Questions about the quality of climate change research have bolstered the sceptics. But leading companies say their climate change strategies remain unchanged

 

Questions about the quality of climate change research have bolstered the sceptics. But leading companies say their climate change strategies remain unchangedIs global warming real? If so, is it human-induced? Thousands of scientific studies, including the ones by the Intergovernmental Panel on Climate Change and the United Nations Framework Convention on Climate Change, tell us the planet is heating up at an alarming rate, caused by greenhouse gas emission due to human activity such as by burning fossil fuel.

They warn if the problem is not tackled, the earth will be devastated by catastrophic floods and storms, displacement of communities and shortages of food and water.

The doubters, who include a few scientists armed with their own versions of research, would like us to believe that the evidence is inconclusive and the warnings exaggerated. Some of them admit that temperature has risen “marginally” but they insist the rise is not caused by human activity.

Scientific studies that point to global warming caused by human activity have led to international treaties on greenhouse gas reduction such as the Kyoto protocol and climate change regulations in several countries to cut emissions.

But some recent events have emboldened the sceptics. First, hundreds of emails and documents were hacked into and leaked from a computer server in the climate research unit of the University of East Anglia in Britain. The mails, exchanged between prominent US and British climate researchers, give an impression that scientists may have withheld or manipulated data to strengthen the case that global warming was real and discussed strategies to counter arguments of climate sceptics.

The embarrassing leak took place weeks before the world climate summit in Copenhagen, providing fodder to sceptics. The Copenhagen summit eventually failed, though not entirely because of the sceptics.

This was followed by even more embarrassing revelations, in January this year, that the fourth assessment report of the IPCC, managed by a Nobel prize winning committee, had several errors. These included unsubstantiated predictions about the potential disappearance of the Himalayan glaciers by 2035. Sceptics have gone to town, citing these errors to discredit the entire work of the IPCC.

Questions over the science of climate change seem to have started eroding public belief of global warming. This was reflected in a leading British poll early this year by Ipsos Mori. According to the survey, which covered 1,500 respondents, the proportion of adults who believe climate change is “definitely” a reality dropped from 44% to 31% over the past year.

“People are victims of a disinformation campaign,” says Paul Dickinson, chief executive of the UK-based Carbon Disclosure Project (CDP), the world’s largest non-profit initiative to collect and report greenhouse gas emission data from companies.

Dickinson says the most reliable sources of climate data are official experts. “Government scientists have no particular incentive to under-estimate or over-estimate the problem of climate change. There are many statements from the government scientists that climate change represents the most serious problem facing the world,” he says.

But the public cynicism – if it became widespread – could create a serious challenge for governments’ efforts to introduce tougher carbon emission reduction laws, which in turn may mean unpopular actions such as increases in energy prices. And sustainability managers in companies may find it more difficult to persuade their colleagues to implement emission reduction strategies.

In February, three major US companies operating in sectors with high greenhouse gas emissions – BP America, ConocoPhillips and Caterpillar – decided to quit the United States Climate Action Partnership (USCAP), a grouping formed to lobby the government over the proposed climate change regulation. These companies, say analysts, were unhappy with the draft legislation pending in the US Congress that provides concessions for coal-fired power plants but not for the oil and gas industry. Climate sceptics, however, have welcomed their exit and claim it is part of a growing trend.

Companies that know better

But companies that have taken demonstrable leadership position on climate change appear unaffected by the sceptics’ campaign. Dickinson says the CDP is on track to get 4,500 companies to report their emissions this year, up from the current 2,500 companies.

“We are seeing a move from discussions around the science of climate change to much more business-oriented discussion regardless of the recent media attention around scepticism of climate change,” says Sak Nayagam, London-based climate change practice head for Europe, Africa and Latin America at consulting firm Accenture.

Accenture, which reports its own carbon emission through the CDP, works with several clients to help them reduce their carbon emission and increase energy efficiency. “We are actually seeing greater uptake of low carbon technologies around green buildings, for example,” Nayagam says.

He points to a global climate change survey of consumers worldwide that Accenture conducts every year. In 2009, when 11,000 consumers were surveyed in 22 countries, 86% of respondents were still concerned by climate change despite the economic downturn. Among consumers, 71% said they would avoid buying long-distance imported goods because of the high emissions involved.

“Growing concerns related to climate change are driving the actions of policymakers, investors, corporations, employees, customers and other stakeholders around the global toward low carbon economy,” Nayagam says.

In fact, an increasing number of companies are not only aggressively implementing climate change strategies, but are also lobbying for tougher climate change regulations.

“Most discussions in the US do not raise doubts about climate change. It’s the fringe, reactionary entrenched interests that raise doubts. They are an extreme minority,” says Anne Kelly, director of Business for Innovative Climate & Energy Policy (Bicep), an association of consumer companies in partnership with sustainability non-profit Ceres to lobby for a strong climate change and energy legislation in the US.

