Business action on climate change
includes a range of activities relating to combatting global warming
, and to influencing political decisions on global-warming-related regulation
, such as the Kyoto Protocol
. Major multinationals
have played and to some extent continue to play a significant role in the politics of global warming
, especially in the United States
, through lobbying of government and funding of global warming skeptics
. Business also plays a key role in the mitigation of global warming
, through decisions to invest in researching and implementing new energy technologies and energy efficiency measures. (See also individual and political action on climate change
In 1989 in the US, the petroleum
and automotive industries and the National Association of Manufacturers
created the Global Climate Coalition
(GCC) to oppose mandatory actions to address global warming. In 1997, when the US Senate
overwhelmingly passed a resolution against ratifying the Kyoto Protocol
, the industry funded a $13 million industry advertising blitz in the run-up to the vote.
In 1998 the New York Times published an American Petroleum Institute (API) memo outlining a strategy aiming to make "recognition of uncertainty ... part of the 'conventional wisdom.'" The memo has been compared to a late 1960s memo by tobacco company Brown and Williamson, which observed: "Doubt is our product since it is the best means of competing with the ‘body of fact' that exists in the mind of the general public. It is also the means of establishing a controversy." Those involved in the memo included Jeffrey Salmon, then executive director of the George C. Marshall Institute, Steven Milloy, a prominent skeptic commentator, and the Competitive Enterprise Institute's Myron Ebell. In June 2005 a former API lawyer, Philip Cooney, resigned his White House post after accusations of politically-motivated tampering with scientific reports.
In 2002 the GCC considered its work in the US against regulation on global warming to have been so successful that it "deactivated" itself, although the loss of some leading members may also have been a factor.
At the same time, since 1989 many previously skeptical petroleum and automobile industry corporations have changed their position as the political and scientific consensus has grown, with the creation of the Kyoto Protocol and the publication of the International Panel on Climate Change's Second and Third Assessment Reports. These corporations include major petroleum companies like Royal Dutch Shell, Texaco, and BP, as well as automobile manufacturers like Ford, General Motors, and DaimlerChrysler. Some of these have joined with the Pew Center on Global Climate Change, a non-profit organization aiming to support efforts to address global climate change.
Since 2000, the Carbon Disclosure Project has been working with major corporations and investors to disclose the emissions of the largest companies. By 2007, the CDP published the emissions data for 2400 of the largest corporations in the world, and represented major institutional investors with $41 trillion combined assets under management . The pressure from these investors had had some success in working with companies to reduce emissions.
The World Business Council for Sustainable Development, a CEO-led association of some 200 multinational companies, has called on governments to agree on a global targets, and suggests that it is necessary to cut emissions by 60-80 percent from current levels by 2050.
U.S. Climate Action Partnership
The U.S. Climate Action Partnership
(USCAP) was formed in January, 2007 with the primary goal of influencing the US government's regulation of grenhouse gas emissions. Original members included General Electric
, Natural Resources Defense Council
, etc., but they were joined in April, 2007 by ConocoPhilips
has been a leading figure in the business world's position on climate change, providing substantial funding to a range of global-warming-skeptical organizations. Mother Jones
counted some 40 ExxonMobil-funded organizations that "either have sought to undermine mainstream scientific findings on global climate change or have maintained affiliations with a small group of "skeptic" scientists who continue to do so." Between 2000 and 2003 these organizations received more than $8m in funding.
It has also had a key influence in the Bush administration's energy policy, including on the Kyoto Protocol, supported by both $55m spent on lobbying since 1999 , and direct contacts between the company and leading politicians. It was a leading member of the Global Climate Coalition. It encouraged (and may have been instrumental in) the replacement in 2002 of the head of the IPCC, Robert Watson.
At the same time, it has for internal business reasons invested in some energy conservation measures. It has also invested $100m into the Global Climate and Energy Project, with Stanford University, and other programs at institutions such as the Massachusetts Institute of Technology, Carnegie Mellon University and the International Energy Agency Greenhouse Gas Research and Development Program.
Some of Exxon's activities on climate change produced strong criticism from environmental groups, including reactions such as a leaflet produced by the Stop Esso campaign, saying 'Don't buy E$$o', and featuring a tiger hand setting fire to the Earth. The company's carbon dioxide emissions are more than 50% higher than those of British rival BP, despite the US firm's oil and gas production being only slightly larger.
According to a 2004 study commissioned by Friends of the Earth, ExxonMobil and its predecessors caused 4.7 to 5.3 percent of the world's man-made carbon dioxide emissions between 1882 and 2002. The group suggested that such studies could form the basis for eventual legal action.
BP left the Global Climate Coalition in 1997 and said that global warming was a problem that had to be dealt with, although it subsequently joined others in lobbying the Australian government not to sign the Kyoto Protocol unless the US did.
