Why Low Carbon Corporate Champions Want a Global Climate Agreement

Why Low Carbon Corporate Champions Want a Global Climate Agreement

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Global leaders from corporate, public and civil society are gathering around the events of Climate Week, which began Sunday in New York. This piece, the second part of a two-part post, coincides with the release today of "Champions of the Low Carbon Economy," a joint report of the UN and Dalberg Global Development Advisors.

In yesterday's post, we introduced the "low carbon champions," CEOs and senior executives who are leading their firms and their sectors into the low carbon economy of the future. Some 80 low carbon champions are meeting with heads of state at the UN today.

In this post, we explore with the low carbon champions why they are seeking a climate agreement that's truly global and why they seek it right now.

To arrive at greater certainty and a price on carbon, senior executives consistently prioritize a truly global agreement over national or regional agreements.

J.J. Irani is a director and member of the Group Executive Office of the India-based Tata Group, a diversified conglomerate with more than $70 billion in annual revenue. In his view, many global challenges such as narcotics or arms trafficking can have effective, if partial, solutions established at a national border. But in contrast, he argues carbon dioxide "cannot be controlled or kept away by geographical boundaries.

The urgency for action is clearly articulated by the low carbon champions.

Caio Koch-Weser, vice chairman of the Deutsche Bank Group, underscores this by saying, "[The upcoming global agreement negotiations in] Copenhagen are so important; if we wait another 5-10 years, we have lost it." As articulated by Francesco Starace of Enel Green Power, "We need an agreement now because time is running short and there's a wide array of data showing that. As we discuss, things get worse not better."

For some companies, the failure to address climate change represents a considerable risk to their core operations.

Gareth Penny of De Beers explains that three of the company's largest mines are situated in semi-arid areas of Botswana and South Africa. As Penny notes, "Even modest water changes could create massive issues with operations and the communities they serve. Closing one of those mines would have a profound impact on tens of thousands of workers and members of the local communities."

Low carbon champions are absolutely clear that the current global recession should not derail progress toward an agreement.

Willie Walsh, British Airways' CEO, says that "We are ready to accept ambitious carbon-reduction targets. These will galvanize the whole industry, from manufacturers and fuel suppliers to airlines and air traffic control providers, to accelerate the transition to lower-carbon alternatives."

Jack Ehnes, CEO of CalSTRS explains that "Without a global agreement, we would be going back into another cycle without any rules in place and without learning what we could have from the current crisis. We'll be going into another ambiguous risk environment, which would be very short-sighted."

This sentiment is echoed by Tata Group's Irani, who contrasts the short-term nature of the financial crisis with the long-term crisis of climate change. "The financial crisis is like a summer shower -- we are all getting a little wet, but the sun rays are peeping through the clouds. If we don't deal with climate change, however, we will be inundated by a downpour of Biblical proportions."

That outcome is not inevitable, in the view of these CEOs. As Robert Fowler of the Australian pension fund HESTA states, the challenge is for "the corporate world to convince the government that this is do-able." Peter Barker-Homek is CEO of TAQA, the vertically integrated $4.4 billion power company based in Abu Dhabi. "We have enough technology not only to beat the targets for 2020 and 2050," he says, "but to beat them by a material amount. "

Put more broadly by Gary Helou, CEO of Australian food giant SunRice, "Human beings have the capacity and intellect to come out of this situation on the positive side."

Finally, senior executives see a global agreement as a critical test of global leadership in the face of a daunting challenge.

For Vattenfall, a leading producer of electricity in Europe with roughly 46 percent of production from fossil fuel-based generation, the global agreement is critical as a signal of transition. Vattenfall's President and CEO Lars Josefsson asserts that "Most importantly, it would give the world comfort and trust that the leaders of the world are changing course towards a more sustainable future." His thoughts are echoed by Mats Jansson, CEO of the SAS Group, whose comments summarize his hopes as well as ours. "For society, a global agreement would be a sign that we have enough courage and strength of leadership to take a good decision on a global basis."

The full report "Champions of the Low Carbon Economy" is being released today by the UN and Dalberg. You can view or download it from the news section of
www.dalberg.com.

Jonathan Berman is a partner and head of the global corporate practice for Dalberg Global Development Advisors, Sonila Cook is a partner in Dalberg's New York office and leads Dalberg's Energy and Environment practice, and John Stephenson is a project manager in Dalberg's Washington D.C. office.

Image courtesy of SunPower via
NREL.