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We live in an age when climate change is unquestionably the most serious threat facing humanity and the real implications and effects of our carbon-intensive lifestyles are now being recognised. We are, in the words of leading environmental campaigner and commentator George Monbiot, living in ‘the brief historical interlude between ecological constraint and ecological catastrophe’. 

Debate on climate change has recently passed a key landmark with the publication of The Stern Report. Until now the issue was seen by many as a specialist topic for meteorologists, environmentalists, niche political parties and CSR professionals. Now it is a mainstream issue receiving massive media exposure across all major channels, as well as close attention from Prime Ministers, Chancellors and Presidents.

And in the first week of April the latest report from the Intergovernmental Panel on Climate Change has been covered widely in the global media, forecasting that in Europe ‘coastal flooding is likely to threaten up to an additional 2.5 million people each year by 2080. In Africa, some regions will experience increased water shortages, which will affect livelihoods and lead to large increases in numbers of people at risk of water scarcity. In Asia, declines in crop productivity will increase the risk of hunger.’ One of the lead authors on the small island chapter said in a statement that the warming temperatures also will hurt sectors as wide-ranging as tourism, agriculture and fisheries on many island nations.

What is business’ response?
In the UK, the CBI has recently set up a Climate Change Task Force including members such as Ben Verwaayen, of BT, Clara Furse of the London Stock Exchange and Peter Redfern, of George Wimpey Plc. BP has also said it will direct some 5 percent of its investment over the next 10 years into clean energy e.g. low carbon energy sources like wind. It has also joined the UK government and the WWF environment group in publicly backing the EU's Emissions Trading Scheme (ETS), which has created a market for carbon, providing incentives for businesses to cut pollution.

The CEO of GE, America's biggest corporation, has effectively staked his company's future on its ability to "define the cutting edge in cleaner power and environmental technology." Under its ‘Ecomagination’ strapline, GE has promised by 2010 to double its research spending on cleaner technologies to $1.5 billion annually and double its sales of environment-friendly products to $20 billion annually. Meanwhile, GE will also reduce its emission of greenhouse gases by 1 percent by 2012. Without this action, emissions would have increased 40 percent.

GE’s actions carry a lot of weight. Not only is it the largest company in the US with a market capitalisation of $381 billion, it is also the most widely-held stock in the world. Its CEO, Jeffery Immelt, represents arguably a new breed that emphasises a company's obligations to a range of stakeholders and interests including the global environment.

Recent indexes are also having an impact on perception. In the third annual Global 100 Most Sustainable Companies, (based on ratings by Innovest), Shell knocked BP, a G100 constituent for the last two years, off the list. BP had attracted some negative attention due to its health and safety, attention which related to the study conducted by an independent safety review panel headed by former US secretary of state James Baker.

BP’s top-rated spot was been taken by Shell in spite of the fact that BP is addressing the health and safety problems.

Bank of America also dropped off the list, not so much due to its poor ESG performance, but rather due to the fact that it had fallen behind the improving performance on these issues by its sector peers – new G100 constituents Goldman Sachs and JPMorgan Chase.

If brand value is at risk from climate change, there would seem to be an opportunity for real differentiation against competitors that goes well beyond the ‘cosmetic’. Some organisations are already actively shaping their future strategy around the issue. 

Sustainability and business impact
Awareness and understanding of climate change is at one level part of a wider consumer focus around ‘sustainability’, which also incorporates the demand for ethical production and greater corporate social responsibility.

For commercial organisations, climate change is not just an issue for those sectors or companies that are traditionally linked with the issue, such as oil and gas. Increasingly, climate change will potentially impact businesses in three key ways: regulatory risk (where for example a company may be subject to emissions regulation and buildings compliance); physical risk (such as the impact on property and insurance costs); and business risk (including the impact of climate change exposure to brand value and reputation).

Research undertaken for the Carbon Trust in 2005 indicated that the impact of climate change would potentially vary according to the particular sector. Not surprisingly, airlines, along with the food and drink sector were found to have the highest intangible value at risk (50% and 10% of market value, respectively).

But even though the figures for the other sectors examined (oil and gas, retail, banking and telecommunications) were around 2%, this would still represent several billions in share value in the UK alone. Other reputational elements at risk would include a company’s reputation amongst its business customers, staff, suppliers, shareholders and regulators.

Importance of networks
With governments typically soft-pedalling around the whole area of climate change at present, we are seeing the effective ‘privatisation’ of environmental policy. Informal networks are emerging that link influential NGOs, giant corporations and governments that want to solve social problems. These networks develop new rules that become industry standards.

One example of such ‘self-enforcing’ guidelines is an environmental benchmark for financial institutions known as the Equator Principles. Participating companies agree not to lend money for a project unless the borrower completes a detailed ‘environmental assessment’ that explains how it will meet criteria for sustainable development and other social goals. These principles have now been adopted by nearly all the major global financial institutions, including Citigroup, Bank of America, HSBC and JP Morgan Chase.

Longer term, some kind of transparent and simple to understand evaluation ‘mark’ may be developed with clear governmental backing that incorporates some combination of expert industry opinion, climate change science, financial analysis and consumer [lobbying] representation. This mark may reflect a set of discrete criteria that together constitute an overall grading assessment, with the detailed (and regularly updated) supporting evidence provided on a central register.

