Climate action

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Climate action

  1. 1. VisitWWW.CLIMATEACTIONPROGRAMME.ORG To help your organisation become carbon neutral
  2. 2. Climate Action John Chartmere, Michael Gray, Raj Powar,V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  3. 3. © 2007 KPMG LLP a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss ,cooperative. All rights reserved. Headline is set Headline is set in Univers 65 Bold, in Univers 65 Bold, 11pt with +4pt 11pt with +4pt leading. leading.Top of the agenda for KPMG’s CarbonAdvisory Group At KPMG our dedicated team of over 200 professionals understand the kind of advice and support an organisation needs in order to respond to the business risks and opportunities associated with climate change. Contact Richard Sharman KPMG in the UK richard.mas.sharman@kpmg.co.uk
  4. 4. 3 CONTENTSV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  5. 5. 4CONTENTS V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  6. 6. 5 CONTENTSV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  7. 7. 66CONTENTSCONTENTS V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  8. 8. 7 CONTENTS 268 269 271 273 276 280 282 285 286 287 290 291V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  9. 9. Foreword 9The year 2007 may well prove to be adefining moment in the internationaleffort to combat climate change. FOREWORDA NEW CARBON NEUTRAL NETWORK FORTHE UNV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  10. 10. Across the world, countries, companies, cities and citizens are rising to the challenge of climate change and at a scale and pace which is truly unprecedented. THE KEY TO THE FUTURE10FOREWORD The fact that a global carbon neutral network is being called for reflects the momentum of an issue that has become the challenge for this generation. V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  11. 11. 11 Overcoming seriousclimate change may costperhaps as little as 0.1 percent of global GDP a year FOREWORDfor three decades. THE WIDER LANDSCAPEV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  12. 12. The fact that so much activity is underway is also due to the anticipation that countries will indeed agree a treaty that engages post-2012 and one that delivers much bigger cuts than Kyoto. Climate change offers the chance to transform the way we do business on this planet. All that is really required now12 is the political commitment of governments to unleash human ingenuity. Achim SteinerFOREWORD TRANSITION TO A LOW CARBON SOCIETY V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  13. 13. CLIMATE ACTION WISHES TO THANK OUR SUPPORTING ORGANISATIONS: 13 SUPPORTING ORGANISATIONSV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  14. 14. CLIMATE ACTION WISHES TO THANK OUR PLATINUM SPONSORS: 15 PLATINUM SPONSORSV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  15. 15. The need forclimate action 19The time to act on climate change is now. We can nolonger consider the issues relating to climate change THE CASE FOR ACTIONas primarily environmental. Quite simply, climateaction has become a matter of strategic consequence, Certain words ran like aa core political issue for every government on Earth. thread through our discussions: ‘urgency’, ‘action’ and ‘now’.THE TWO FACES OF THE CLIMATE ISSUEV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  16. 16. India, one of the world’s most rapidly advancing economies, is devoting two per cent of GDP annually to flood control and food security programmes, as well as mandating tough energy efficiency standards. THE BAD NEWS 20 We need a breakthrough,THE CASE FOR ACTION THE GOOD NEWS an agreement to launch negotiations for a comprehensive climate change deal that all nations can embrace. A POLITICAL IMPERATIVE THE NEED FOR CLIMATE ACTION V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  17. 17. 21 Climate change willno longer be a primarily THE CASE FOR ACTIONenvironmental concern. It hasbecome a matter of strategicconsequence, a core politicalissue for every government Wealthy nations muston Earth. help provide incentives to poorer ones to take steps that help us all. CARBON NEUTRAL UNV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  18. 18. Author 22 With political will,THE CASE FOR ACTION comes results. Our job is to translate this spirit into deeds Organisation in Bali, and beyond. Enquiries V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  19. 19. Climate changeis unequivocal 23Special reports published by The IntergovernmentalPanel on Climate Change (IPCC) provide a Climate change is nowcomprehensive assessment of knowledge on allaspects of climate change. These include advances unequivocal and the human THE CASE FOR ACTIONin scientific understanding related to climate changeand major findings from working groups. Together, influence on the Earth’s climatethese reports have, and are having, a major impact onpublic opinion and awareness among world leaders. is now very well established.The IPCC’s most recent Fourth Assessment Report setsout to integrate and compact this wealth of informationinto a readable and concise document explicitlytargeted at policymakers. OBSERVED IMPACTSV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  20. 