climate action book lowres[1] copy

8/3/2019 Climate Action Book Lowres[1] Copy

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Visit

WWW.CLIMATEACTIONPROGRAMME.ORGTo help your organisation become carbon neutral


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V I S I T : W W W . C L I MAT E A C T I ON P R OG R A MME . OR G

John Chartmere,

Michael Gray, Raj Powar,

Climate Action


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At KPMG our dedicated

team of over 200

professionals understand

the kind of advice and

support an organisation

needs in order to respond

to the business risks and

opportunities associated

with climate change.

Headline is set

in Univers 65 Bold,

11pt with +4pt

leading.

Headline is set

in Univers 65 Bold,

11pt with +4pt

leading.

2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss

cooperative. All rights reserved.

Contact

Richard Sharman

KPMG in the UK

[email protected]

Top of the agenda for KPMGs CarbonAdvisory Group


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FOR

EWORD

9


Foreword

The year 2007 may well prove to be a

defining moment in the international

effort to combat climate change.

A NEW CARBON NEUTRAL NETWORK FORTHE UN


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FOR

EWORD

10


THE KEY TO THE FUTURE

Across the world,

countries, companies, cities

and citizens are rising to the

challenge of climate change

and at a scale and pace which

is truly unprecedented.

The fact that a global carbon

neutral network is being calledfor reflects the momentum of

an issue that has become the

challenge for this generation.


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FOR

EWORD

11


THE WIDER LANDSCAPE

Overcoming serious

climate change may cost

perhaps as little as 0.1 per

cent of global GDP a year

for three decades.


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FOR

EWORD

12


TRANSITION TO A LOW CARBON SOCIETY

Achim Steiner

Climate change offers the

chance to transform the way

we do business on this planet.

All that is really required now

is the political commitmentof governments to unleash

human ingenuity.

The fact that so much

activity is underway is also

due to the anticipation that

countries will indeed agree a

treaty that engages post-2012

and one that delivers much

bigger cuts than Kyoto.


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SUPPORTING

ORGANISATIONS

13


CLIMATE ACTION WISHES TO THANK OUR SUPPORTING ORGANISATIONS:


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PLATINUM

SPONSORS

15


CLIMATE ACTION WISHES TO THANK OUR PLATINUM SPONSORS:


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THECASE

FORACTION

19


The need forclimate action

The time to act on climate change is now. We can no

longer consider the issues relating to climate change

as primarily environmental. Quite simply, climate

action has become a matter of strategic consequence,

a core political issue for every government on Earth.

THE TWO FACES OF THE CLIMATE ISSUE

Certain words ran like a

thread through our discussions:

urgency, action and now.


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THECASE

FORACTION

20


THE BAD NEWS

THE GOOD NEWS

THE NEED FOR CLIMATE ACTION

A POLITICAL IMPERATIVE

India, one of the worlds

most rapidly advancing

economies, is devoting twoper cent of GDP annually

to flood control and food

security programmes, as well

as mandating tough energy

efficiency standards.

We need a breakthrough,

an agreement to launch

negotiations for a comprehensive

climate change deal that all

nations can embrace.


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THECASE

FORACTION

21


CARBON NEUTRAL UN

Wealthy nations musthelp provide incentives to

poorer ones to take steps

that help us all.

Climate change will

no longer be a primarily

environmental concern. It has

become a matter of strategic

consequence, a core political

issue for every government

on Earth.


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THECASE

FORACTION

22


Author

Organisation

Enquiries

With political will,

comes results. Our job is to

translate this spirit into deeds

in Bali, and beyond.


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THECASE

FORACTION

23


Special reports published by The Intergovernmental

Panel on Climate Change (IPCC) provide a

comprehensive assessment of knowledge on all

aspects of climate change. These include advances

in scientific understanding related to climate change

and major findings from working groups. Together,

these reports have, and are having, a major impact on

public opinion and awareness among world leaders.

The IPCCs most recent Fourth Assessment Report sets

out to integrate and compact this wealth of information

into a readable and concise document explicitly

targeted at policymakers.

OBSERVED IMPACTS

Climate changeis unequivocal

Climate change is now

unequivocal and the human

influence on the Earths climate

is now very well established.


