Carbon Disclosure Project
Report – Global Electric Utilities

Building business resilience
to inevitable climate change

T...
Agenda

 Welcome address                Graham Butler,
                                 Executive Partner, Energy & Utili...
Agenda

 Welcome address                Graham Butler,
                                 Executive Partner, Energy & Utili...
Introduction to the Carbon Disclosure Project (CDP)

“To collect and distribute high quality information that motivates in...
Example CDP Signatory Investors




                                  5
CDP’s Global Reach in 2009




                             New Expansions in 2009:
                             Russia – ...
CDP’s Perspective


CDP provides a Global Intersection between Government,
Investors and Companies


           475
     I...
CDP – The Future


 Expand number of disclosers
 Improve quality and depth of disclosures
 Work with and supplement the...
Agenda

 Welcome address                Graham Butler,
                                 Executive Partner, Energy & Utili...
Agenda

 Welcome address                Graham Butler,
                                 Executive Partner, Energy & Utili...
Adapting to inevitable climate change.

                                                          Observed and modelled ch...
Climate change: the business context

 We have to act without delay to reduce emissions AND we need to
  adapt to manage ...
Our approach

 Review responses from global electricity companies to the 2008
  Carbon Disclosure Project.

 Analysis us...
Headline results

 Adaptation: an unexplored corporate issue.
 – 93% of companies acknowledge exposure, but only 27% indi...
The challenge of inevitable climate change to business models

 An ‘energy revolution’ is required to meet the challenges...
How should businesses respond?

 Avoid entirely ‘predictable surprises’.
 – Need to foresee the implications and take app...
How should businesses respond?
 Learning lessons from the current financial crisis.

 Short-termism, risk management and...
A call for action by senior executives

 Revisit fiduciary responsibilities.

 Ensure corporate governance meets the cha...
Agenda

 Welcome address                Graham Butler,
                                 Executive Partner, Energy & Utili...
IBM Viewpoint: Adaptation will be crucial to business success
 Electric utilities have taken positive steps to mitigate t...
IBM Viewpoint: Adaptation will be crucial to business success
 Electricity is a complex system of systems.

  Balance wil...
Agenda

 Welcome address                Graham Butler,
                                 Executive Partner, Energy & Utili...
To access the full report

 For softcopy please go to:
 – ON24 registration website
 – www.ibm.com/uk/green
 – www.acclim...
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Global Electric Utilities Climate Change Adaptation Acclimatise Report

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Global Electric Utilities Climate Change Adaptation Acclimatise Report

