When Policy Fails on Climate, What Can Business Do?

This article originally appeared in BSR's Insight, and is reprinted with permission.

As 2011 draws to a close, we have registered a record year for weather disasters following the largest-ever jump in greenhouse gas (GHG) emissions, and the carbon intensity of the world's fastest-growing economies is only rising. Following the inconclusive end of the UN climate talks in Durban, there is also little reason left to believe that our outmoded international treaty system is going to lead the world away from the ever-worsening state of climate change.

All of this raises the bar for business. Gone are the days when corporate climate progress was "simply" about making incremental improvements in energy efficiency and calling for government action from the sidelines. Today, leadership means fundamentally reorganizing the world's systems of energy and agricultural production, and devoting the finance, innovation, and operations required to make it happen.

For business, this means using the company's capabilities, assets, and even political muscle to directly address the problems where policy is falling short. In 2012, BSR will focus on three vital areas for doing this: addressing supply chain emissions, enabling more sustainable energy choices, and adapting to an uncertain future climate.

Alleviating the Supply Chain Carbon Crunch

Supply chains represent the real nexus of global GHG emissions, even though they do not show up as such in typical enterprise accounting. This is largely due to the "off-shoring" of emissions: A quarter of global emissions are linked to goods that are shipped across borders for purchase elsewhere, generally in high-income economies. The upstream emissions from manufacturing are further augmented by the importing of energy -- witness the growing sales of U.S. coal to China.

BSR will help companies alleviate this supply chain "carbon crunch" in two ways. First, we will help them identify their most promising areas for investment based on the GHG Protocol's Scope 3 standard. Second, we'll help bridge the technological and cultural gaps that hinder effective collaboration with suppliers, particularly in China.

Building on the insights gained through our Energy Efficiency Partnership program, we will do this by helping companies build the trust needed to gather factory-floor level data, by training suppliers' operational and senior staff to manage energy and emissions, and by connecting suppliers and energy-service companies and other resource providers in their home communities.

Making More Sustainable Energy Choices

Our second focus area is based on the fact that even with the rapid growth of renewable energy sources and periodic successes in blocking fossil fuel extraction and production, fossil-based energy is going to remain the backbone of the world's electricity grids and transportation fuels for at least the next 30 years. This is a result of rising global consumption led by emerging market demand, with economic and political factors making unconventional gas and oil more attractive in the United States, Europe, China, and beyond.