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THECASE

FORACTION

24


FUTURE TRENDS

UNEQUAL IMPACTS

ECOSYSTEM DISRUPTION

FOOD INSECURITY

COASTAL FLOODING

At the lower end of these

scenarios, the best estimate

of temperature increase by

the end of the 21st century is

placed at 1.8C and at the

upper end of the scenarios,

the best estimate is

approximately 4C.

One scenario that would

limit temperature increase

at equilibrium to 2.02.4C

would actually cost the world

less than three per cent of theglobal GDP in 2030.


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THECASE

FORACTION

25


COST EFFECTIVE CLIMATE MITIGATION

CONCLUSION

In some countries, yields

from agriculture could be

reduced by up to 50 per cent

by 2020.

Author

Organisation

Enquiries

@


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THECASE

FORACTION

28


A basic conclusion of the Stern Review is that the costs of

strong and urgent action on climate change will be less

than the costs of inaction and the impacts of climate

change under business as usual (BAU). Although they

are in the minority, there remain a number of people

who deny the importance of strong and urgent action

on climate change and they essentially offer one of, or

a combination of, four arguments. These arguments are

correspondingly, absurd, reckless, irresponsible and

ethically indefensible.

THE CASE FOR ACTION ON CLIMATE CHANGE

NO SCIENTIFIC BASIS

The cost ofclimate action


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THECASE

FORACTION

29


HUMANS CAN ADAPT TO CLIMATE CHANGE

ACTION IS TOO COSTLY

Under a BAU scenario, the

stock of greenhouse gases

could more than treble by

the end of the century, giving

at least a 50 per cent risk of

exceeding 5C global average

temperature change during

the following decades.


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THECASE

FORACTION

30


FUTURE GENERATIONS WILL BE RICHERAND MORE ABLE TO ADAPT

30

The likely cost of urgent andcoordinated action is around

one per cent of GDP by mid

century. In terms of growth, it

amounts to a fraction of a fraction

taken off the annual rate.


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THECASE

FORACTION

31


THE BASIC QUESTION

Author

Enquiries

Is it worth paying one

per cent of GDP to avoid the

additional risks of higher

emissions?

The case for strong and

timely action, supported by welldesigned economic policies,

is overwhelming.


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FRAM

EWORKS

33


The roadfrom Bali:TOWARDS A BINDING POST-2012 CLIMATE FRAMEWORK

After years of struggle to mobilise an effective

international response to climate change, 2007 may

prove to be a critical turning point. From the G8 summitin Heilegendamm to the APEC summit in Sydney, from

a high level UN gathering in New York to a meeting of

major economies in Washington, climate change has

suddenly vaulted to the top of the global agenda. This

burst of climate diplomacy culminates in December

in Indonesia, where the goal will be a Bali road map

pointing the way to a new global agreement. The

questions to ask are whether this road map will set

governments on a course towards binding multilateral

commitments and will some form of commitment be

given by all the worlds major economies?

INTRODUCTION

Why are international

commitments essential?

Because without them, countries

cannot be confident that others

are contributing their fair share

to the global effort.


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FRAM

EWORKS

34


THE NEED FOR INTERNATIONAL ANDBINDING COMMITMENTS

PROVIDING FOR A RANGE OFCOMMITMENTS

Economy-wide emissions

Policy-based commitments

Sectoral agreements

Other commitments

If it is to achieve broadparticipation, the post-2012

framework must accommodate

different national circumstances

and strategies and allow

countries to take on different

types of commitments.


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FRAM

EWORKS

35


Assisting developing countries

TOWARDS A COMMON FRAMEWORK

THE BALI ROAD MAP

The political reality is

that few if any of those withKyoto targets will be prepared

to assume binding post-2012

commitments without some

form of commitment from the

US and the major emerging

economies.


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FRAM

EWORKS

36


Author

Organisation

Enquiries

@

There is growing political

momentum in the US for

mandatory GHG limits.

California, New York and other

states, many led by Republican

governors, have enacted

mandatory controls.

BEYOND BALI


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FRAM

EWORKS

37


Climate change is a complex, long term problem,

two centuries in the making. There are few human

activities that do not contribute to it and as such, the

scale of response needed for an ultimate solution is so

large that widespread, collective action is essential.