In March 2002 BP
's chief executive
, Lord Browne
, declared in a speech that global warming
was real and that urgent action was needed, saying that "Companies composed of highly skilled and trained people can't live in denial of mounting evidence gathered by hundreds of the most reputable scientists in the world.".
In 2005 BP was considering testing carbon sequestration
in one of its North Sea
oil fields, by pumping carbon dioxide
into them (and thereby also increasing yields).
Throughout 2006 BP, led by their CEO Lord John Browne, has continued to take a leadership stance on climate change. It has cut its own operational emissions of CO2 by 10%. It is investing $8 billion in renewable energy over the next 10 years. And most recently is has launched a 'target zero' campaign in the UK to encourage its customers to offset their vehicle emissions when they fill up at the petrol station.
BP's American division is a member of USCAP (see above).
ConocoPhilips is a member of USCAP (see above).
American Electric Power
, the world's largest private producer of carbon dioxide, said in 2005 that targets for carbon reduction "represent a common-sense approach that can begin the process of lowering emissions along a gradual, cost-effective path." The company complained that "uncertainties over the cost of carbon" made it very difficult to make decisions about capital investment.
DuPont has cut its greenhouse gas emissions by 65% since 1990, saving hundreds of millions of dollars in the process. "Give us a date, tell us how much we need to cut, give us the flexibility to meet the goals, and we'll get it done", Xcel Energy CEO Wayne Brunetti told Business Week in 2004.
Duke Energy, FPL Group and PG&E Corporation are a members of USCAP (see above).
In 2004 Swiss Re
, the world's second largest reinsurance company, warned that the economic costs of climate-related disasters threatened to reach $150 billion a year within ten years.
Their predictions came true in 2005/06 with huge losses for the Re-insurance industry due to weather related phenomena. There is debate as to whether the increased hurricane activity in the US and elsewhere is due to climate change or rather cyclical norms. But for the world's largest re-insurers such as Swiss Re and Munich Re they know that climate change is a huge threat to their businesses - affecting the predictability and stability on which they rely - and that what has started to happen, largely due to warmer seas (especially in the Gulf of Mexico) is mirroring their predictions worryingly.
In 2006 Lloyd's of London, published a report "Climate Change - Adapt or Bust" highlighting the latest science and implications for the insurance industry
AIG is a member of USCAP (see above).
In the UK, some newspapers (Daily Mail
, Daily Telegraph
) are significantly skeptical, while most others (with varying enthusiasm, The Independent
giving it most prominence) support action on global warming. Overall, British newspapers have given the issue three times more coverage than US newspapers. In 2006 (British Sky Broadcasting
(Sky) became the world's first media company to go 'climate neutral' by purchasing enough carbon offsets. The CEO of the company James Murdoch
(son of Rupert Murdoch
and heir apparent for the News International empire) is a strong advocate of action on climate change and is thought to be influential on the issue within the wider group of companies, The Sun
announced it was "going green" and now covers the global warming issue extensively. In June 2006, to much industry interest, Rupert Murdoch invited Al Gore
to make his climate change presentation at the annual News Corp (including the Fox Network) gathering at the Pebble Beach golf resort, (USA). In August of 2007, Rupert Murdoch announced plans for News Corp. to be carbon neutral by 2010.
More on business action
Businesses take action on climate change for several reasons. Action improves corporate image and better aligns corporate actions with the environmental interests of owners, employees, suppliers, and customers. Action also occurs to reduce costs, increase return on investments, and to reduce dependency on uncontrollable costs.
Increased energy efficiency
For many companies, looking at more efficient energy use
can pay off in the medium to long term; unfortunately, shareholders need to be satisfied in the short term, so regulatory intervention is often required, to encourage prudent conservation measures. However, as carbon intensity starts to show up on balance books through organizations such as the Carbon Disclosure Project
, voluntary action is starting to take place.
Recently there has been a spate of companies acting to improve their energy efficiency. Possibly the most prominent of these companies is Wal-Mart. Wal-Mart, the largest retailer in the US, has announced specific environmental goals to reduce energy use in its stores and pressure its 60,000 suppliers in its worldwide supply chain to follow its lead. On energy efficiency, Wal-Mart wants to increase the fuel efficiency of its truck fleet by 25% over the next three years and double it within ten years, moving from 6.5 mpg. This seems an attainable goal, and by 2020, it is expected to save the company $494 million a year. The company also wants to build a store that is at least 25% more energy efficient within four years.