20. ECOSYSTEM DISRUPTION At the lower end of these FOOD INSECURITY scenarios, the best estimate of temperature increase by the end of the 21st century is placed at 1.8°C and at the 24 upper end of the scenarios, the best estimate is approximately 4°C.THE CASE FOR ACTION COASTAL FLOODING FUTURE TRENDS One scenario that would limit temperature increase at equilibrium to 2.0–2.4°C would actually cost the world UNEQUAL IMPACTS less than three per cent of the global GDP in 2030. V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  21. 21. AuthorCOST EFFECTIVE CLIMATE MITIGATION 25 THE CASE FOR ACTION Organisation In some countries, yieldsfrom agriculture could bereduced by up to 50 per centby 2020.CONCLUSION Enquiries @V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  22. 22. The cost of climate action 28 A basic conclusion of the Stern Review is that the costs of strong and urgent action on climate change will be less than the costs of inaction and the impacts of climate change under business as usual (BAU). Although they are in the minority, there remain a number of peopleTHE CASE FOR ACTION who deny the importance of strong and urgent action on climate change and they essentially offer one of, or a combination of, four arguments. These arguments are correspondingly, absurd, reckless, irresponsible and ethically indefensible. THE CASE FOR ACTION ON CLIMATE CHANGE NO SCIENTIFIC BASIS V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  23. 23. HUMANS CAN ADAPT TO CLIMATE CHANGE Under a BAU scenario, the stock of greenhouse gases could more than treble by the end of the century, giving at least a 50 per cent risk of exceeding 5°C global average temperature change during the following decades. ACTION IS TOO COSTLY 29 THE CASE FOR ACTIONV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  24. 24. The likely cost of urgent and coordinated action is around one per cent of GDP by mid century. In terms of growth, it amounts to a fraction of a fraction FUTURE GENERATIONS WILL BE RICHER taken off the annual rate. AND MORE ABLE TO ADAPT 30THE CASE FOR ACTION V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  25. 25. The case for strong and timely action, supported by well designed economic policies, is overwhelming. THE BASIC QUESTION 31 Is it worth paying oneper cent of GDP to avoid the THE CASE FOR ACTIONadditional risks of higheremissions? Author EnquiriesV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  26. 26. The roadfrom Bali:TOWARDS A BINDING POST-2012 CLIMATE FRAMEWORKAfter years of struggle to mobilise an effective 33international response to climate change, 2007 mayprove to be a critical turning point. From the G8 summitin Heilegendamm to the APEC summit in Sydney, froma high level UN gathering in New York to a meeting ofmajor economies in Washington, climate change hassuddenly vaulted to the top of the global agenda. This Why are internationalburst of climate diplomacy culminates in Decemberin Indonesia, where the goal will be a Bali ‘road map’pointing the way to a new global agreement. The commitments essential? FRAMEWORKSquestions to ask are whether this road map will setgovernments on a course towards binding multilateral Because without them, countriescommitments and will some form of commitment begiven by all the world’s major economies? cannot be confident that othersINTRODUCTION are contributing their fair share to the global effort. V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  27. 27. THE NEED FOR INTERNATIONAL AND BINDING COMMITMENTS Sectoral agreements PROVIDING FOR A RANGE OF COMMITMENTS If it is to achieve broad participation, the post-2012 framework must accommodate different national circumstances and strategies and allow Economy-wide emissions countries to take on different 34 types of commitments.FRAMEWORKS Other commitments Policy-based commitments V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  28. 28. Assisting developing countries THE BALI ROAD MAPTOWARDS A COMMON FRAMEWORK The political reality is that few if any of those with Kyoto targets will be prepared to assume binding post-2012 commitments without some form of commitment from the US and the major emerging 35 economies. FRAMEWORKSV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  29. 29. BEYOND BALI There is growing political 36 momentum in the US for Author mandatory GHG limits. California, New York and other states, many led by Republican governors, have enactedFRAMEWORKS mandatory controls. Organisation Enquiries @ V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  30. 30. Framework for a newglobal agreement onclimate changeClimate change is a complex, long term problem,two centuries in the making. There are few humanactivities that do not contribute to it and as such, thescale of response needed for an ultimate solution is so 37large that widespread, collective action is essential.The Global Leadership for Climate Action, facilitatedby Mohamed El-Ashry, was set up to mobilise politicalaction and offer a framework for collective action. Theframework and its recommendations for mitigationand adaptation policies, technological development,finance and global collaboration are discussed here.INTRODUCTION FRAMEWORKS V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  31. 31. GLOBAL LEADERSHIP FOR CLIMATE ACTION Targeted agreements on energy efficiency and renewable energy COMPREHENSIVE AGREEMENT 38 Carbon sinks } } } }FRAMEWORKS MITIGATION – TARGETS AND TIMETABLES Market-based mechanisms V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  32. 