The Global Leadership for Climate Action, facilitated

by Mohamed El-Ashry, was set up to mobilise political

action and offer a framework for collective action. The

framework and its recommendations for mitigation

and adaptation policies, technological development,

finance and global collaboration are discussed here.

INTRODUCTION

Framework for a new

global agreement onclimate change

FRAM

EWORKS

37


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FRAM

EWORKS

38


GLOBAL LEADERSHIP FOR CLIMATEACTION

COMPREHENSIVE AGREEMENT

}

}

}

}

MITIGATION TARGETS AND TIMETABLES

Targeted agreements on energy efficiency and

renewable energy

Carbon sinks

Market-based mechanisms


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FRAM

EWORKS

39


ADAPTATION

ACCELERATE TECHNOLOGY RESEARCHAND DEPLOYMENT

Consultative group on clean energy research

FINANCE

Reform Clean Development Mechanism


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FRAM

EWORKS

40


Author

Organisation

Enquiries@

Enhance public finance

A new US$50 billion per year climate fund

CONCLUSION


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FRAM

EWORKS

41


A framework forclimate changeand global equity

With the world initiating new climate change

negotiations in December 2007 to succeed the Kyoto

Protocol expiring in 2012, there is still no shared

framework for agreement between developed and

developing countries. There has been a sea change

in global attention to this issue in the past three

years, reflected in this years 2007 Nobel Peace Prize

which is shared by former Vice-President Al Gore

and the Intergovernmental Panel on Climate Change.

Yet there is still no consensus on how to proceed.This brief note sketches out a framework for action,

building on the underlying core facts of the climate

change challenge itself.

CARBON DIOXIDE IS INCREASING RAPIDLY

41


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FRAM

EWORKS

42


DECOUPLING GROWTH WITH EMISSIONS

A GLOBAL FRAMEWORK FOR TECHNOLOGYDEVELOPMENT

ENERGY EFFICIENCY AND ENERGY DE-CARBONISATION

CARBON CAPTURE AND SEQUESTRATION

}}

}}

There is widespreadagreement that the world will

enter a very severe danger

zone if the CO2

concentration

reaches 560 ppm; indeed the

threshold of safety could be

450 ppm or even lower.


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FRAM

EWORKS

43


}}

}

COSTS

TOWARDS A WORLDWIDE ADOPTION OFLOW EMISSION TECHNOLOGIES


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FRAM

EWORKS

44


LOOKING FORWARD

Author

Organisation

Enquiries

@


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GLOBA

LEQUITY

45


Managing risks of

climate change forhuman well beingTHE CASE FOR ADAPTION

Impacts of climate change will inevitably influence

ecosystem services and human well-being, and increase

the pressure on the most vulnerable regions and

communities that depend more on natural resources and

ecosystems and have lower adaptive capacity. Taking

appropriate adaptation measures is urgent to manage

the risks and alleviate the impacts of climate change.

Various mechanisms and instruments can be used, while

concerted action from public and private sector and the

international community is required in order to take

equity and fairness into consideration.

CLIMATE CHANGE IMPACTS ON ECOSYSTEMSERVICES AND HUMAN WELL BEING

Table 1: Climate change impacts on ecosystem services and human well being.

45


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GLOBA

LEQUITY

46


}

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}

INSTRUMENTS AND MECHANISMS TOCOPE WITH CLIMATE CHANGE

Table 2: Mechanisms and instruments for managing climate change risks.

} } } } } }

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GLOBA

LEQUITY

47


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GLOBA

LEQUITY

48


48

INVESTING IN BIODIVERSITY FOR THE FUTURE

CHALLENGES AND OPPORTUNITIES

Author

Organisation

Enquiries


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GLOBA

LEQUITY

49


The IPCC Fourth Assessment report demonstrates

evidence of human induced global climate change.

The poor are the worst victims of a global problem t hat

has been created mainly by the rich and industri alised

countries. Climate change is a harsh reality now for

many of us, and this is demonstrated through various

recent extreme climatic events around the world.

These include: prolonged and devastating floods in

Bangladesh, India, China and in the UK in 2007; severe

droughts in Africa and Asia, extreme heatwavesin central Europe, devastating cyclones and tidal

surges across the coasts. We live in an unequal world

economically, politically and socially, and climate

change impacts will increase poverty, food insecurity,

hungers, inequity and social conflict in the coming

decades if we dont take urgent action now before it

escapes our control.