Starbucks, Nike, Levi Strauss, Sun Microsystems and Timberland are Bicep’s founding members. A number of other US companies joined the group later, including Gap, Ben & Jerry’s, Symantec, eBay and Best Buy among others.

Climate sceptics

Analysts note that it is the traditional companies, mainly in carbon intensive industries such as oil, transport, coal-fired power plants and mining that are against any aggressive climate change and energy legislation in the US.

For instance, the US Chamber of Commerce, dominated by traditional businesses, is against the proposed US climate bill that aims to cut greenhouse gas emissions and put a price on carbon. The chamber fears that strict targets for emission reduction will make US businesses uncompetitive in the global market. Frustrated by the chamber’s negative stance on the climate change bill, some companies, including Apple, have recently withdrawn their membership.

“It’s very clear that there is a connection between those who are creating doubt and funding sceptics and those who stand to benefit from the status quo in the short term,” says Kelly. “But in the long term we all will benefit from a low carbon economy.”

Kelly says Bicep companies will continue to push for a comprehensive climate and energy bill. “We want a bill that puts a price on carbon, enhances energy efficiency and use of renewable energy and has a real strict and strong set of targets and timetable,” she says.

Convinced that climate change will affect all businesses irrespective of whether they are major emitters or not, Bicep members have been pursuing their own climate change policies as well.

“There is a lot of scientific evidence that the temperature has been rising over the years,” says Jim Hanna, director of environment impact at Starbucks, a founder member of Bicep. Starbucks heavily relies on a highly specialised agricultural supply chain to source coffee which is grown at high altitudes in specific sub-tropical climates.

Hanna says climate change can directly affect Starbucks’ business by disrupting the supply chain. “Coffee farmers are already feeling the impact of climate change due to shifts in rainfall and a decrease in the usable land in coffee growing regions.”

Starbucks started implementing a climate change strategy in 2004 and first measured its direct carbon footprint in 2007, when it stood at 913,000 tonnes a year – with 75% of this coming from electricity use in stores, offices and roasting plants. The company has set aggressive targets to reduce energy consumption and aims to obtain LEED certification for all newly opened stores.

Hanna says Starbucks will also continue to participate in discussions at the US federal level to push for a strong climate change regulation through Bicep.

In the UK, the telecoms giant BT says its climate change strategy remains central to how the company operates.

The company started a programme to reduce its impact on the environment in 1990, which later evolved into climate change initiatives becoming part of the company’s broader sustainability strategy.

“We realised years ago that climate change is going to cost the business a great deal of money if nothing was done,” says Donna Young, BT’s climate change head.

Costs cut

Climate change strategies have actually helped BT to reduce costs. “For example, creating energy efficiency not only saves the planet, it also saves money. It’s a win-win situation,” says Young.

BT’s climate change strategy, launched in 2006, has four core elements: reducing the company’s own carbon footprint, influencing customers, influencing suppliers and engaging employees.

Young says BT’s climate change strategy is based on solid scientific advice, both internal and external. BT’s director of sustainable development, Chris Tuppen, is himself an environmental scientist. BT’s leadership forum, an advisory board, includes Jonathon Porritt, a sustainability expert, and Jorgen Randers, chair of a Norwegian government commission on greenhouse gas reduction.

On reports of surveys revealing public scepticism towards global warming, Young says part of the media is responsible for sensationalising such findings. “Our 7,000 employees are actively engaged in reducing their carbon footprint at work and at home,” she says.

As sustainability partner to the London 2012 Olympic games, BT is launching initiatives to encourage people to address climate change.

In the US, even though the climate change bill hangs in the air, companies cannot ignore climate change risks. For example, the Securities and Exchange Commission’s rules require publicly listed companies to disclose climate-related risks to investors.

A new SEC guidance note issued in January requires the US companies to provide broader and more consistent disclosure on climate change issues impacting their business. This includes the impact of climate change on business arising from current and impending legislation; international agreements; indirect consequences of climate change such as potential business risks or opportunities; and physical impact of climate change on business operations.

Institutional investors are playing a key role in driving companies to embrace climate change policies. More than 500 institutional investors managing $60tn in assets have signed up to the Carbon Disclosure Project. CDP acts on behalf of these investors to collect greenhouse gas emission data from companies. Institutional investors, policymakers and other stakeholders use the data to make investment and policy decisions.

The CDP’s Paul Dickinson says carbon disclosures have helped institutional investors understand and respond to climate change risks by gathering quality data. This also helps them understand the climate strategies companies are deploying, technologies that are being developed and innovations that are taking place. “All of this really helps them to understand which corporations will be winners and which will be losers in a carbon constrained economy,” Dickinson says.

Supplier disclosure

An increasing number of companies are extending their emission disclosure commitment to their supply chain. Companies including Dell, Juniper Networks, National Grid, PepsiCo and Reckitt Benckiser are requesting their suppliers to disclose emission data by participating in the CDP supply chain programme. The CDP says 56% of members of its supply chain programme have said they actually expect to deselect some suppliers in the future for failing to meet carbon management criteria.