32. ADAPTATION Consultative group on clean energy research 39 FINANCE FRAMEWORKSACCELERATE TECHNOLOGY RESEARCHAND DEPLOYMENT Reform Clean Development MechanismV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  33. 33. Enhance public finance CONCLUSION Author 40 A new US$50 billion per year climate fundFRAMEWORKS Organisation Enquiries @ V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  34. 34. A framework forclimate changeand global equity 41With the world initiating new climate changenegotiations in December 2007 to succeed the KyotoProtocol expiring in 2012, there is still no sharedframework for agreement between developed and CARBON DIOXIDE IS INCREASING RAPIDLY FRAMEWORKSdeveloping countries. There has been a sea changein global attention to this issue in the past threeyears, reflected in this year’s 2007 Nobel Peace Prizewhich is shared by former Vice-President Al Goreand the Intergovernmental Panel on Climate Change.Yet there is still no consensus on how to proceed.This brief note sketches out a framework for action,building on the underlying core facts of the climatechange challenge itself.V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  35. 35. DECOUPLING GROWTH WITH EMISSIONS CARBON CAPTURE AND SEQUESTRATION There is widespread agreement that the world will enter a very severe danger zone if the CO2 concentration reaches 560 ppm; indeed the threshold of safety could be 42 450 ppm or even lower. A GLOBAL FRAMEWORK FOR TECHNOLOGY DEVELOPMENTFRAMEWORKS ENERGY EFFICIENCY AND ENERGY DE- CARBONISATION } } } } V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  36. 36. }}}COSTS 43 FRAMEWORKSTOWARDS A WORLDWIDE ADOPTION OFLOW EMISSION TECHNOLOGIESV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  37. 37. Author LOOKING FORWARD 44 OrganisationFRAMEWORKS Enquiries @ V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  38. 38. Managing risks ofclimate change forhuman well beingTHE CASE FOR ADAPTION 45Impacts of climate change will inevitably influence CLIMATE CHANGE IMPACTS ON ECOSYSTEMecosystem services and human well-being, and increasethe pressure on the most vulnerable regions and SERVICES AND HUMAN WELL BEINGcommunities that depend more on natural resources andecosystems and have lower adaptive capacity. Takingappropriate adaptation measures is urgent to managethe risks and alleviate the impacts of climate change. GLOBAL EQUITYVarious mechanisms and instruments can be used, whileconcerted action from public and private sector and theinternational community is required in order to takeequity and fairness into consideration. Table 1: Climate change impacts on ecosystem services and human well being.V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  39. 39. INSTRUMENTS AND MECHANISMS TO COPE WITH CLIMATE CHANGE } } } 46 Table 2: Mechanisms and instruments for managing climate change risks. } } }GLOBAL EQUITY } } } } } } V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  40. 40. } } } } } } } } } } } } } } } } } } } } } 47 } } } } GLOBAL EQUITY } } } } } } } }V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  41. 41. INVESTING IN BIODIVERSITY FOR THE FUTURE CHALLENGES AND OPPORTUNITIES 48 48GLOBAL EQUITY Author Organisation Enquiries V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  42. 42. Promoting equity andadaptation fordeveloping countries 49The IPCC Fourth Assessment report demonstratesevidence of human induced global climate change.The poor are the worst victims of a global problem that GLOBAL EQUITYhas been created mainly by the rich and industrialisedcountries. Climate change is a harsh reality now formany of us, and this is demonstrated through variousrecent extreme climatic events around the world.These include: prolonged and devastating floods inBangladesh, India, China and in the UK in 2007; severedroughts in Africa and Asia, extreme heatwavesin central Europe, devastating cyclones and tidalsurges across the coasts. We live in an unequal worldeconomically, politically and socially, and climatechange impacts will increase poverty, food insecurity,hungers, inequity and social conflict in the comingdecades if we don’t take urgent action now before it COST OF DELAYED ADAPTATIONescapes our control.V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  43. 43. Isolated US Any delay in mitigation, increases the risk of runaway global climate change with severe regional impacts. PROGRESS AND BARRIERS TO ADAPTATION 50GLOBAL EQUITY V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  44. 44. THE POOR NEED GREATER ADAPTATION 51BEYOND 2012: COMMITMENT TO EQUITY AuthorAND FAIRNESS GLOBAL EQUITY OrganisationCONCLUSION Enquiries @V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  45. 45. 52 Partnerships andPARTNERSHIPS climate change With an increased understanding about the scale of change required to tackle global warming, business, government and civil society need to work in partnership to address such change. Building these partnerships allows governments to implement policies that will drive the necessary change, and business to respond rapidly to these drivers in a positive way. INTRODUCTION V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  46. 46. THE TREND TOWARDS GREATERTRANSPARENCY 53 PARTNERSHIPS A growing awareness A STRATEGIC PRIORITY FOR BUSINESSof climate change amongconsumers has resultedin a significant increase incorporations reporting howthey are helping to tackleclimate change.V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  47. 