COST OF DELAYED ADAPTATION

Promoting equity and

adaptation fordeveloping countries


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GLOBA

LEQUITY

50


Isolated US

PROGRESS AND BARRIERS TO ADAPTATION

Any delay in mitigation,

increases the risk of runaway

global climate change with

severe regional impacts.


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GLOBA

LEQUITY

51


THE POOR NEED GREATER ADAPTATION

BEYOND 2012: COMMITMENT TO EQUITYAND FAIRNESS

CONCLUSION

Author

Organisation

Enquiries

@


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PARTN

ERSHIPS

52

INTRODUCTION

Partnerships and

climate changeWith an increased understanding about the scale of change required to tackle global warming, business,government and civil society need to work in partnership to address such change. Building these partnershipsallows governments to implement policies that will drive the necessary change, and business to respond rapidlyto these drivers in a positive way.


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PARTN

ERSHIPS

53

THE TREND TOWARDS GREATERTRANSPARENCY

A STRATEGIC PRIORITY FOR BUSINESS

A growing awareness

of climate change among

consumers has resultedin a significant increase in

corporations reporting how

they are helping to tackle

climate change.


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PARTN

ERSHIPS

54

BUILDING PARTNERSHIPS

Creating a common platform

Creating political space

There is clearly a potential

for missed opportunities with

most environmental and

clean technology sectors

seeing double digit growth

rates over the past couple of

years, or savings to the

bottom line through energy

efficiency measures.


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PARTN

ERSHIPS

55

The current members of the UK CLG are:

Author

Organisation

Enquiries@

ENABLING A STEP CHANGE IN RESPONSE

Working together as an

industry reduces the overall

exposure to business risk

while clearly communicating

to others the reasons behindthe need for a change in

the industry.


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PARTN

ERSHIPS

56


Increasingly, businesses in developed countries

are recognising their responsibilities regarding

greenhouse gas (GHG) emissions and climate change.

But as well as clearing up their own houses, they have

the potential to help mitigate the global impacts of

climate change, by working with NGOs, governments and

developing country businesses to ensure the mistakes

of developed countries are not repeated in new growth.

In addition, businesses, through an agenda of corporate

social responsibility, can help alleviate the hardship of

the most vulnerable groups who stand to bear the brunt

of much of the impacts of climate change.

INTRODUCTION }

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}}

}

A SECTORAL APPROACH WITH FINANCIALINCENTIVES

Production sector

Developing partnerships acrossdeveloped and developing countries AN AGENDA FOR INCLUSION OF THE POOR


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PARTN

ERSHIPS

57


Energy sector

Consumption sector

FRAMEWORK FOR A SOCIOECONOMICAGENDA FOR POOR

Energy efficiency

Agriculture and food security

Water and other resource shortages

Improving the efficiencyof the mining and processing

of coal and improving the

monitoring and control of coal

mine methane gas can make

a significant contribution to

emissions reductions andworkplace safety.


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PARTN

ERSHIPS

58


RISKS AND INSURANCE

}

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PROGRAMMES, INSTITUTIONS AND POLICIES

}

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Author

Organisation

Enquiries

@


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INVESTORS

60

Climate change presents enormous risks and

opportunities for corporations. Increasingly, as investors

make decisions about the value of their investments,

they are factoring in how well a company is prepared

to manage those risks and act on those opportunities.

To do so, they are increasing pressure on companies

to make climate change a priority governance issue

and using their leverage to encourage companies

to analyse and disclose their plans for managing

climate risk and their strategies for seizing climate-

related opportunities.

CLIMATE CHANGE: A STRATEGIC IMPERATIVE

Investors:A NEW WORLD OF RISK AND OPPORTUNITY


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INVESTORS

61

REGULATORY RISKS AND OPPORTUNITIES

LITIGATION RISKS

When industry is willing

to be regulated, it is a good

bet that policy changeswill follow.


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INVESTORS

62

PHYSICAL RISKS AND OPPORTUNITIES

COMPETITIVE RISKS ANDOPPORTUNITIES

A GROWING CONSENSUS

}

}

}


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INVESTORS

63

CLIMATE RISK DISCLOSURE:TRANSPARENCY IS KEY

Which companies

have the strategic vision

to manage the legal,

physical and competitive

risks associated with

climate change?


