The business of climate change is heating up, as evidenced by a recent spate of reports, studies, and documents on the topic. I've witnessed the birthing of five such works in just the past ten days, all of which deserve mention.
One theme is risk. For example, there's the Global Framework for Climate Risk Disclosure, published by an alliance of 14 large institutional investors and other organizations representing "trillions in assets," according to news reports. Investors created the framework to address what they called "a widespread problem": not enough companies are reporting adequately on their climate policies, programs, and progress -- and the implications to shareholders -- that investors need to analyze climate risk and opportunities in their portfolios. Despite the rising interest in corporate climate performance, it turns out that fewer than a dozen Fortune 500 companies have done comprehensive climate risk reports to date for shareholders, virtually all of them by electric power companies.
The framework asks companies to measure their total and projected greenhouse gases, provide a strategic analysis of climate risk, assess the physical risks of climate change to their companies, and conduct a risk analysis related emerging climate regulations in the U.S., Europe, and elsewhere.
Meanwhile, a report issued last week by insurance giant Allianz and the World Wildlife Fund said that the insurance industry needs to do more to address the growing impact of climate change-induced damages -- and the resulting insurance claims. (This is a topic I've covered frequently -- see here, here, and here, for example.) The Allianz report (Download - PDF) proffers recommendations for addressing the potentially adverse consequences of climate change in the U.S.
One recommendation is for governments and insurance companies to "help correct market distortions and communicate appropriate signals to homeowners, businesses, and consumers moving into high-risk areas." The report points to the need by regulators to consider carefully the impact of programs like the U.S. National Flood Insurance Program, which keep insurance rates artificially low for people living in flood-prone areas, thereby encouraging overdevelopment. The report also recommends that insurers influence land use development and planning in high-risk areas.
But it's not all bad news. The challenge of tackling climate change could create a market of up to £30bn for British business over the next ten years, according to a new report by Shell Springboard. The report (Download - PDF) quantifies for the first time the potential size of the market for businesses that develop technologies, products and services that help combat climate change.
Among other things, the report identifies "major opportunities" for small and mid-sized companies in a range of markets, by both responding to consumer demand for environmentally friendly goods and to demands created by government action. Among the biggest identified markets in 2010 will be renewable energy, renewable transportation fuels, and home energy efficiency.
It's that same sense of opportunity that led nearly 150 companies, environmental groups, and others to release last week a "Sustainable Energy Blueprint," a policy paper outlining a "plausible strategy for achieving a no-nuclear, low-carbon, highly-efficient and sustainable energy future."
The paper (inexplicably unavailable online; to obtain a copy e-mail to firstname.lastname@example.org) envisions that by 2050, energy-efficiency improvements will have reduced U.S. energy use from present levels by 40%, renewables will account for at least half of total energy supplies, greenhouse gas emissions will be two-thirds from 2005 levels, fossil fuel imports will have ceased, and nuclear power will no longer be in use.
Hey, you gotta have a dream.
And then there's Business for Social Responsibility, which has just issued a comprehensive report entitled "A Three-Pronged Approach to Corporate Climate Strategy." The report (to be made available this week on BSR's Web site) asks, "What would be the components of a smart corporate strategy for companies that are serious about climate change?"
The answers won't shock anyone who's been paying attention -- they involve some combination of making energy efficiency improvements, using renewable energy, and offsetting remaining emissions -- in short the Three R's of energy I've addressed in the past. Still, the BSR report covers the ground well, with real-life examples.
Perhaps most interesting is the report's guidance for successful organizational change in a company's approach to climate. The guidelines include both the obvious ("Initiate change before the threat becomes severe") and the not-so-obvious ("Build internal capacity, and avoid long-term dependence on external entities").
And, perhaps, most importantly, "Communicate early, fully, and often."
Some people say that government and industrial activities like the ones you mention are just delay tactics, what do you think about that?
It seems to me that any statement by a sector as important and mainstream as insurance to the effect that companies need to do more to document their contributions to global warming is a step in the right direction.
Of course many corporations are ignoring the problem altogether; of course governments like the US's are dragging every foot they can. There'll be plenty of legislation that sends the issue to committee forever (I can't speak to the specifics of the Canadian Clean Air Act). But public recognition of the problem by big companies is a vital first step.
I don't doubt that down the line a few years we'll have to figure out ways to hold companies' feet to the fire on this. There are too many industries whose whole business model is built on cheap, CO2 -intensive energy for that not to happen. And we probably won't have many governments on our side, or other corporations helping get their brothers in line. But better some multinationals recognize the problem today than not.