(Paris, 11 December 2009) – By Georg Kell, Executive Director of the Global Compact, published in the International Herald Tribune:
As negotiating teams labor at the U.N. climate change conference, a rising chorus of business leaders is chanting “seal the deal.”
Though notions of hammering out an actual climate treaty in Copenhagen have been put to rest, many captains of industry are nonetheless urging governments to agree on the core elements of a climate framework that can serve the basis of a treaty.
Indeed, in recent months, scores of business leaders and some important investors have pursued what amounts to a global road-show to demonstrate the many initiatives and actions they are undertaking to combat climate change, despite the slowness of many governments to act.
In September, for instance, more than 100 business leaders met with government heads at the United Nations in New York for a special conference on climate change. Business chiefs discussed the importance of forging a new international framework and shared many examples of corporate climate action — including significant cuts in carbon emissions, long-term goals, increased use of renewable energy and investment in new technologies to deal with associated issues such as water scarcity.
While praiseworthy, one should not fall prey to the misconception that these business leaders represent the private sector writ large. As important as these efforts are, they pale in comparison to the countervailing weight of the corporate fence-sitters and outright opponents to climate-change action.
A recent analysis of the 300 largest global companies by market capitalization reveals a high level of unmitigated climate-change risk, despite some improvements during the past year.
Of the companies in this group that have high carbon footprints, 60 percent have not set long-term emissions targets, while 80 percent have not disclosed targets related to the climate impact of their products.
A study of American companies provides another alarming picture. Of the 1,000 largest U.S. companies by market cap, only 8.4 percent have stated environmental policies that address emissions of greenhouse gases.
Of course, regulatory uncertainty at both the national and international levels are key factors holding back many companies. An agreement in Copenhagen would undoubtedly tip the scale in favor of more business action.
But given the level of inaction and the counteracting forces of organized opposition, further steps will be needed to truly tip the scale in favor of positive business action.
First, progressive businesses must take their case to the industry fence-sitters through an active outreach campaign that includes a number of key messages:
1. climate change is the test of business leadership in the 21st century;
2. the future of the global marketplace hangs in the balance;
3. addressing climate can trigger an era of sustainable prosperity;
4. transformation is possible and viable; and
5. climate change is an urgent ethical issue for the broader role business in society.
Of course, it would be naïve not to acknowledge that there will be industry losers in the end. There will be those companies and sectors that are just too entrenched in the high-carbon economy to adapt and change.
A second action must involve the further mobilization of key stakeholders — most notably civil society, consumers and the investment community.
Already, many nongovernmental organizations and consumers are pressing companies to take action. Much more could be done through consumer movements and initiatives that identify companies that are making real progress in managing their environmental footprints and those that are not.
Investors in particular have a critical role to play. Already there is a gathering momentum of important institutional investors — public pension funds, for example — that are making climate change a central consideration in their investment decisions and in their discussions with companies. Some have taken to filing shareholder resolutions on the topic.
It is noteworthy that many of these investors and money managers now carry studies showing that proactively managing environmental and social issues can contribute to market outperformance.
Achieving the low-carbon economy of the future will not be possible without the active role of business. Some have taken up the challenge. It is time for the fence-sitters to join this effort.