47. There is clearly a potential for missed opportunities with Creating political space most environmental and clean technology sectors seeing double digit growth rates over the past couple of years, or savings to the bottom line through energy efficiency measures. 54 BUILDING PARTNERSHIPSPARTNERSHIPS Creating a common platform V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  48. 48. The current members of the UK CLG are:ENABLING A STEP CHANGE IN RESPONSE Author 55 Working together as an Organisationindustry reduces the overall PARTNERSHIPSexposure to business riskwhile clearly communicatingto others the reasons behindthe need for a change inthe industry. Enquiries @V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  49. 49. Developing partnerships across developed and developing countries – AN AGENDA FOR INCLUSION OF THE POOR Increasingly, businesses in developed countries are recognising their responsibilities regarding greenhouse gas (GHG) emissions and climate change. But as well as clearing up their own houses, they have the potential to help mitigate the global impacts of climate change, by working with NGOs, governments and developing country businesses to ensure the mistakes of developed countries are not repeated in new growth. In addition, businesses, through an agenda of corporate social responsibility, can help alleviate the hardship of 56 the most vulnerable groups who stand to bear the brunt of much of the impacts of climate change. INTRODUCTION } A SECTORAL APPROACH WITH FINANCIAL } INCENTIVESPARTNERSHIPS } } } } Production sector } } V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  50. 50. Consumption sector FRAMEWORK FOR A SOCIOECONOMIC AGENDA FOR POOR Energy efficiency 57 Improving the efficiencyof the mining and processingof coal and improving themonitoring and control of coal PARTNERSHIPSmine methane gas can makea significant contribution toemissions reductions and Agriculture and food securityworkplace safety.Energy sector Water and other resource shortagesV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  51. 51. } } RISKS AND INSURANCE } } } } Author 58 }PARTNERSHIPS Organisation Enquiries PROGRAMMES, INSTITUTIONS AND POLICIES } @ V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  52. 52. 60 Investors:INVESTORS A NEW WORLD OF RISK AND OPPORTUNITY Climate change presents enormous risks and opportunities for corporations. Increasingly, as investors make decisions about the value of their investments, they are factoring in how well a company is prepared to manage those risks and act on those opportunities. To do so, they are increasing pressure on companies to make climate change a priority governance issue and using their leverage to encourage companies to analyse and disclose their plans for managing climate risk and their strategies for seizing climate- related opportunities. CLIMATE CHANGE: A STRATEGIC IMPERATIVE V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  53. 53. When industry is willing to be regulated, it is a good bet that policy changes will follow. 61REGULATORY RISKS AND OPPORTUNITIES LITIGATION RISKS INVESTORSV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  54. 54. A GROWING CONSENSUS } 62 PHYSICAL RISKS AND OPPORTUNITIES } }INVESTORS COMPETITIVE RISKS AND OPPORTUNITIES V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  55. 55. Which companieshave the strategic vision 63to manage the legal,physical and competitiverisks associated withclimate change? INVESTORSCLIMATE RISK DISCLOSURE:TRANSPARENCY IS KEYV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  56. 56. INVESTOR NETWORK ON CLIMATE RISK MEMBERS Authors 64INVESTORS Organisation CONCLUSION Enquiries @ V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  57. 57. TakeAction! At Novo Nordisk, we recognise that there are limits to growth. It is only when we respect the principles of sustainable development that we can grow a healthy business. A sustainable business.– unlimited access to We base our business on the Triple Bottom Line: striving to conduct our activities in a financially, environmentally and socially responsible way.renewable energy This principle is anchored in our actions – from board decisions to daily practices among all our employees. TakeAction! is the employee engagement program that enables everyone to make the Triple Bottom Line their business. It unleashes creativity, harnesses innovation and inspires action. A key element is the principle that activities must support business objectives. Examples are fundraisers for underprivileged people in need of medical care, educational programs that inspire healthier living among children and environmental initiatives in the local community. Building a sustainable business is about overcoming the constraints of current practices. It’s about nurturing new skills, supporting disruptive innovation, practicing deep listening and learning with stakeholders. It’s about valuing people’s motivation to drive change and to keep pushing forward. There may be a limit to growth, but there is no limit to ideas. That is our most precious source of renewable energy. That is the foundation for our business. That is what makes people at Novo Nordisk TakeAction! To defeat diabetes. To combat climate change.To chart a road towards a healthier future for the next generations. Read more about TakeAction! and other initiatives to put our values into action at novonordisk.com Tak eAc tion !Kristina Kempf,Daniela Rimpf andLisbeth Juhl Christensen,Novo Nordisk Germany.
