and Climate Change The future agenda: consumers
• Increased awareness vital
• Concern about severe lack of current awareness
• "Tragedy of the commons" worries: mutual 'destruction', the 'what can I do' attitude
• Governments, institutions, business needs to tackle apathy
• Incentives needed:
White goods labelling, carbon labelling, pricing incentives on flying, transport, energy sourcing, insulation
Business and Climate Change Larson B Ice Shelf: Melting fast
Business and Climate Change What companies are doing:
• Corporate sector directly responsible for at least 40% of all greenhouse gas emissions
• Firms have stopped denying climate science! (BP in 1997, Exxon in 2008)
• Joint corporate statements urging for long term market based frameworks
• Companies such as: BP, BA, BT, Ford, HP, HSBC, Rio, Toyota signed up with CEOs. USCAP in US does similar work
• Companies said they wanted to make investments AND have investor surety on frameworks
• Lobby groups such as the CBI in UK urged action for several years, before every major summit
• Some US companies found to be members of lobby groups on different sides of the debate! (USCAP)
Business and Climate Change Sunsets may get more spectacular…
Business and Climate Change
• 2009 PWC CEO survey said that 40% of CEOs were not concerned about CC
• 7% extremely concerned, while 42% were extremely concerned about economic downturn
• Suggestions of climate fatigue among businesses in current economic climate
• Many big companies have done the 'easy wins' on energy efficiency. Where next in recession?
• Aviation has been in denial: 2% of emissions, 5-6% by 2050.
• Now industry says will use 10% alternative fuels by 2017
Business and Climate Change Sea levels will rise…
Business and Climate Change
• Wal-Mart is committed to being supplied 100% by renewable energy, creating zero waste and selling environmentally-friendly products
• Coke has a 5% absolute reduction target for its business and that of its bottlers, plus intensity targets for refrigeration equipment
• BT has 80% carbon emissions target by 2020
• ArcelorMittal, Corus and ThyssenKrupp setting up 1 billion Euro research project on gas recycling and CCS in EU
• M&S Plan A. 100 targets, 20% achieved. One aspect: Think Climate Wash at 30C campaign proved big success: increasing the level of 30C washes carried out by M&S customers from 23% to 31% in the first year of Plan A, saving about 25,000 tonnes of CO2.
Business and Climate Change
The first official climate change casualty
Business and Climate Change
• Tesco: Launched a £100 million climate technologies fund, pledged to cut energy usage per square foot by 50% by the beginning of next year compared to 2000 levels, to cut emissions in half by 2020, triple its recycling, and improve in-store climate communications for customers.
• Iberdrola: world’s largest provider of renewable energy: 44GW of renewable assets at different stages of development, 95% of it wind power.
• Waitrose: committed to cutting its CO2 emissions by 10% by 2010, from 2001 levels through a carbon management programme
• Unilever has reduced CO2 emissions in manufacturing operations by more than 30% over the past decade in absolute terms. In 2006, sourced 14.8% of its energy from renewable sources, of which 8.2% it generated itself.
• Lafarge: 20% cut in net emissions per tonne of cement worldwide and a 10% cut in absolute emissions in industrialized countries by 2010, from 1990 levels.
Business and Climate Change
Business and Climate Change
• BUT: These are all big companies.
• "Medium" and "small polluters" for example not done much.
• UK Carbon Reduction Commitment set to change this by 2011. Allowances to be given, then auctioned…
• Other SME's and SME's in other countries doing v little beyond basic environmental compliance.
• Campaigners argue only regulation will work...
Business and Climate Change
Business and Climate Change Buzzwords and what they mean
• Footprint: "Total set of GHG (greenhouse gas) emissions caused directly and indirectly by an individual, organization, event or product” (UK Carbon Trust 2008)
• Neutrality: "Achieving net zero carbon emissions by balancing a measured amount of carbon released with an equivalent amount sequestered or offset"
• Offsetting: "Financial instrument representing a reduction in greenhouse gas emissions. Offsets are typically generated from emissions-reducing projects"
Business and Climate Change Can we make green cool for consumers?
Business and Climate Change Buzzwords and what they mean
• Intensity: In companies, increases efficiency per unit or facility but does not limit overall emissions growth of the organisation
• Supply chain emissions: "Emissions generated by indirect associates to the organisation: First, second, third tier suppliers, and that generated by their products"
• Carbon labelling: "Show products' carbon footprint and help people make green shopping decisions" (in theory!)
Business and Climate Change More resources: Much more on emissions trading, regulation etc in this report:
Countdown to Copenhagen: Government, business and the battle against climate change (Economist Intelligence Unit)
And on www.ClimateChangeCorp.com/ www.ethicalcorp,com / [email protected]
IPCC website
UK Government websites: DEFRA, Energy and Climate Change Ministry
Greenpeace website
Plus many others, just search around….