Taking the first steps
So, what should companies consider when setting out their first strategy regarding Climate Change? There are a few simple things that need to be looked at, all of which will have immediate effects on carbon neutrality:
Consumption of energy

• Electricity
• Gas
• Coal

Contribution to deforestation

Paul Dickinson, co-ordinator of the Carbon Disclosure Project has stated, “There are fortunes to be made if you focus on just these four things.”

After a review and analysis of the above takes place, then organizations need to ask themselves a second question, one that is currently overlooked by many who embark on Climate Change strategies:

‘How can I make money through this?’

Some immediate answers are using videophones instead of traveling to meetings, installing double glazing, or just flying less. Each organization needs to look at what change needs to take place and the opportunities, money making and otherwise, resulting from these changes.  Examples of companies that are early movers are Toyota and Honda, who have focused on developing and making electrical cars and are now way ahead of their American counterparts.

Another aspect of Climate Change that companies need to consider is adaptation. That is looking to the future and identifying what other changes or new practices should be employed to address the negative effects of Climate Change. For instance, when the climate becomes significantly warmer, glass may start falling out of windows due to its melting temperature being met. Global desertification will increase and therefore organizations involved in food production will need to look at new areas to plant crops and graze animals.

Making it policy
Once a strategy is decided on, Nick Robins of Henderson Global Investors has suggested that “Companies should integrate climate change into the core of investor communication through reports and presentations.

“They should implement best practice by signing up to the Carbon Disclosure Project and the Greenhouse Gas Protocol, an accounting tool.

“Companies should also make use of the Climate Disclosure Standards Board, which aims to make it easier for investors to compare firms’ climate change-related reporting.”

Robins also stated businesses should make sure they are “part of the debate on the coming mandatory reporting” for carbon emissions, since “companies will start to bear the full cost of carbon”. (Excerpts from Ethical Corporation, ‘Strategy & Management: Carbon down, Profits up, Problem solved’).

Communicating your policy
Assuming your organization decides to take Climate Change seriously and formulates a strategy embracing carbon reduction measures, then it is vitally important that your thinking is communicated clearly to your employees, partners and media and influencers.
These simple guidelines should help you in this process:

1. Make sure the programme is understood
In order to address issues of such importance effectively, it's essential that the programme you're embarking on is properly understood. And that means the people responsible for change, and those who will benefit from change both inside and outside your organisation, understand clearly the 'what, why and how' of bringing it about.
 
2. Get the communications climate right
One of the most important ways you can make your communications effective is to breathe life into your programme messages and visual elements. To strip away the glib, tired vocabulary of the 'me too' world, and replace it with a commitment to creating a thought provoking, persuasive dialogue.

The issues we are addressing are too important to be glossed over with comfortable corporate jargon that uses so many words that mean so little. Your organisation must not just talk. It must be seen to act. And if it's to act effectively, everyone with a contribution to make has to buy into what's happening for all the right reasons.

3. What are the benefits?
People are often galvanised by positive messages rather than negatives ones. It’s worth considering, ‘what are the benefits of introducing change to reduce CO2 emissions’?

Can you relate your programme of activity to your brand? What are the benefits of 'doing something about it'? This should be more than a ticked box. It's an action with a continuous objective. One that sets an example in your industry, that your people can be proud of, that attracts customers and that complements what your brand stands for.

Are there ways to communicate the importance of what you're doing to customers and business partners? While the primary objective is to communicate internally, you can tailor this ethical message to attract and retain customers and draw the positive attention of your key influencers and journalists.

4. ‘Where do I stand?’
Define and communicate to the business, teams and individuals, messages in meaningful, clear, realistic and motivational terms. Your messages should allow them to see where they stand, what they can do and how it really counts. Clarify and expand on the rationale behind the need for global and local action. While more and more people are aware of the dangers of global warming and the need to act, the subtleties of carbon offsetting and reduction, and even the need for it at all in the workplace, are still a mystery.

5. Continuous measurement and review
It’s important to monitor the progress of the programme. Define and implement a clear strategy before you start, but be flexible in your approach and responsive to feedback. Be prepared to adapt to changing circumstances both in and outside the business, whether they're global or local.

6. Look forward, playback
A narrative that people can easily understand and empathise with is a powerful tool. Build the story and play it back both internally, to build momentum and morale and externally, to show positive leadership and progress.

7. Take it home
Ensure the positive actions in  your programme are designed to go further than the workplace. Show how behavioural changes can reach into everyday actions. This corporate 'generosity' will reflect on the brand, the business and your people, for the benefit of everyone in your organisation.

8. Will it cost the earth?
It's hard to put a price on an initiative with such important potential consequences and benefitst. A truly effective carbon reduction programme impacts in so many ways both in and beyond the workplace. You will therefore need to make realistic assessments of what will be spent, based on the overall strategy and priorities of each stage of the programme. You may want to consider it in terms of head count - the cost per person to achieve your goals, or fix a budget to work from.

“Shifting to a low-carbon future in the UK and internationally will require the adoption of a very broad range of technologies, many of which are at a very early stage of development. Developing and nurturing new technologies takes a long time. If we are to be where we need to be in 2050, serious investments need to be made today in the rapid development of low carbon transport and energy technologies. For example, research done by the World Business Council on Sustainable Development shows that, even if we start seriously developing the market for zero emissions cars now, total global emissions from cars will not start to fall until 2040.” -  Corporate Leaders Group on Climate Change – 2005

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