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This page presents readers with a brief introduction to climate change, as well as the risks and opportunities it presents to business. Links to a wealth of web resources about climate change and business can be found in Article 13's Climate Change Resource Centre.
What is climate change?
The greenhouse effect
Climate change is a phenomenon related to the change in concentration of greenhouse gases in the Earth's atmosphere. The greenhouse effect is a natural phenomenon that allows temperatures to be maintained at levels favourable to life and a stable climate on Earth.
However, since the last century the concentration of greenhouse gases has increased, primarily due to human activities such as fossil fuel combustion and deforestation. These activities are pinpointed by climate specialists as two of the main causes of climate change. These activities have led to massive emissions of gases, which in turn have resulted in increased air temperatures, called global warming, sea level rises, melting of glaciers and led to increased variation in precipitation and seasonal patterns.
Climate change manifestations
On 10 August 2007, the scientific journal Science published an article in which eminent British scientists stated that global warming will be clearly perceptible by 2009 due to a severe rise in the Earth’s temperature. More precise climate change simulators are being created; they assert that nothing could compensate the rising temperature caused by a higher green house gases concentration.
Today we can already observe the first signs of climate change and of global warming on the Earth with the melting of the glaciers as well as the migration of tropical species to previous temperate areas. But these imposing facts are just preliminaries to dramatic events symptomatic of climate change that are to occur if efficient solutions are not rapidly implemented to cut down human greenhouse gas emissions world wide.
Climate change and business: risks and opportunities
Climate change and global warming issues have traditionally been viewed as being the responsibility of government.
Today responsive and leading businesses have begun evaluating the opportunities and risks faced by their own organisations in the face of climate change. These businesses are seeking to put in place appropriate responses, going beyond legal obligations.
Climate change risks:
- Physical risks: due to an increase in the number of violent meteorological episodes such as heat waves, floods, storms, sea level rises, droughts. These events can directly damage a business premises, hurt its clients or affect its suppliers.
- Regulatory risks: climate change incites national and international regulation organs to change current legislation and to impose new rules about environmental management. These put pressure on companies, notably to lower their emission of greenhouse gases. By not conforming to these new rules businesses put themselves at risk.
- Competitive risk: companies which ignore consumer concern over climate change risk losing out to companies which have responded. Polling evidence shows consumers taking into account a company’s attitudes to climate change in choosing which products and services to buy.
Climate change opportunities:
- As recent success stories show, the early movers in climate change businesses such as renewable energy companies face extraordinary opportunities to create wealth for their shareholders.
- Businesses that are engaged in cutting down their greenhouse gases emissions and reducing their environmental footprint are also benefiting from the rise in consumer awareness and concern about climate change issues.
- Companies that get involved in tackling climate change, implement solutions that can also be beneficial to their profitability by reducing their consumption of resources (e.g. use of green energy and water management) and consequently increase their profit margin.
Non-binding international systems have also been developed to help businesses to lower their impact on the climate. The United Nations Global Compact (UNGC), for example, is a voluntary agreement that companies can sign up to, engaging them to commit to ten principles and implement more efficient systems to decrease their impact on environment. In the UK the Carbon Trust has launched the Carbon Standard which business can apply for to prove their credentials in carbon monitoring and reduction.
The next step in the corporate effort to curb climate change will be to gather the knowledge and best practice companies have acquired, because the efforts of early movers will have more worth and impact if they are spread to the widest range of businesses. Many conferences, congresses and meetings will take place during the coming years such as the Green Power Conferences in Chicago, September 2007. These events will allow businesses to learn about the latest solutions to manage their environmental footprint and to share their experiences and knowledge about climate change issues. These will encourage a benchmark of environmental friendly practices within businesses.
Offsetting:
In addition to cutting down greenhouse gas emissions companies can offset their unavoidable emissions through the practice known as carbon offsetting. This involves investing through the purchase of carbon credits in reforestation projects, renewable energy and energy efficiency. Each carbon credit is the equivalent of one tonne of carbon, replaced through renewable energy use, avoided through energy efficiency or sequestrated through forestry.
There are two market places to purchase carbon credits, the voluntary market and the regulated market. The regulated market consists of the existing regulated trade in carbon credits through the UN and schemes such as the European Union Trading Scheme (EUTS), This area offers comfort to purchasers in that it is highly regulated, However from an ethical point of view purchasers should check the sources of the purchase for issues such as human rights and the environmental impact of any project on non carbon environmental issues such as water pollution. Although the UN and the EUTS have taken great steps to improve these issues customers should be aware of the general ethical performance of the entity issuing the carbon credit.
The voluntary or unregulated market covers a wide variety of carbon credit types and is unregulated. Credits purchased in this market need to be carefully vetted and customers should seek proof or verification of the projects involved. In this field a lot of effort is being made in order to provide more efficient and reliable services. Initiatives such as the Voluntary Carbon Standard are welcome as is the Climate, Community and Biodiversity Alliance which is setting accurate standards to evaluate offsetting projects. These types of initiative are shaping the voluntary carbon offset market in the right direction.
For further information on web-based information on climate change, including carbon offsetting companies, carbon calculators, case studies and examples of initiatives, visit Article 13's Climate Change Resource Centre.
Explore our services to learn how we can help you calculate your carbon footprint, conduct a lifecycle assessment or sustainability appraisal.
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