Opinion

The Great Debate

Business must take the lead on carbon management

January 22, 2010

APOTHEKER

Léo Apotheker is CEO of SAP. The views expressed are his own.

Most people who followed the Copenhagen climate talks in December will have been disappointed.

While the agreement brokered by the group of countries that included the United States, Brazil, China, India and South Africa and ratified by most of the attending countries is being touted as a success of sorts, it fell far short of the expectations that had built up, and achieved very little in concrete terms.

Now with the World Economic Forum approaching, the issue of climate change and sustainability will once again dominate discussions among the business and political leaders who attend the annual gathering in Davos.

Ever since the 1968 publication in Science of Garrett Hardin’s article “The Tragedy of the Commons,” it has been regarded as virtually an article of faith that only strong national and international regulators can be trusted with the proper management of public resources.

A clear regulatory framework is necessary for businesses to act in competitive environments and maybe at least some pieces of such a framework will be provided in the future. But it was not provided at Copenhagen.

James Madison’s 1788 observation, “If men were angels, no Government would be necessary,” underlines the rationale behind a global framework to limit air pollution. Treaties are valuable in defining what a large-scale, shared objective should look like.

On the regulatory front in the United States, for instance, the Environmental Protection Agency instituted a rule in September that will require the roughly 10,000 facilities that account for 85 percent of heat-trapping emissions domestically to measure and report on those emissions. The first such reports will be due in March 2011 and businesses could face daily fines of up to $32,500 for non-compliance.

In Europe, France and Germany have been calling for a punitive carbon tax on imports into the EU from countries that fail to back international efforts to fight global warming.

However, we as business leaders cannot wait for global regulations to be agreed upon and put into practice. We must act today as carbon management and sustainable business will only become more critical over time.

As the cost of energy has become high and volatile, a careful appraisal of one’s consumption becomes a matter of good, common business sense. It is no coincidence that Boeing and Airbus are now in the midst of a fierce competition to build the most fuel-efficient new airliners possible.

Many large companies are already taking matters into their own hands. The hope of course is that politicians will take note and respond with a global regulatory framework, but business leaders know they cannot wait for this framework before acting.

Retail giant Tesco, for instance, is exerting its market power to mandate that its suppliers reduce the carbon footprint of their products by 30 percent by 2020. For years, Nike has been steadily reducing its total CO2 emissions and its use of volatile organic compounds. At SAP, we have pledged to reduce absolute CO2 emissions to year 2000 levels by 2020 (approximately 250,000 tonnes of CO2).

Fortunately for all involved, better technology and better software are now in the process of making it easier for companies to quickly and accurately report on their carbon emissions with less paperwork, fewer headaches, and at a lower cost – thus making it possible to greatly increase the quality of the available data. This data is the key to the success of any post-Kyoto global climate change framework, enabling companies to align their methodologies with diverse and evolving regulatory requirements.

Some 2,500 companies are already providing data on their carbon emissions to the Carbon Disclosure Project (CDP). Their voluntary participation in this global initiative represents a sea change in the business world’s appreciation of the importance of transparency in environmental matters.

These sorts of advances in data collection and aggregation will result in the availability of accurate information that can easily be appraised and compared by investors, businesses, consumer associations and regulators across the world. These simplified processes, managed by software, will make it easier for companies to benchmark their carbon footprints against their peers and to identify key areas for improvement.

At SAP, I am determined that we will be an exemplar among businesses in how we manage our own carbon footprint.

As business people, we have a chance now to lead the way and create an effective monitoring system.

The challenges we are facing after the failed Copenhagen Accord remain formidable. Now, after global political leaders have failed to find a suitable arrangement, it is in the hands of business to lead the way.

Comments
9 comments so far | RSS Comments RSS

Okay You Lead The Way!