  58. 58. Investor expectationon company climatechange risk disclosureInvestors expect three key aspects of a company’sclimate change risk approach to be disclosed. Theyexpect a clear articulation of the nature of materialclimate change risks and the impact on both short andlong term strategy and competitiveness. Secondly, INVESTORS RESPONSE TO THEthey expect a quantification of the risk and level ofuncertainty that surrounds any risk assessment. Finally, CLIMATE CHANGE RISKinvestors expect a description of the risk management,mitigation and adaptation actions identified andthe level of any residual/acceptable risk. Investorsrecognise the area of climate change risk is a rapidly }evolving one; one that continues to demand a greater }level of sophistication in disclosing those risks to }investments. } 67CLIMATE CHANGE: A SYSTEMIC, LONGTERM RISK FOR INVESTORS DISCLOSURE NEEDS OF INVESTORS INVESTORS } } V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  59. 59. } } INVESTOR EXPECTATIONS } } } Clear articulation of material climate change risk 68 The disclosure expectations of investors are different from other stakeholders in both their scope and detail. ThisINVESTORS } has meant that emissions } } disclosure and associated discussion through company sustainability reports is often insufficient for investors. V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  60. 60. } CONCLUSIONQuantification of climate change risk}}}} 69 Author}}}} Organisation INVESTORS EnquiriesRisk management, mitigation and adaptation} @}V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  61. 61. Using financial indices for responsible investment 70 The Stern Review suggests that climate change } threatens to cause the greatest and widest ranging market failure ever seen. Stern states, “...our actions over the coming few decades could create risks of major disruption to economic and social activity, later RISK MANAGEMENT – AND VALUE in this century and in the next, on a scale similar to PROTECTION those associated with the great wars and the economic depression of the first half of the 20th century.” As a result, investors, governments and wider societyINVESTORS expect companies to take rapid action in response to the varied and considerable risk that climate change poses. Financial indices, such as the Dow Jones Sustainability Index, and the FTSE4Good Index can help investors find companies doing just that. Here, Detailed climate change the FTSE4Good Index is explored in more detail. requirements have already TWIN-TRACK STRATEGY been added to FTSE4Good inclusion criteria to ensure the index series is aligned to one of the major concerns } facing business and investors today. V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  62. 62. Table 1: Overview of elements of a good management system. } } } } } Table 2: Climate change criteria for the FTSE4Good index series. } } } } } } 71 } INVESTORS } } } } } } } } } } } } } } }V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  63. 63. SUPPORTING TECHNOLOGY SOLUTIONS COMPANIES TRANSFORMATIONAL INITIATIVES AND VALUE CREATION Investor perceptions have changed and these environmental technology companies are now seen 72 as providing exciting opportunities for growth. Table 3: Definition and examples of transformational initiatives.INVESTORS V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  64. 64. THE ROLE OF BENCHMARKING Authors 73CONCLUSION INVESTORS Organisation Enquiries @V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  65. 65. ARE YOU SERIOUS?SGS VERIFIES THE ACCURACY AND ENVIRONMENTAL INTEGRITY OF GREENHOUSE GAS EMISSIONS REPORTINGYour company, your shareholders and the public need to know that your emissions reporting is accurate, reliable andconsistent with global standards. Our experience stretches from the smallest through to the largest multi-site andmulti-country customers, and from simple through to complex and diverse project portfolios. To get serious about emissionsreductions, visit www.sgs.com/climatechangeSGS IS THE WORLD’S LEADING INSPECTION, VERIFICATION, TESTING AND CERTIFICATION COMPANY
  66. 66. Responsible investmentfor responsible investorsA spectacular global political failure in dealing withclimate change has led consumers to vote with theirmoney, buying hybrid cars and green electricity andin turn creating huge new markets. Investors too arevoting with their money and organisations such asthe Carbon Disclosure Project offer a unified way forthem to find out about the greenhouse gas emissionsand risk management of many of the world’s largestcorporations. 75CLIMATE CHANGE AS A POLITICAL ISSUE REPORTING THE CARBON DISCLOSURE PROJECTCLIMATE CHANGE AS A CORPORATE ISSUEV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  67. 67. A UNIFIED APPROACH TO CLIMATE CHANGE THE PRUDENT INVESTOR 76REPORTING Practical steps to take for a concerned shareowner V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  68. 68. 77 Author REPORTING Organisation Enquiries @V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  69. 69. Carbon emissions reporting in Asia 78 Asia ex-Japan results from the 2007 Carbon Disclosure A MORE STRATEGIC RESPONSE Project reveal that: 1) a range of Asian companies are increasingly describing strategic business initiatives to curtail carbon emissions, 2) companies working on climate change strategies often rely on industry associations and global NGOs for guidance, 3) the degree of top management engagement is a criticalREPORTING determinant in the disclosure of carbon emissions and the development of formal initiative, 4) pictures of regional response characteristics are becoming apparent and 5) the quality and quantity of responses from Asia’s tech and telecoms companies is notable, while Asia’s banks and utilities lag their global counterparts. NEW INDUSTRY RESOURCES V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  70. 