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.

But even with this continued reliance on fossil fuels, we can make energy choices that are more sustainable. A wide range of lifecycle GHG impacts -- as well as other environmental and social issues -- can be positively affected through improved operating practices and a more sustainable mix of fuels. Similarly, business can support the growth of low-carbon and renewable-energy sources by addressing the total lifecycle impact of different technologies and sources.

In 2012, we will be launching our "Future of Energy" initiative to help companies and stakeholders create a shared roadmap and practical tools for reducing the impacts of our energy use and promoting the transition to more sustainable energy sources and technologies.

Through this effort, we will advance several climate solutions: Better evaluation and reduction of GHG impacts by companies purchasing energy, increased industry and multistakeholder collaborations to share investments in energy efficiency, and swifter deployment of low-GHG renewable-energy options.

For example, our Future of Fuels project will bring together corporate fuel purchasers such as Nike, Walmart, and UPS to understand the total sustainability impacts of conventional and unconventional fossil fuels. The group will also identify tools for energy producers and stakeholders to make investments in more sustainable solutions, while educating companies and their stakeholders on the impacts of energy choices.

Making Companies and Communities Climate-Resilient

Our third focus area is based on another hard reality: Even under the most aggressive scenarios for possible GHG reductions, the world is already locked into significant climate change. It is increasingly likely that we will not avoid the 2 degrees C (3.6 degrees F) of global warming considered a critical threshold, with the result that the record-breaking extreme weather we saw in 2011 is likely to continue and even intensify. These weather disruptions will put the well-being of companies -- as well as the communities on which they depend -- at increasing risk.

The primary focus of government efforts to adapt to climate change is the so-called Green Climate Fund, which is expected to eventually disburse US$100 billion to developing economies for adaptation. But even if all these funds are made available, implementation will be constrained by the limitations of international-aid-style assistance. Meanwhile, companies retain some of the best tools for helping communities deal with likely climate impacts.

Drawing on our climate change adaptation research, we will be helping companies align their business strategies with the likely requirements of our future climate. We will also look for ways to help adaptation-related solutions providers -- from financial services to infrastructure -- partner with civil society and governments. And we will collaborate with Oxfam America in their Partnership for Resilience and Environmental Preparedness initiative, which is helping vulnerable communities and business adapt to climate change.

We believe these three areas represent opportunities for companies to demonstrate leadership while building the skills and relationships critical to long-term success in a carbon-constrained world. We look forward to working with our member companies and others to make this happen.

Protest photo via Shutterstock.

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