Andy Gouldson and Rory Sullivan argue why tough targets and new business models are essential to counter climate change

One of the central questions in climate change policy is whether and to what extent corporate action can contribute to the greenhouse gas emission reductions that are required if we are to avoid dangerous levels of global warming.

In the UK supermarket sector – which we have been researching as part of a wider project on how non-state actors influence corporate performance on climate change – we have seen companies set a range of targets for some or all of their operations, and supply and value chains.

Companies in the sector expect to reduce at least some of their operational emissions by 1-2% a year in absolute terms and by 2-5% in relative (or efficiency) terms. The difference is accounted for by business growth, with a number of companies indicating that, over the longer term, business growth is expected to run ahead of the emissions reductions achieved through operational efficiencies.

When we compare these targets to those being set by national governments, they align reasonably well. For example, the commitments that have been made by the UK translate into economy-wide greenhouse gas emissions reductions of 1-1.5% a year through to 2020.

If we look at the work of the Intergovernmental Panel on Climate Change, it suggests that keeping global temperature increases in the range 2-2.4C would require global greenhouse gas emissions to be reduced by 50-85% over the period 2000-2050. This is equivalent to reductions in global greenhouse gas emissions of 1.4-3.7% a year over this timeframe.

That is, while the targets being set by supermarkets align well with the targets being set by national governments, at least over the short term, they compare less well with the types of reductions that are required if global greenhouse gas emissions are to be stabilised at a level that averts dangerous climate change.

There are reasons to be optimistic that the targets being set by supermarkets will be achieved. The supermarkets concerned have reasonably clear strategies for how they intend to achieve these targets. These companies also have a reasonable track record of delivering on commitments. Moreover, the sorts of emissions reduction trajectories they are proposing are broadly consistent with those they have achieved in the past.

Not so fast!

However, it is important to qualify this enthusiasm. Most targets relate to operations rather than wider supply chain or customer-related emissions. While the sector’s operational emissions are significant, its wider footprint is an order of magnitude larger. That is, the sector could be criticised for focusing on the less significant part of its carbon footprint – although it is also important to acknowledge that many of the supermarkets now have a range of initiatives directed at reducing emissions from their supply chains and to engage their customers on climate change.

The second qualification is down to the fact, as stated above, that many companies’ targets are expressed in relative rather than absolute terms. That is, the goal is to improve energy efficiency and/or greenhouse gas emissions intensity. One of the recurring themes from our interviews with the supermarkets is the very real tension between business growth and changes in business models (eg increased transport from internet shopping) and absolute greenhouse gas emissions, and the difficulties in ensuring that efficiency and intensity gains outweigh the increases in emissions associated with business growth.

The third qualification is that, at least as yet, we have seen little evidence that any of the retailers are considering radical changes in their business models. Nor do any of them see an alternative to business growth. In that context, we need to be aware that radical changes to business models are not really on the agenda.

The fourth qualification is that while there is evidence that retailers can and will deliver on their commitments, the dependability of these commitments is contingent on the drivers for action, particularly cost savings – so there is a dependency that energy prices remain reasonably high, for example.

In conclusion, the greenhouse gas emission reduction commitments that supermarkets, at least in the UK, have made and the potential contribution that these commitments may make to wider public policy goals on climate change can be viewed quite positively. However, we must also be aware that the commitments may not be enough and that we may need further incentives (whether through prices or regulation) for companies to take further action.

Prof Andy Gouldson is director of the centre for climate change economics and policy at the University of Leeds. Dr Rory Sullivan is a senior research fellow at the University of Leeds, strategic adviser, Ethix SRI Advisers and a member of the Ethical Corporation editorial panel.

See also: Andy Gouldson and Rory Sullivan (2013), Long-term Corporate Climate Change Targets: What Could they Deliver?, Environmental Science & Policy, 27 (March 2013), pp. 1-10.

Andy Gouldson  climate change  Environment  Rory Sullivan 

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