CDP has launched disclosure initiatives for public procurement agencies as well. “In the UK, we are working with 17 public departments including the treasury, defence, health and environment,” says Dickinson.

CDP has also started a water disclosure initiative and hopes to rope in the world’s 300 largest water consuming companies to report their water footprint this year.

Though an increasing number of companies worldwide are adopting climate change policies and disclosing their footprint and strategies, not all sectors are up to speed.

In the UK, the 2008 climate change act sets a national target of 34% emission reduction by 2020 and 80% by 2050 from 1990 levels. Companies need to achieve on average 2.4% annual reduction to meet the 2020 national target.

Many companies in the highest carbon intensity sectors of energy, utilities and materials lag behind the national targets, according to a recent study of FTSE 100 companies by the CDP.

The study found that the materials sector will register a 1.5% annual increase in emissions. The annual reduction targets of the energy and utilities sectors are at 2% and 1.8%, both falling short of the 2.4% required for meeting the national 2020 target.

In the US, the two leading business lobbies on climate change – Bicep and USCAP – are pursuing different approaches, though both support federal action on climate change.

Bicep members themselves are not major emitters but their businesses will be affected by climate change legislation and the impact of climate change itself. In contrast, USCAP is made up of major carbon emitters that will be more directly affected by a climate regulation.

Bicep advocates deeper reduction targets – 20% by 2020 and 80% by 2050, taking 1990 as the base year. USCAP takes a softer approach and wants 2005 to be the base year for setting reduction targets.

Bicep wants 100% of carbon emission allowances to be auctioned by the government, under a cap-and-trade scheme, in order to price carbon. This will benefit the companies that have achieved carbon efficiency. USCAP wants a significant portion of these allowances to be distributed free. This will benefit polluting industries that have done little to reduce their emission.

Another group of companies that are supporting tougher regulations are those that stand to gain from the heavy investments companies will have to make to reduce their emissions. These include manufacturers and providers of video conferencing systems, energy efficiency technology, carbon capture and storage technology, and renewable energy.

It appears that sceptics are not about to change their tune and will keep trying to create doubts about global warming. But smart companies and investors understand the risks as well as opportunities presented by climate change. They will continue to align their businesses to be efficient and profitable in a low carbon economy. This will mean increasing investment in energy efficiency, carbon emission reduction, green technologies and product innovation.

Starbucks’ clean climate strategy

• Derive 50% of the energy used in stores from renewable sources by 2010. 
• Reduce greenhouse gas emissions by making stores 25% more energy efficient by 2010.
• Achieve LEED certification for all new stores worldwide by late 2010.
• Ensure 100% of cup supply is reusable or recyclable by 2015.
• Make recycling available in stores where Starbucks controls waste collection by 2015.
• Multi-year partnership with non-profit Conservation International to help coffee farmers to protect standing forests and restore degraded landscapes surrounding the farms.
• Push for a strong US climate change and renewable energy legislation through Business for Innovative Climate & Energy Policy (Bicep).
• Global sustainable store design strategy launched in 2009.

Source: Starbucks

BT, an early mover

• 1991: BT sets up its first environment management system. 
• 1992: Establishes the first carbon reduction target, started reporting on environmental performance.
• 1996: Pledges to reduce its carbon emissions by 60% by 2006 in the UK.
• 1999: Obtains UK-wide ISO 14001 certification for environment management system.
• 2000: Becomes the top-rated FTSE 100 company in the Business in the Environment Index of Corporate Environmental Engagement.
• 2004: Signs the world’s largest contract for the supply of green energy with Npower and British Gas.
• 2006: Pledges that 20% of its global workforce will be actively involved in reducing their carbon emissions at home and at work by 2012.
• 2007: Announces plans to develop wind farms aimed at generating up to 25% of the company’s existing UK electricity requirements by 2016.
• 2008: Launches three-year global energy saving campaign to reduce its carbon emissions by 75,000 tonnes by March 2011. Also sets a stretching new target to reduce its worldwide CO2 emissions per unit of BT’s contribution to GDP by 80% from 1997 levels, by 2020.

Source: BT

Carbon Disclosure Project

• Non-profit, headquartered in the UK. 
• Launched in 2000 to collect and distribute greenhouse gas emissions data from companies.
• Started with 235 companies in 2003, now more than 2,500 organisations in 60 countries use CDP to report their annual GHG emissions.
  82% of the FTSE Global 500 companies report their emission through CDP. 
• Collects climate change data on behalf of more than 500 institutional investors holding over $60tn in assets.
• Acts on behalf of more than 60 companies to collect emissions data from their supply chains.
• Ranks companies in the Carbon Disclosure Leadership Index based on quality of disclosure.
• Other programmes include CDP Water Disclosure and CDP Public Procurement

Source: Carbon Disclosure Project