Use of renewable energies
In August 2002, the largest gathering of ministers in the history of the world met at the World Summit on Sustainable Development WSSD in Johannesburg. The global environmental community discussed the role of renewables and energy efficiency in lowering carbon emissions, mitigating poverty reduction (energy access) and improving energy security. One result from WSSD was the formation of Partnerships for Sustainable Development to carry forward the international dialogue on sustainable energy and its role in the energy mix.
Partnerships formed include the Renewable Energy and Energy Efficiency Partnership REEEP, the Global Village Energy Partnership GVEP, the Johannesburg Renewable Energy Coalition (JREC), and the Global Network on Energy for Sustainable Development GNESD
Renewable energies and renewable energy technologies have many advantages over their fossil fuel counterparts. These advantages include the absence of local pollution such as particulates, sulphur oxides (SOX's) and nitrous oxides (NOX's). For the business community, the economic advantages are also becoming clearer. Numerous studies have shown that the working environment has a significant effect on workforce morale. Renewable energy solutions are a part of this, wind turbines in particular being seen by many as a potent symbol of a new modernity, where environmental considerations are taken seriously. A workforce seeing a forward-looking and responsible company is more likely to feel good about working for such a company. A happier workforce is a more productive workforce.
More directly, the high oil and gas prices of 2005 have only added to the attraction of renewable energy sources. Although most renewable energies are more expensive at current fuel prices, the difference is narrowing, and uncertainty in oil and gas markets is a factor worth considering for highly energy-intensive businesses.
Another factor affecting the uptake of renewable energies in Europe is the EU Energy Trading Scheme (ETS or EUTS). Many large businesses are fined for increases in emissions, but can sell any "excess" reductions they make.
Companies with high-profile renewable energy portfolios include an aluminium smelter (Alcan), a cement company (Lafarge), and a microchip manufacturer (Intel). Many examples of corporate leadership in this area can be found on the website of The Climate Group, an independent organization set up for promoting such action by business and government.
The principle of carbon offset
is fairly simple: a business decides that it doesn't want to contribute further to global warming, and it has already made efforts to reduce its carbon (dioxide) emissions, so it decides to pay someone else to further reduce its net emissions by planting trees or by taking up low-carbon technologies. Every unit of carbon that is absorbed by trees -- or not emitted due to funding of renewable energy deployment -- offsets the emissions from fossil fuel use. In many cases, funding of renewable energy, energy efficiency, or tree planting -- particularly in developing nations -- can be a relatively cheap way of making an event, project, or business "carbon neutral". Many carbon offset providers -- some as inexpensive as $0.10 per ton of carbon dioxide -- are referenced in the Carbon Offset
article of this encyclopedia.
Many businesses are now looking to carbon offset all their work. An example of a business going carbon neutral is FIFA: their 2006 World Cup Final will be carbon neutral. FIFA estimate they are offsetting one hundred thousand tons of carbon dioxide created by the event, largely as a result of people travelling there. Other carbon neutral companies include the bank HSBC, the consumer staples manufacturer Annie's Homegrown, world leading society publisher Blackwell Publishing, and the publishing house New Society Publishers. The Guardian newspaper also offsets its carbon emissions resulting from international air travel.
Green Office Standards
An agreed upon set of standards has not been adopted for the environmentally friendly management of non-manufacturing businesses. A Wiki called TurnLeaf
was created for the community development of such standards.
- Ross Gelbspan, Boiling Point: How Politicians, Big Oil and Coal, Journalists and Activists Are Fueling the Climate Crisis—And What We Can Do to Avert Disaster, Basic Books, (August 1, 2004) ISBN 0-465-02761-X
- Lowe, EA and Harris, RJ (1998), Taking Climate Change Seriously: British Petroleum's business strategy", Corporate Environmental Strategy, Winter 1998
- Grant Thornton International Business Report Energy & Environment survey
- History Commons, Timeline of industry influence on climate change science
- Mother Jones, 18 April 2005, "Profits of Doom: Why the insurance industry is putting its money on global warming"
- Business Week, 16 August 2004, "Global Warming"
- The Climate Group, September 2005, "Carbon Down Profits Up" — case studies of cost savings from energy efficiency measures in private and public sectors
- Environmental Finance — magazine "covering the ever-increasing impact of environmental issues on the lending, insurance, investment and trading decisions affecting industry"
- Michael Northrop and David Sassoon (2005), " Climate Change – The mythology of economic peril", Environmental Finance, June 2005
- Paul D. Thacker, Environmental Science and Technology, 31 August 2005, "How the Wall Street Journal and Rep. Barton celebrated a global-warming skeptic: The untold story of how a front-page article and powerful U.S. politicians morphed former mining executive Stephen McIntyre into a scientific superstar"
- The Guardian, 8 December 2005, Oil industry targets EU climate policy
- Articles on the role of business organizations in sustainable development - includes actions on climate change.
- Climate Biz - website explores the business of climate change.