70. SECTOR FOCUS: TWO LEADERS, TWO LAGGARDS Asian bankers waiting for guidance Although climate changeremains a relatively newpolicy area in Asia, leadingcompanies are now takingthe initiative and positioningthemselves to capitalise ona shift in policy and growingconsumer awareness. 79 Asian companies are increasingly relying on industry associations to REPORTING shape their emerging carbonGOVERNANCE MATTERS emissions policy responses, carbon reporting and management strategies. Energy efficiencyV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  71. 71. Harnessing consumer sentiment 80REPORTING Asia’s leading tech Asia’s tech players demonstrating new carbon companies appear to be sophistication making systematic efforts to match the breadth and depth of reporting common to their global competitors. Asian utilities hiding under a cloud V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  72. 72. REGIONAL CHARACTERISTICS Telecom respondents 81 SETTING A BENCHMARKunderstand they are one of thefew sectors which can benefitstrategically from carbonlinked trends. REPORTING OrganisationAsian telecoms benefitting from carbon linkedtrends EnquiriesV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  73. 73. Companies:A NEW WORLD OF RISK AND OPPORTUNITYClimate change will have far-reaching consequenceson companies across all sectors of the economy.Already, billions are being invested in energy efficiency,renewable energy and development of low carbon 83technologies. Company disclosure on climate-relatedrisks is increasing, carbon costs are being factored intocompany capital planning and corporate leaders arecalling for mandatory caps on greenhouse gases (GHGs).Nevertheless, while many leading companies are takingimportant steps to manage climate change, bolder actions BUSINESS LEADERSHIPto maximise energy efficiency, develop climate-friendlyproducts and curb greenhouse gas emissions throughoutcompany supply chains will be needed.INTRODUCTIONELECTRIC POWER V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  74. 74. OIL AND GAS With renewable portfolio 84 standards in place in 25 US states, electric power companies are moving to diversify theirBUSINESS LEADERSHIP generation portfolio to include larger amounts of renewable energy. BANKING/FINANCE V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  75. 75. TECHNOLOGY SECTOR 85AUTOMOTIVE BP’s energy efficiency initiative has been the company’s most profitable BUSINESS LEADERSHIP project in the last decade; with a US$100 million investment, the company realised US$400 million in savings. CONSUMER PRODUCTSV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  76. 76. Author 86BUSINESS LEADERSHIP Organisation CONCLUSION Enquiries @ V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  77. 77. Life in the low carbon economy. Is your business ready? 87In order to maximise commercial value from the issues arising as a result of climate change, businesses needto act and they need to act now. Designed to help businesses respond to the challenges of the new operatingenvironment in a way that enhances brand reputation, operating efficiency and financial performance, KPMG’sCarbon Advisory Group provides a deep understanding of the issues and challenges facing businesses today. PROFILE Climate change isBECOMING A LOW CARBON BUSINESS forcing companies of all sizes to rethink the way they do business.V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  78. 78. HOW TO PROSPER IN A LOW CARBON ECONOMY KPMG’s Carbon Advisory WHAT ARE THE KEY SUCCESS FACTORS? Group is providing insight and strategies to help companies understand and manage the many business implications of climate change. Four key areas in creating an efficient low carbon business.88PROFILE V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  79. 79. KPMG: SUPPORTING BUSINESS IN MEETING CARBON REDUCTION OBJECTIVES Carbon trading and offsetting – investigation and dispute } } } } Carbon efficient logistics } } } } Carbon management Environmental tax and incentives 89 Accounting for carbon Mergers and acquisitions in the carbon market Carbon restructuring PROFILE Organisation Enquiries @V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  80. 80. Caring for Climate: THE BUSINESS LEADERSHIP PLATFORM 90 The rise of climate change as a fundamental issue } for society has emphasised the need for leadership and voluntary action on the environment. Against this background The Global Compact, together withBUSINESS LEADERSHIP the United Nations Environment Programme (UNEP) and the World Business Council for Sustainable Development (WBCSD), has developed Caring for Climate: The Business Leadership Platform as a way to mobilise business action on climate change. Within months of launching the initiative, 200 companies from around the world, including many of the world’s largest transnational corporations, have endorsed the statement and are already taking action. INTRODUCTION CARING FOR CLIMATE INITIATIVE } } V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  81. 81. CARING FOR CLIMATE: THE BUSINESS LEADERSHIP PLATFORM A Statement by the Business Leaders of the UN Global Compact 91 BUSINESS LEADERSHIPV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  82. 