  1. 1. Carbon Disclosure Project Report – Global Electric Utilities Building business resilience to inevitable climate change The Adaptation Challenge
  2. 2. Agenda  Welcome address Graham Butler, Executive Partner, Energy & Utilities Industry Leader, IBM  CDP context James Howard, Project Director, The Carbon Disclosure Project  Introduction to the report Michael Valocchi, Partner, Global Energy & Utilities Industry Leader, IBM  Building business resilience John Firth, Chief Executive Officer, Acclimatise  IBM viewpoint Graham Butler, Executive Partner, Energy & Utilities Industry Leader, IBM  Q & A panel discussion Hosted by Peter Richardson Energy and Environment Marketing Manager, IBM  Close
  3. 3. Agenda  Welcome address Graham Butler, Executive Partner, Energy & Utilities Industry Leader, IBM  CDP context James Howard, Project Director, The Carbon Disclosure Project  Introduction to the report Michael Valocchi, Partner, Global Energy & Utilities Industry Leader, IBM  Building business resilience John Firth, Chief Executive Officer, Acclimatise  IBM viewpoint Graham Butler, Executive Partner, Energy & Utilities Industry Leader, IBM  Q & A panel discussion Hosted by Peter Richardson Energy and Environment Marketing Manager, IBM  Close
  4. 4. Introduction to the Carbon Disclosure Project (CDP) “To collect and distribute high quality information that motivates investors, corporations and governments to take action to prevent dangerous climate change.” 475 • Global non-profit organisation, established in 2000 385 • Secretariat to 475 Signatory 284 315 Investors with $55 trillion assets under management 155 • Largest climate change database 95 in the world: 35 – More than 2,500 companies reporting in 2008, and even more 2003 2004 2005 2006 2007 2008 2009 in 2009 Number of Signatory Investors to CDP – Process supported by many global figures 4
  5. 5. Example CDP Signatory Investors 5
  6. 6. CDP’s Global Reach in 2009 New Expansions in 2009: Russia – Central & Eastern Europe – Portugal – Ireland 6
  7. 7. CDP’s Perspective CDP provides a Global Intersection between Government, Investors and Companies 475 INSTITUTIONAL INVESTORS 3,700 OF THE WORLD’S COMBINED LARGEST ASSETS OF US CORPORATIONS $55 TRILLION DATA MADE PUBLICLY AVAILABLE VIA CDP
  8. 8. CDP – The Future  Expand number of disclosers  Improve quality and depth of disclosures  Work with and supplement the emerging and varied disclosure landscape of mandatory reporting and registries 8
  9. 9. Agenda  Welcome address Graham Butler, Executive Partner, Energy & Utilities Industry Leader, IBM  CDP context James Howard, Project Director, The Carbon Disclosure Project  Introduction to the report Michael Valocchi, Partner, Global Energy & Utilities Industry Leader, IBM  Building business resilience John Firth, Chief Executive Officer, Acclimatise  IBM viewpoint Graham Butler, Executive Partner, Energy & Utilities Industry Leader, IBM  Q & A panel discussion Hosted by Peter Richardson Energy and Environment Marketing Manager, IBM  Close
  10. 10. Agenda  Welcome address Graham Butler, Executive Partner, Energy & Utilities Industry Leader, IBM  CDP context James Howard, Project Director, The Carbon Disclosure Project  Introduction to the report Michael Valocchi, Partner, Global Energy & Utilities Industry Leader, IBM  Building business resilience John Firth, Chief Executive Officer, Acclimatise  IBM viewpoint Graham Butler, Executive Partner, Energy & Utilities Industry Leader, IBM  Q & A panel discussion Hosted by Peter Richardson Energy and Environment Marketing Manager, IBM  Close
  11. 11. Adapting to inevitable climate change. Observed and modelled changes in temperature in Europe  Climate change is underway. – Whatever steps we take to limit GHG concentrations we are now faced with decades of increasing temperatures and possibly centuries of sea-level rise. – Limiting global average temperature rise to 2oC is looking increasingly challenging. If we fail the adaptation challenge becomes even greater.  Significant impacts of extreme events and incremental changes in climate are already evident.  Carbon neutrality does not create business resilience.  Businesses face two climate challenges, not one. They must: – Reduce emissions to avoid the unmanageable – Adapt to manage the unavoidable
  12. 12. Climate change: the business context  We have to act without delay to reduce emissions AND we need to adapt to manage the unavoidable – there is no choice. – Business as usual in the face of a changing climate is not an option.  Building business resilience: – Climate change is not just an ‘environmental’ issue. – Adapting to the impacts of inevitable climate change is a mainstream business risk and should be ‘internalised’ within business models and value chains.  Corporate drivers for action on climate change: – Changes in their relative importance over time. – Meeting the challenges of the energy revolution.
  13. 13. Our approach  Review responses from global electricity companies to the 2008 Carbon Disclosure Project.  Analysis using our proprietary Acclimatisation Index – a quantitative approach creating a relative score for companies in the electricity sector.  Allows the resilience of companies to inevitable climate change to be assessed. – The risks and opportunities they face. – How they plan to adapt. – Their position in the resilience landscape
  14. 14. Headline results  Adaptation: an unexplored corporate issue. – 93% of companies acknowledge exposure, but only 27% indicate a ‘quantified’ analysis has been undertaken.  Companies are generally more aware of the risks than the opportunities. – 59% identified potential business opportunities.  Implications for governance. – Only 6% provided evidence of integrating inevitable climate change into their internal corporate governance procedures.  Building business resilience to the impacts of climate change remains a new issue for most electricity companies.
