The most comprehensive review ever carried out in the United Kingdom on the economics of climate change was published in the latter half of 2006. The Stern Review, which reported to Britain's Prime Minister and Chancellor, was commissioned by the Chancellor in July last year. It was carried out by Sir Nicholas Stern, Head of the Government Economic Service and former World Bank Chief Economist.Sir Nicholas said recently:
“The conclusion of the Review is essentially optimistic. There is still time to avoid the worst impacts of climate change, if we act now and act internationally. Governments, businesses and individuals all need to work together to respond to the challenge. Strong, deliberate policy choices by governments are essential to motivate change. But the task is urgent. Delaying action, even by a decade or two, will take us into dangerous territory. We must not let this window of opportunity close.”
Herein below is part three (final reproduced portion) of the article written by Kevin Eddy (assistant Editor of the Chartered Secretary ICSA magazine January 2007-- Apocalypse now-ish (Part Three)
Theory into practice - So, what does all this mean in practice? Tony Hoskins, chief executive of the consultancy firm The Virtuous Circle - which specialises in advising companies on corporate social responsibility issues - thinks that many organisations will need to think of it as a culture change process to achieve the desired results. The Stern Review will have a significant effect on companies' approach to corporate social responsibility because the actions needed to achieve change will affect all areas of business. Companies will need to consider plans over and above energy offsets and energy efficiency improvements if the scenarious potrayed in the Stern Review are to be avoided. It will give certain arguments a different emphasis - the current discussions about supply chains, for example, as we've seen with the shipping of langoustines to Asia for them to be cleaned and returned to the United Kingdom. Companies will need to consider the carbon emissions related to having such long supply chains and decide whether or not a more local sourcing policy may be more appropriate. On a wider scale, over time firms will have to look at the products and services they provide to see how they can improve their environmental emissions impact.
The starting point for employers regarding their carbon emissions involves encouraging employees to change the way they have traditionally done things. That means looking beyond the obvious requirement to turn off the lights when the office is empty, to other aspects of their behavior such as whether they drive into work. Regulation wise, some form of carbon taxing is inevitable. Hopefully, whatever is introduced will be simple for business. Green taxes will be easier to implement, while emissions trading would be quite onerous.
The second obvious effect for companies, though, comes from the increased amount of information that listed companies will have to produce in their business review under the new companies act. To date, few companies have started to report on emissions as a part of their Key Performance Indicators (KPIs), unless they are big energy users like glass manufacturers. But when the government starts a form of carbon taxing, more companies will feature emission performance as one of their KPIs.
Some companies are acting already - banks like HSBC and investment companies like Man Group have issued clear policies stating how they intend to address the climate change agenda. Organisations like the Carbon Trust are providing support to companies to identify ways in which they can effect change in a cost effective way. Ultimately, the one action that every business should take is to understand what its carbon impact is and then consider in what ways this can be improved upon. If this process improves their performance, then better corporate social responsibility across the board will be a welcome by-product.
An effective response to climate change will not be the responsibility of one or two nations alone. Agreements like the Kyoto Protocol and the UN Framework Convention on Climate Change should act as a foundation for further cooperation, with the aim of creating an international approach based on multi-lateral frameworks and coordinated action.
It's a tall order, especially as their has already been criticism that, since climate change is a phenomenon largely caused by the industrialisation of the West, it is an issue that the West should sort out. Even so, developing countries are already taking action to ensure their economic growth is not accompanied by a corresponding growth in emissions. China, for example, has introduced domestic targets to reduce energy used per unit of GDP by 20% by 2010; and, India has its own Integrated Energy Policy, intended to expand access to cleaner energy and increase energy efficiency. It's a promising move and if the rest of the world can follow suit, the ambitious aims of the Review may well be within reach. Even so, it's likely to be a long hard road ahead for us all.