82. CONCLUSION COMPANIES TAKING ACTION ON CLIMATE Author 92BUSINESS LEADERSHIP Organisation Enquiries V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  83. 83. Boosting the earth’s immune system.To help conserve our one and only planet Earth, it is important not only to reduce environmental impact, but also to maintain and enhance the planet’sself-recovery capability. Which is why Ricoh is dedicated to actively promoting ecosystem conservation projects throughout the world in partnershipwith environmental NPOs and local communities that place a priority on protecting the habitats of indigenous species as well as the life of human beings.To learn more about Ricoh’s efforts to conserve the environment and enhance our employees’ global citizen awareness visit us at ricoh.com/environment. Agency #: 10011590 Job: RIC_11590-01_pass01.indd Client: Ricoh WO#: TYP.1 RT WO#: TK PO#: NA Pub: Magazines
  84. 84. Carbon footprintsin the supply chain:THE NEXT STEP FOR BUSINESS? 95To mitigate the effect of climate change, business needsto develop innovative strategies which challenge theway in which consumer needs are satisfied and whichmove beyond incremental improvements in processefficiency. By undertaking a carbon investigation oftheir supply chains, businesses can calculate andmanage the carbon footprint of their products and SUPPLY CHAINSunlock significant emissions reductions. BENEFITS OF THE HOLISTIC VIEWFOCUSING ON THE SUPPLY CHAIN V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  85. 85. CARBON REDUCTION LABEL 96 ECONOMY-WIDE APPROACHSUPPLY CHAINS SUPPLY CHAIN SUCCESS THE DETAILED METHODOLOGY V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  86. 86. WHAT NEXT FOR BUSINESSES? 97 Author SUPPLY CHAINS Organisation Enquiries @V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  87. 87. Listening to the planet98 For many years we have heard about the ozone hole over Antarctica, the greenhouse effect and other possible effects of man’s activities on our planet. For a long time these alarms had little effect outside the world of biologists and other specialists. But today, with an increasing number of indications, the environment and climate issues have finally reached a whole new level of attention among entire populations. The time has come to take what Mother Earth tells us seriously. A LONG TERM COMMITMENTPROFILE IN 1871 THERE WERE NO WORRIES V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  88. 88. REDUCING AIR EMISSIONS AND A whole range of FSC certified papersPURIFYING WATERTHE ENVIRONMENTAL CENTRE IN MUNKEDAL The Munkedal mill is now one of the most environmentally friendly 99 paper mills in the world. OrganisationTHE ROLE OF FSC CERTIFICATION PROFILE Enquiries @V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  89. 89. Responding to climate change – THE INSURANCE INDUSTRY PERSPECTIVE With core competencies in risk management and finance, the insurance industry is uniquely positioned to further society’s understanding of climate change and advance creative solutions to minimise its 100 impacts. Insurers have now begun to embrace this huge opportunity, which will enable them to prosper while reducing the claims from climate change. INTRODUCTIONINSURANCE V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  90. 90. Figure 1: Range of insurer activities documented in this article. 101A PROACTIVE APPROACH TO CLIMATECHANGE INSURANCEADVANCING SOLUTIONSV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  91. 91. 1. Understanding the climate change problem 2. Promoting loss prevention Figure 2: Range of carbon footprints for global insurers (each symbol represents one insurer). 4. Crafting innovative insurance products 102 Insurers have an enormous opportunity to develop new profit centres by providing innovative insurance products for energy users or providersINSURANCE of clean energy services. 5. Offering carbon risk management and carbon reduction services 3. Aligning terms and conditions with risk reducing behaviour 6. Financing climate protection improvements V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  92. 92. 7. Investment in climate change solutions8. Public policy Author9. Leading by example 10310. Carbon risk disclosure Organisation INSURANCE EnquiriesTOWARDS BEST PRACTICES @V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  93. 93. Climate change104 litigation: A CATALYST FOR CORPORATE RESPONSESLEGAL This overview considers a variety of legal actions AN OVERVIEW OF CLIMATE CHANGE against both governments and government agencies (public actions), and against corporate entities (private LITIGATION actions). It is generally considered that governments and corporations in non-Kyoto Protocol ratifying nations are the most vulnerable to litigation, eg USA and Australia. However, nations that are dramatically failing to meet Kyoto obligations will also be at risk, eg Canada. As the gap between Kyoto obligations and the stringent cuts recommended by the Intergovernmental Panel on Climate Change (IPCC) grow, no nation and no corporation can consider themselves safe. V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  94. 94. PUBLIC LAW ACTIONS (DOMESTIC) In 2007, increasing New Zealandscientific certainty, emerginglegal precedent and growingpublic awareness of climatechange, are combining tocreate potent motivators forlegal action. 105 AustraliaPUBLIC LAW ACTIONS (INTERNATIONAL) LEGAL USAV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  95. 