  15. 15. The challenge of inevitable climate change to business models  An ‘energy revolution’ is required to meet the challenges of: – Continuing urbanisation and intense competition for natural resources, driven by population growth and economic development. – National energy security concerns and supply reliability. – Reducing emissions and shifting the focus to renewable sources of energy, low carbon generation and more dynamic balancing of supply and demand requiring significant levels of investment to transform the industry.  This has to be achieved within the context of a changing climate and the impacts on social, economic and environmental systems: – Causing significant changes in the demand for electricity against a backdrop of supply challenges, ageing assets, impacts on asset performance and efficiency, and prescriptive regulation  Maintaining a global perspective on climate change impacts on social, economic and environmental systems.
  16. 16. How should businesses respond?  Avoid entirely ‘predictable surprises’. – Need to foresee the implications and take appropriate steps.  Understanding impacts: – Extreme events (acute) and incremental change (chronic). – Direct and indirect impacts working through all elements of business models and value chains. – The ‘pinball machine’ effect.  Understanding opportunities: – Companies are focussing on risks, immature landscape on opportunities. – Building resilience creates a competitive advantage. – New markets, products and services in response to the energy revolution. – Financial crisis presents an opportunity for companies to revisit their business models and build resilience.
  17. 17. How should businesses respond?  Learning lessons from the current financial crisis.  Short-termism, risk management and control, disclosure of potential risks all have to be addressed.  Business risk ‘signals’ driven by climate change are already visible.  Uncertainties should act as a catalyst for companies to quantify the risks, monitor the impacts and respond by changes to their business models. – Dealing with uncertainty is the measure of a well managed business.  An integrated approach to the challenges through: – Optimisation of existing infrastructure assets, systems and information. – Growth of existing capabilities. – Acceleration of emerging technologies to a commercial scale.
  18. 18. A call for action by senior executives  Revisit fiduciary responsibilities.  Ensure corporate governance meets the challenge. • Embed climate risk management into decision making. • Develop a risk assessment process using the best available science.  Learn from others, engage with policy makers.  Improve internal expertise and capabilities, ensure knowledge management systems are fit for purpose.  Disclose material risks.  Prepare-Adapt: 10 questions for senior executives – To aid senior executives and help companies take the right steps towards building business resilience by exploring risks, opportunities and responses.
  19. 19. Agenda  Welcome address Graham Butler, Executive Partner, Energy & Utilities Industry Leader, IBM  CDP context James Howard, Project Director, The Carbon Disclosure Project  Introduction to the report Michael Valocchi, Partner, Global Energy & Utilities Industry Leader, IBM  Building business resilience John Firth, Chief Executive Officer, Acclimatise  IBM viewpoint Graham Butler, Executive Partner, Energy & Utilities Industry Leader, IBM  Q & A panel discussion Hosted by Peter Richardson Energy and Environment Marketing Manager, IBM  Close
  20. 20. IBM Viewpoint: Adaptation will be crucial to business success  Electric utilities have taken positive steps to mitigate the impact of climate change  Electricity industry is at a critical point – Increase generation - 36.8 % growth in energy demand by 2030 – Reduce emissions - responsible for 25% emissions  2 options – Generate ‘cleaner’ electricity – Drive down energy people are using • 170 billion KW hours wasted each year by consumers – lack of power usage information  Climate change brings additional pressures – Changes in • demand - population migration, new demands (e.g. electric vehicles) • supply chain - vulnerable assets • availability of natural resources - competition for scarce resources
  21. 21. IBM Viewpoint: Adaptation will be crucial to business success  Electricity is a complex system of systems. Balance will change and we need to redesign the way the industry works: – more dynamic control of • power flows • information • money – new sources of supply • Consumers to be part of the electricity management and efficiency story  3 practical steps 1. Optimise– existing assets to be more efficient and more robust to adapt to climate change 2. Grow – existing commercialised capability through smarter design and operation 3. Accelerate – new and emerging capabilities to commercial scale Change is needed now to enable prosperity in a much different future
  22. 22. Agenda  Welcome address Graham Butler, Executive Partner, Energy & Utilities Industry Leader, IBM  CDP context James Howard, Project Director, The Carbon Disclosure Project  Introduction to the report Michael Valocchi, Partner, Global Energy & Utilities Industry Leader, IBM  Building business resilience John Firth, Chief Executive Officer, Acclimatise  IBM viewpoint Graham Butler, Executive Partner, Energy & Utilities Industry Leader, IBM  Q & A panel discussion Hosted by Peter Richardson Energy and Environment Marketing Manager, IBM  Close
  23. 23. To access the full report  For softcopy please go to: – ON24 registration website – www.ibm.com/uk/green – www.acclimatise.uk.com  you can order paper copies of the documents from – www.ibm.com/uk/green – enquiries@acclimatise.uk.com
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