The Copenhagen Diagnosis, 2009: Updating the world on the Latest Climate Science. Has again indicated urgency in action is imperative. Here’s my solution and immediate areas of impact.
dennisbaker2003@hotmail.com
RE : The solution to climate change.
( human excrement + nuclear waste = hydrogen )
The USA discharges Trillions of tons of sewage annually, sufficient quantity to sustain electrical generation requirements of the USA.
Redirecting existing sewage systems to containment facilities would be a considerable infrastructure modification project.
It is the intense radiation that causes the conversion of organic material into hydrogen, therefore what some would consider the most dangerous waste because of its radiation would be the best for this utilization.
I believe the combination of clean water and clean air, will increase the life expectancy of humans.
The four main areas of concern globally are energy, food,water and air!
The radiologic decomposing of organic materials generates Hydrogen
By using our sewage as a source of energy we also get clean air , clean water, and no ethanol use of food stocks. Eat food first, create energy after.
Simply replacing the fossil fuel powered electrical generating facilities with these plants, would reduce CO2 emissions, and CH4 emissions, to acceptable levels, globally.
This would require a completely new reactor facility capable of converting human waste into hydrogen and then burning the hydrogen to generate electricity on site.
This solution is sellable to citizens because of all the side issue solutions. I’ve been able to convince most simply with concept of using nuclear waste to a productive end.
Superbugs ( antibiotic resistant ) apparently are created in the waters sewage is discharged into, which is one more side issue solution.
Anything not converting into hydrogen will potentially be disposed of using Transmutation.
The water emitted from hydrogen burning will have uses in leaching heavy metals from other contaminated site clean ups.
I thank you for your consideration, please feel free to contact me anytime.
Dennis Baker

Posted by D.Baker | Report as abusive
 

My experience with CEOs claiming that we must ‘do something’ about climate change/global warming usually is that they are simply talking their position like any trader; i.e. they are trying to sell some service or product which, they claim, will ameliorate climate change. The most egregious example I have seen recently was a Chinese maker of solar panels, speaking at a trade conference in the Far East, claiming that global warming was a ‘fact’ and ‘imminent’ and that governments must invest in new, environmentally-friendly energy sources…like solar panels! Gimme a break, PLEASE. Hey Leo, how many carbon offsets are ya buying to salve your conscience about flying executive class to Davos and staying in a five-star hotel? Nothing but the best for you, I’d wager!

Posted by Gotthardbahn | Report as abusive
 

WastingtonDC: Shivering in the grip of a world wide 30 year record cold spell, we find ourselves chortling at the repeated revelations of potential fraud/conspiracy/stupidity in the efforts of the very geniuses touting global warming to sell their vast job and economy killing snake oil medicine to cure the planet of woes that apparently only the potential fraudsters’ have imagined. In fact, the publicized emails, and silly errors seem to indicate there may even have been criminal actions, involving the fraudulent use of cherry picked data, with employees conspiring to ignore or dispose of data offending their predetermined conclusion, to avoid Freedom Of Information Requests, and to savage those skeptical scientists now proved quite sensible to have raised questions about their skewed political campaign. Clearly, the first world economy destroying costs of the vast and unnecessary reduction of economic activity, that would be globalism, might well support the personal religious or political bias of the conspirators, but with the rampant deforestation, and weekly coal fired electrical plant creation of the developing world unhampered, even the impossibly large expenditures, and economic hobbles aimed at, by the conspirators, would have been a piffle, compared to the emissions of those nations exempted from those draconian controls. We can do better, by simply using private money, with incentives based on the rule of law, and protection of private property, to persuade well off Free World investors to buy, outright, the remaining lungs of our planet,for the chump change it is on offer, to the forest destroyers, with tax incentives for the new owners, as long as they protect the forests from destructive exploitation, particularly illegal mining, and timber cutting. I get an offer to purchase 10,000 acres of pristine South American rain forests, often, for $200,000, no doubt from the elite inheritors of the vast estates that have enslaved our South American neighbors, for centuries. With international assurance of the rule of law, and undisputed title, millions of Free World investors could end the destruction of our planets lungs, with private money, backed up by American technical means to monitor illicit activities, and help the host nations protect our environment. Wake up and use common sense, at private cost, with private profit, to save the world’s lungs, now.

