Monday, 9 January 2012

Corporate Carbon Management - Now More Than Ever

The latest round of international climate change negotiations ended one month ago in Durban.  Now that the dust has settled, we can take stock of what the results mean for corporate carbon management.

There were a number of policy announcements from Durban, but the biggest piece of good news is that government negotiators managed to avoid the worst-case scenario, agreeing to set a path to binding emission reduction targets and agreeing to preserve the Clean Development Mechanism in the interim.  The other piece of good news is that, for the first time, major developing nations like China have agreed to set binding reduction targets as an outcome of future negotiations.

Governments around the world have sent a clear signal to business: emission reduction targets are going to tighten, so get ready.

The bad news from Durban is that the deadlines are much too loose.  The Durban Declaration calls on the parties to finalise a post-Kyoto climate change agreement by 2015, with emission reductions beginning no later than 2020.

These targets reflect the difficulty of agreeing potentially painful greenhouse gas emission reductions amongst scores of states with their own political and economic agendas.  However, they fail to reflect the urgency of the climate change crisis.

Mother Nature does not care that it is an election year.  We will not get a reprieve from record drought, record heat and fires, record floods, coral bleaching, and thawing permafrost.

Climate change is happening today.  While it is too late to prevent climate change, we still have time to minimise its impacts.  As we have seen over the past year, the costs of climate change related impacts can greatly exceed the cost of reducing our emissions.

Many politicians seem to have an incentive to encourage business as usual, but companies are in a different position.  The incentives for early and ambitious action on corporate carbon management are clear.

The writing is already on the wall regarding the need to reduce emissions.  Many governments are already putting carbon reporting and reduction rules in place, and the rest are making noises in this regard. Companies that take action now are

thus in a position to gain first-move advantage developing lower-carbon processes, products and services.

Second, while governments may have signalled that carbon reductions can wait - for a few years at least - customers are

more demanding.  Over and over again, surveys show that consumers think more highly of firms that take carbon management seriously. In the UK and internationally, major firms are embracing sustainability at the senior management level in a race to demonstrate their environmental credentials to the public.

Third, Carbon Clear has documented an increasingly direct link between carbon management and financial performance.  Understanding the greenhouse gas emission drivers in a company requires managers to get a handle on resource flows within the business, the efficiency of their production processes, and the ways in which customers use their products and services.  Developing carbon clarity drives efficiencies and reduces costs throughout the company, with a measurable impact on the bottom line, and benefits that can be felt by customers, employees, investors, the finance team, and other stakeholders.

The corporate sector has the potential to drive huge global emission reductions, not only here but in developing countries that form a huge part of the global supply chain.  While government leadership and policy direction are welcome, there's no need to wait.  The benefits of corporate carbon management and the risks of inaction are a spur to immediate action. We need transformative corporate carbon management now more than ever.