Copenhagen: Big Deal or Hot Air?
Published:
December 11 2009, 10:00 AM
by
Sonny Masero
With President Obama and President Hu Jintao attending the UN Climate Change Conference in Copenhagen next week, the climate change community is almost at fever pitch. Why is Copenhagen a big deal? It has been billed as the event when an international agreement on global climate change policy will be agreed to supersede the Kyoto Agreement which comes to an end in 2012. To combat man-made climate change, the Kyoto agreement is responsible for introducing "emissions trading" and was the political basis for the international carbon market being established. The size of the carbon market in 2008 was estimated at between €92bn-€118bn and will continue to grow as more stringent targets are set and the scope expanded. The Kyoto Agreement also sets out greenhouse gas emission reduction targets for 26 countries in the European Union, Canada, Japan and Australia, amongst others. A successor agreement is vital for long term economic growth and for the future of the international carbon market.
In Copenhagen over the next fortnight, the reality is that a political agreement could be reached, which would set out the over-arching principles of a legal agreement. It will then be down to detailed negotiations over the next year before an enforceable agreement will be reached. Whatever the outcome, the fact that some of the most powerful men in the world will be in Copenhagen next week surrounded by the largest corporate lobby group seen at these negotiations in 15 years indicates that climate change is not about to disappear as an issue for the public or the private sector. In fact, the absence of an international agreement will make progress more complicated as regional and voluntary initiatives move forward regardless.
What does this mean for business? This high level of anticipation is an indication of the future direction of the market. Regional and national climate change policy and regulation is moving forward with or without an international agreement. Investors now see climate change as a material business risk. Companies now see carbon management and low carbon products and services as essential for competitive advantage. Governments recognize that their electorate is concerned about climate change and that they need to be seen to be taking action. The changes required to reduce greenhouse gas emissions won't come if the aim is just to protect the planet, but they will happen if the low carbon solutions also help reduce costs, demonstrate regulatory compliance, differentiate products & services, help to retain the best staff and respond to other stakeholder demands on transparency, active management and reporting. As national and international climate change policy grows up, environmental governance will mature as well.
The proliferation of voluntary and regulatory initiatives around the globe means there has been an exponential growth in data collection, analysis and reporting over the last few years. Due to the dispersed nature of the data collection, this is often a hidden cost within organizations, spread across several budget lines. Companies like Tesco have realized that a more intelligent solution is required to bring the spreadsheets under control. Working with CA ecoSoftware, Tesco is efficiently collecting data from its global operations providing immediate visibility through a centralized system. This is a competitive advantage because it provides better and more immediate information on which to make informed decision and make clear communications to a variety of audiences. The nature of this response is one example of the rapidly expanding demand for environmental software in response to the global debate on climate change.