Posted by WastingtonDC | Report as abusive
 

Unbridled consumerism has to end forever. It’s damage is now seen as too great to continue. The vast majority of our global carbon footprint is due to the making of goo-gaws, gadgets, trinkets and whatchmacallits that no one really needs. Our world compulsion for selfish “wants” must end and a new cultural explosion must be directed toward the best quality satisfaction of real global needs. Infrastructure, transportation, and utilities would be foremost in this rebuilding renaissance and must be done to a high global standard and breadth, much higher than today’s, no matter the country in which they are located. We can agree on this if only the fascination with mostly useless object worship could be seen for what it truly is…………..the ruination of the world before its natural time from air and water and food contaminating chemicals from the manufacturing processes of the production of mostly junk that no one really needs and is only habituated by unbridled consumerism to want. It all must end for our grandchildren to have a chance to live in a world worth living in and for!

Posted by bobbobwhite | Report as abusive
 

Mr. Apotheker, you are obviously an educated and broad-minded man. I wonder, however, how many of your readers will actually [have] read “The Tragedy of the Commons.”
While you do not explicitly endorse the entire contents of that article, and while the particular part of that message which supports your own article (w.r.t. environmental pollution) is quite reasonable; I would more generally caution your readers that this article which you have cited:
* while partly based on unquestionable facts, is also founded on a number of very tenuous assertions.
* while condemning emotional appeals to conscience, the article makes precisely such an appeal.
* pretentiously praises science while failing to make a wholly scientific argument.
* casts generalisations on society that appear to be based more on theoretical extrapolation than on empirical experience.
* according to expediency in supporting their apparently pre-determined and firm conclusions; in some cases they base propositions on the premise that human beings are mostly irresponsible, and in other cases where convenient (e.g. in proposing to trust the majority to enforce the group-think decision) they base propositions on the premise that human beings are mostly responsible and fair (a basis directly contradicted by their own example of the cynical and politically motivated city government.)
* various points made in the article could demonstrably be construed as “straw man arguments” and “weasel words” lacking in proper citation.
* concludes that various forms of coercion are needed, extending all the way from absolute control of our biosphere, to absolute control (or near irresistable “persuasion”) in the private matters of the married couple’s bedroom.

