For real results on climate, look beyond Copenhagen
— Aron Cramer is the president and CEO of BSR, a global business network and consultancy focused on sustainability. He is also coauthor of the forthcoming book Sustainable Excellence (Rodale 2010). The views expressed are his own. —
(Updated on December 17th to correct figure in McKinsey study in paragraph 7.)
As world leaders seem uncertain about whether a binding treaty is even possible at Copenhagen, it’s important to remember what was already clear: Twelve days in Copenhagen were never going to solve climate change anyway.
No doubt, these negotiations, now extending into 2010, are crucial. The sooner we can seal a global deal to reduce emissions, the sooner we can avoid catastrophic climate change. But as important as the treaty negotiations in Copenhagen’s Bella Centre are, even a successful outcome will be for naught if boardroom decisions and factory processes aren’t reoriented toward a low-carbon future.
To steer the world in that direction, business must change how it operates, with a shift of historic proportions. Otherwise—like the Kyoto Protocol of 1997—a new international climate agreement won’t achieve its goals.
Making this change requires business to focus on innovation, efficiency, mobilization, and collaboration—and that work must start now.
At every turning in point in history, from the advent of the railroad to the internet revolution, innovation has redefined our economy. Solving climate requires exactly the same thing. Everything about a climate-friendly economy—from the basic products we use to the places we shop to how we commute—will look different.
Companies that lead the way by re-imagining their offerings will find unprecedented opportunities to boost profits. Take clean technology: Smart buildings, smart energy grids, and smart transportation systems are all smart business, and require innovation to get us there. And let’s not forget, innovation can deliver savings, along with better, healthier lives for all of us. The companies that maintain R&D budgets—especially in our times of disruptive change—will be best able to compete. This is especially important in light of new centers of innovation, illustrated by prospective world-beaters like China’s BYD and Abu Dhabi’s Masdar.
Efficiency is the second piece of the puzzle. A McKinsey study earlier this year found that an investment of $520 billion in efficiency measures would deliver $1.2 trillion in savings—and achieve emissions reductions equivalent to removing all passenger vehicles and light trucks from American highways. Individual companies have learned the same lesson: Wal-Mart estimates that it can save between $35 million and $50 million for every additional mile it squeezes from a gallon of gasoline. This is why the retail giant is partnering with several companies to hike the efficiency of its truck fleet.
Companies can also leverage their powerful brands to mobilize changes in consumer habits. Companies have a unique platform that can help build support for action on climate change. U.S. public opinion on climate change is, to put it charitably, unsupported by the science. According to a recent study, while nearly every scientist agrees that the planet is warming and that human activity is to blame, approximately half of all Americans think scientists have yet to settle the matter. This gap is a problem, since public opinion is the life force behind decisions by politicians and business managers. The many companies like Nike and Apple that are advocating for climate legislation can strengthen these efforts by leveraging a core strength—communication—to mobilize public opinion.
Collaboration is also essential to the new low-carbon economy. The spat with the U.S. Chamber of Commerce, with several high-profile departures from the Chamber, has gotten headlines, but the more important development is the emergence of new coalitions to lead climate progress. Businesses are banding together to promote climate legislation in Washington and an agreement in Copenhagen. Efforts like the U.S. Climate Action Partnership and the Business for Innovative Climate and Energy Policy have the potential to push legislation over the finish line.
Collaboration is also a key element in climate-friendly innovation: The days of the vertically integrated monolith are over. Companies like Coca-Cola have worked with unlikely bedfellows such as Greenpeace in efforts to produce refrigerators that use less energy. Within the private sector, companies in unrelated industries, such as Nike and Best Buy, have collaborated in initiatives like the Green Xchange, which creates an open-source platform for the development of new products that have a smaller footprint.
In the wake of President Obama’s visit to Asia, it is not clear whether he and his peers are still seeking a binding agreement in Copenhagen. We’ll see. A treaty is needed, and business should clearly advocate for that outcome. But regardless of whether Copenhagen delivers the goods, let’s remember that a treaty alone won’t solve climate change.
To make a treaty work, we need a business road map that focuses on low-carbon prosperity, with an emphasis on innovation, efficiency, mobilization, and collaboration.
If you want to see whether we make progress on this immense global challenge, look beyond Copenhagen and the treaty negotiations to see which companies follow this path.