95. PRIVATE LAW ACTIONS Public nuisance106 Director liabilityLEGAL Climate change litigation now presents a real and present financial risk for Nigeria corporations. Actual costs of litigation are likely to be far outweighed by associated commercial risks. V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  96. 96. CORPORATE RESPONSES Author Organisation 107 LEGAL Enquiries @V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  97. 97. The Clean Development Mechanism – 108 EVOLVING TO MEET CLIMATE AND DEVELOPMENT CHALLENGES The Clean Development Mechanism is addressing both climate and development issues. It is up and running but the challenge now is to increase efficiency, and scale upMARKET MECHANISMS the mechanism so that CDM can fulfil its potential. } } } NUTS AND BOLTS OF CDM V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  98. 98. A number of variables impacting on the ability of sub-Saharan African countries to attract CDM investment are the same constraints that In a few short years, more limit FDI in the region.than 840 projects have been 109registered, and about another1,800 are in the validation/registration pipeline. MARKET MECHANISMSACHIEVING POTENTIALV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  99. 99. MICROFINANCE AND CDM THE CHALLENGE OF AFRICA 110 Credit is available fromMARKET MECHANISMS informal commercial and non- commercial money lenders, but usually at a very high cost to borrowers. V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  100. 100. RESPONDING AND EVOLVING 111 Author MARKET MECHANISMS Microfinance as a Organisationdevelopment strategycombines massive outreach,far-reaching impact andfinancial sustainability,which makes it unique among Enquiriesdevelopment interventions.V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  101. 101. The use of targets or market mechanisms for emissions reductions in developing countries 114 There is a strong perception among developed countries that net global greenhouse gas emissions (GHG) reductions are only possible by imposing targets on developing countries. But to do so is neitherMARKET MECHANISMS politically feasible nor technically practicable. We should not waste time designing targets into any TARGETS AGAINST BUSINESS AS USUAL post-Kyoto climate change regime. Instead, we should explore other options, such as market mechanisms. This article looks at the arguments for doing so. Target obsession and political deadlock TARGET SETTING FOR DEVELOPING COUNTRIES Targets in the form of equal global quota V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  102. 102. HIGH IMPACT OF NON-CLIMATE POLICIESVulnerability to external factors Agreeing on specific targets The technical difficultiesand uncertainties involved inprojecting a future emissiontrajectory are making many Agreeing on target level of per capita emissionsdeveloping countries uneasyand reluctant to accept anyform of target. 115 Difficulty of verification MARKET MECHANISMS DIVERSE MODIFIED TARGETS Intensity targetsTransformation of industrial structure Sectoral targetsV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  103. 103. No-lose targets Pledge and review targets If targets are not workable, market mechanisms could provide incentives for developing countries to act on climate change. 116 Originally designed Compatibility of climate action and economic as an Annex 1 compliance goalsMARKET MECHANISMS mechanism, the CDM can function as an incentive mechanism for emission reduction projects in developing countries. WHY NOT MARKET MECHANISMS The Clean Development Mechanism V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  104. 104. The emission reductionsexpected from unsold CERrepresent a real, tangible andmeasurable option, whileemissions reductions basedon a fictitious BAU target cannever be verified or certified. 117NET GLOBAL EMISSIONS REDUCTIONS AuthorA CER discounting scheme MARKET MECHANISMS OrganisationCONCLUSION Enquiries @V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  105. 105. Purchasing carbon offsets A HOW-TO GUIDE Purchasing carbon offsets can set an internal price for carbon, allowing a company to assess the cost 118 of other emissions-reducing initiatives. It can also help companies gain a greater understanding of carbon markets and support existing corporate responsibility policies. But offsetting has also been seen as an easy ‘get-out’ from tougher internal choices with some media casting doubts over the extent to which offsets represent real and additional emissionsMARKET MECHANISMS reductions. This simple 10 step guide is designed to help companies avoid the pitfalls and use carbon offsetting as a useful part of overall greenhouse gas (GHG) reduction strategy. STEP 1: UNDERSTAND WHAT OFFSETS ARE V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  106. 106. STEP 2: DECIDE HOW MANY OFFSETSNEEDED OFFSETTING CASE STUDIES Sky HSBC The GHG Protocol andISO 14064 provide globallyrecognised standards formeasuring and reportingthe carbon footprint of an 119organisation. MARKET MECHANISMSSTEP 3: DEVELOP A TAILORED OFFSETSTRATEGYQuestions to consider during the processV I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G
  107. 107. 120 STEP 4: DECIDE HOW TO BUY OFFSETSMARKET MECHANISMS STEP 5: CHOOSE THE OFFSET STANDARD THAT BEST SUITS YOUR COMPANY Being aware of the key standards in the voluntary offset market will help companies take advantage of the flexibility and competitive prices offered, while ensuring offsets are really delivering the reductions in emissions they claim. V I S I T : W W W. C L I M AT E A C T I O N P R O G R A M M E . O R G

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