Unfortunately while that article is based on so much conjecture; there is not even a modicum of modesty in the manner with which its conclusions are foisted upon us. An emotional appeal is used as a large part of the “basis”, yet the author apparently purports to have made irrefutable scientific conclusions. No reservation is given about the absolute necessity (as the authors would frame it) to coerce people to do the “right thing” (as determined by the majority.) Frankly it is a disgusting, arrogant article written by a man who must have spent far too long in his Universities ivory towers, and not enough time dealing with real people. Like many of his academic colleagues, he appears to have a terribly low opinion of the intelligence, attitudes and altruism of his fellow citizens. I find it a little shocking that you would cite this article at all, given that you come from a shrinking society that has looming demographic problems due to the limited breeding that is taking place among Germans. Since the article was written, various aspects of it has been roundly disproven (at least in the matter of breeding) which is the article’s main point. The man who wrote that article talks so much of ethics, yet has no compassion; he takes a eugenic approach to social engineering, which casts a very long shadow over any of his talk of ethics.

~~~

Getting back to the point. Léo, you are German. I presume you know about Der Grüne Punkt (a tried-and-tested German system of environmental enforcement.) I have relatives in Germany. Experience has shown that most citizens can be persuaded to follow even quite onerous recycling instructions, for the “greater good”, and the good of their environment. Entire German cities have abolished the use of PVC, or the automobile – because people CAN be persuaded to believe in something greater than themselves.

ON THE OTHER HAND, as you rightly point out, many commercial organisations are far behind their customers in altruistic intention – too many companies are just doing “environmentally friendly” initiatives for public relations purposes, without real intent to make a genuine difference. So they play the system to make themselves look good. They fiddle the numbers going into their database until they meet the Government target, or according the marketing department’s requirements. If you read the news, you will know that too much waste “recycled” under the Green Dot scheme has ended up in the Libyan desert (dumped by companies PAID to recycle it.) Too many waste electronic products have ended up being dumped in suburban West African land by companies that were paid MILLIONS of dollars to safely dissassemble and reprocess it. Too much clinical waste has been dumped in Brazil by companies that were paid a fortune to incinerate it.
I once worked for a company whose entire business was supposed to be based on “indepedent” “scientific” and statistical verification – yet they were quite happy to massage the figures on the INPUT side of their database until the OUTPUT gave them the results that would match their commercial imperatives. They tried to get me to “cook the books” for them – which is why I have never worked for that company since.
Recently there were proposals in the UK Government to install weighing equipment on dumpsters in England, and RFID tags on the garbage bins to identify the owners of the bin. I suppose an SAP database would have done a fine job of keeping track of these data. What do you think would have happened if domestic waste disposal had been sanctioned with taxes by garbage weight? IT would have increased illegal fly-tipping… Yet the aggregate numbers would have said that Britons were becoming more compliant and “environmentally friendly.”

I would agree with the most basic premises of your article – however, as a database engineer myself, having seen a lot of what happens in the real world with databases; I would tend to be a little more cynical about the industrial bias in your conclusions. Data collection and aggregation are very nice – but quite meaningless if the offenders have the power to pump spurious data into the system on the INPUT side. And don’t put it past the offenders to meddle with measuring devices, re-calibrating them to make the device more “accurate” in demonstrating “known” compliance. Better to have satellites orbiting the Earth that can detect and imprecisely measure emissions directly; rather than an army of database engineers set about proving “compliance” among the unwilling, producing petabytes of data polluted with rogue results, to feed petaflops of processing that will only generate more CO2.

There are many people who think the Green Dot scheme did little but make a few corrupt Germans (with good government connections) very rich. Would you care to detail a system for environmental verification that would NOT be susceptible to serious fraud? I agree with your most basic conclusions – France, Germany and Tesco do well with the policies you mentioned – I just think your slightly biased and very incomplete conclusions should be taken with a big “pinch of salt.”

Posted by cambcompscigrad | Report as abusive
 

There is no solution to global warming that doesn’t begin with a plan to manage our population at a sustainable level.

Posted by Pete_Murphy | Report as abusive
 

What really irks me about all of this global warming baloney is that supposedly, by buying carbon footprint credits, anyone can allegedly comply with his/her responsibility. Which leads me to believe that the global warming issue is just a new way to grab our cash.

You would figure that if this global warming were to be a real and verifiable threat, we as individuals could do something to curtail it without having to spend extra cash. On the contrary, this should be achieved by saving money, not spending it.

This feels like the fox selling tickets to the hens to prevent the hen house from being invaded by the very foxes themselves. Hmm, extortion? When I see a real plan, one that does not put money in someone else’s pocket, then I may just begin to think about participating in reducing MY carbon footprint. Meantime, no reduction from my angle.

Posted by topapito | Report as abusive
 

Hi,

Climate Change is an issue for sure. But it is one of the issues bothering human welfare. Not the top priority slot. The developed countries or better still, the mega corps want to maintain their stronghold on world economy and influencing the governments of western world by not shouldering the responsibility of plundering the planet. On the other hand, they insist on hand twisting the developing countries and want them to comply with the pollution norms set unilaterally. It must be the rule that those who have spoiled the climate must pay for its restonation. The selfish attitude of the western developed countries need to be deplored. Who is going to bell the cat?

It has been rightly observed by one of the responders that there are fewer safe lungs and we must protect them. Let us not be led astray by the verbosity at various platforms including Davos. China is also to be blamed for large scale carbon emission and shortly will join the band wagon of western countries for its own self interest. A gentle and democratic country like India should not fall pray to the pitfalls of environment pollution. Self discipline commitment of Prime Minister ManmohanSingh should be an example for all other countries to emulate and implemented in action to save the earth.
Best Wishes.
Sharad Kapadia
President, Surat Citizens’ Council Trust, Surat, India

Posted by bizcon | Report as abusive
 

The United State’s forward thinking progressive types want to lead the World in green sustainable energy. This drive was put in park by the last 5 out 7 administrations. It’s no wonder why the Dems finally got mad and elected Barack Obama, and why the Rupuglican’ts are reeling so spastic-ally. But leading the World in Green technology in the near future is going to be other countries like Germany, China. So we had better get cracking with government incentives to build up our
manufacturing base with solar cell factories, hydrogen cell factories, wind farm factories, Algea farms, Alpaca farms, Organic farms, etc etc. First Obama has to be re-elected in 2012 or it’s going to be 6 out 9 “backward not-green” administrations that our beautiful country has had to slog through year after year instead of 5 out of 9. I hope the rest of the World will support Democrats in 2012, for the Planet’s sake I pray.

Posted by mjimih | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •