Comment on this view

View a PDF version of this article (33KB)

Five years ago Rufus Leonard was involved in the set up of the Carbon Disclosure Project, launched in December 2000 at No. 10 Downing Street.  The Project was founded with the aim of reducing greenhouse gas emissions and promoting the transition to a globally carbon sensitive economy. I still serve as a consultant on the Rufus Leonard team and we work together on joint climate change and responsible business initiatives. In fact, the Carbon Disclosure Project was housed in the Rufus Leonard offices for the first five years and we've just recently moved to new offices nearby.

The objective of the Carbon Disclosure Project (CDP) is to use the voice of shareholders to obtain information on greenhouse gas emissions from all over the world. Most FTSE 100 companies already disclose to us (80%), and you can see their responses at our Rufus Leonard designed web site www.cdproject.net. Our website is the largest registry of corporate greenhouse gas emissions in the world where 950 major companies report.

Scientific opinion is largely convinced that our species faces a unique threat by expelling 47,000 tonnes of CO2 into the thin atmosphere each and every minute. We are rapidly cloaking the world in a blanket trapping the fierce heat of the sun. The ice caps are melting, the sea level is rising, and the sinister risk of abrupt climate change threatens our very existence.

Notice that, just as Exxon Mobil attracts criticism from the Royal Society for their stance on climate change, corporate leaders like General Electric have built multi-billion dollar divisions selling renewable energy and energy efficient technology. Will shareholder resolutions encourage corporations to build strategies around the solutions to climate change, rather than the problems?

The current state of affairs cannot persist. Destruction of the world through climate change is quite clearly, in my view, against the regulations.

It can be persuasively argued that governments are a force of dwindling significance. Corporations run much of the way the world works, and people know this. They even accept it. Until that is, something goes horribly wrong.

At that point people want to know, is your company part of the solution, or part of the problem? There will be a lot of finger pointing when the party is over. As people start to see greenhouse gases as a threat to their children's lives, they may ask if British Airways was in any way less or more responsible than easyJet. Were Tesco better or worse than Sainsburys? Is Toyota better or worse than Ford?

Who’s in charge?
Just like the Internet before, managing the risks and opportunities presented by climate change creates a complex challenge for the internal structure of corporations. I remember back in 1996 when it was unclear if a corporation's Internet strategy was owned by the Marketing Department, IT, PR or operations. Getting it right very often turned out to be all of the above, working hand in glove.

The same principle applies to climate change. The Environment Manager suddenly has to cut emissions. That is a big and important job. Look out for a new breed of Environment Directors taking over this responsibility. Or, as energy prices rise, perhaps we will see the appointment of The Director of Energy and Emissions. The term 'Environment' is perhaps too broad to remain useful. The 'Health, Safety and Environment Department' may need to disaggregate.

Next consider marketing. Is the company going to follow HSBC and BskyB and go 'Carbon Neutral'? Or might it make sense to follow Richard Branson's Virgin Group and make a multi-billion dollar investment in renewable energy? Marketing, brand and corporate communications need to discuss this potential with strategy, operations and the board.

A great example of leadership can be seen from BT Group who ran advertising as long ago as 1997 challenging us to 'change the way we work'. The images of endless traffic jams today make us all think of the problem of emissions. In fact, BT is spending more on its network in the next 10 years, than the UK Government will spend on roads over the same period. Whilst cutting their own Greenhouse Gas emissions dramatically, BT is also thinking how to help their customers do the same.

How will consumers buying behaviour change as companies change their internal policy regarding climate change?

What we call 'Sustainability Product Marketing' will mean considering this challenge in practice. We have developed a market research question that asks; "would you be prepared to spend a few extra pounds on some goods and services if it helped protect the life of your children?" The answer seems obvious but what does that mean in the market? It means that corporations that are sensitive to consumers concerns will sell them solutions. And they will make money doing so. Ask any customer of Good Energy, the leading renewable energy company, if price is the reason for choosing this great supplier.

How can a company develop the right strategy for Sustainability Product Marketing? There could be an important role here for the CSR department in facilitating the integration of climate change and related matters across different functions in the corporation.

Sustainable business
The only way society can achieve economic growth without rising emissions is through a process called 'dematerialisation'. Different companies produce very different problems. Consider this example of a 'profit to emissions' ratio. For each £1 of profit produced, British Airways emits 200 times more CO2 than Vodafone. It seems obvious that in the future, there will be less tax on telecommunications and more tax on jet fuel. We might start to think of companies positioning themselves to become 'industries of the future'.

The world wants to know who will be the winners and losers. Of particular importance is the growing interest of investors.

On 1st February 2007 CDP will write to the FTSE 350 largest UK companies (alongside 2,400 others worldwide) asking urgent questions on corporate emissions and climate change. What will your company report? Your investors and the wider public want to know.

The internal challenge
What can companies do to motivate staff to take climate change seriously? This area is perhaps the biggest risk or opportunity of all. Smart people are already so concerned about climate change that they are waiting for their employers to catch up. The most talented and desirable employees - from top graduates to proven sales and management - are increasingly demanding meaningful work.

In the first instance that means companies cannot blindly contribute to the problem of climate change. The talented employees who understand the scale of the problem will not suffer to work against the interests of their children. But for companies that have understood the problem, the sky is the limit.
This is because, almost silently, across the world, people have begun to realise that the problem is serious. Really, really serious.

Now I have letters supporting Carbon Disclosure Project from Tony Blair, Angela Merkel and Al Gore. The moral of the story is that you should raise your game on climate change. There is no time to lose and so much to win.

To see what more than 1,000 corporations think about Climate Change go to www.cdproject.net and click on 'Responses'.

Paul Dickinson is Executive Director of the Carbon Disclosure Project and a consultant at Rufus Leonard.
 

View a PDF version of this article (33KB)

Moot Point?

Our Views