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INVESTORS

64

CONCLUSION

INVESTOR NETWORK ON CLIMATE RISK MEMBERS

Authors

Organisation

Enquiries

@


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At Novo Nordisk, we recognise that there are limits to growth.It is only when we respect the principles of sustainable development that wecan grow a healthy business. A sustainable business.

We base our business on the Triple Bottom Line: striving to conduct ouractivities in a financially, environmentally and socially responsible way.This principle is anchored in our actions from board decisions to dailypractices among all our employees.

TakeAction! is the employee engagement program that enables everyone tomake the Triple Bottom Line their business. It unleashes creativity, harnessesinnovation and inspires action. A key element is the principle that activities

must support business objectives. Examples are fundraisers for underprivilegedpeople in need of medical care, educational programs that inspire healthierliving among children and environmental initiatives in the local community.

Building a sustainable business is about overcoming the constraints of currentpractices. Its about nurturing new skills, supporting disruptive innovation,practicing deep listening and learning with stakeholders. Its about valuingpeoples motivation to drive change and to keep pushing forward.

There may be a limit to growth, but there is no limit to ideas. That is our mostprecious source of renewable energy. That is the foundation for our business.That is what makes people at Novo Nordisk TakeAction! To defeat diabetes.To combat climate change.To chart a road towards a healthier future for thenext generations.

Read more about TakeAction! and other initiatives to put our values intoaction at novonordisk.com

TakeAction! unlimited access torenewable energy

!noitc

AekaT

Kristina Kempf,

Daniela Rimpf and

Lisbeth Juhl Christensen,

Novo Nordisk Germany.


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INVESTORS

67


Investors expect three key aspects of a companys

climate change risk approach to be disclosed. They

expect a clear articulation of the nature of materialclimate change risks and the impact on both short andlong term strategy and competitiveness. Secondly,

they expect a quantification of the risk and level of

uncertainty that surrounds any risk assessment. Finally,investors expect a description of the risk management,

mitigation and adaptation actions identified and

the level of any residual/acceptable risk. Investors

recognise the area of climate change risk is a rapidly

evolving one; one that continues to demand a greater

level of sophistication in disclosing those risks to

investments.

CLIMATE CHANGE: A SYSTEMIC, LONGTERM RISK FOR INVESTORS

INVESTORS RESPONSE TO THECLIMATE CHANGE RISK }}}}

DISCLOSURE NEEDS OF INVESTORS

}

}

Investor expectation

on company climatechange risk disclosure


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INVESTORS

68


}

}

INVESTOR EXPECTATIONS }

}

}

Clear articulation of material climate change risk

}}}

The disclosure expectations

of investors are different from

other stakeholders in both

their scope and detail. This

has meant that emissions

disclosure and associated

discussion through companysustainability reports is often

insufficient for investors.


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INVESTORS

69


Quantification of climate change risk

}

}}}

}

}

}}

Risk management, mitigation and adaptation }

}

}

CONCLUSION

Author

Organisation

Enquiries

@


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INVESTORS

70

Using

financialindices forresponsible

investment

The Stern Review suggests that climate changethreatens to cause the greatest and widest ranging

market failure ever seen. Stern states, ...our actions

over the coming few decades could create risks of

major disruption to economic and social activity, later

in this century and in the next, on a scale similar to

those associated with the great wars and the economicdepression of the first half of the 20th century.

As a result, investors, governments and wider society

expect companies to take rapid action in response

to the varied and considerable risk that climate

change poses. Financial indices, such as the Dow Jones

Sustainability Index, and the FTSE4Good Index can

help investors find companies doing just that. Here,

the FTSE4Good Index is explored i n more detail.

TWIN-TRACK STRATEGY }

}

RISK MANAGEMENT AND VALUEPROTECTION

Detailed climate change

requirements have already

been added to FTSE4Good

inclusion criteria to ensure

the index series is aligned

to one of the major concerns

facing business andinvestors today.


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INVESTORS

71

Table 1: Overview of elements of a goodmanagement system.

}

}

}

}

}

Table 2: Climate change criteria for the FTSE4Good index series.

} }

}

}

}

}

}

}

}

} }

}

}

}}

}}}}

}

}

}


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INVESTORS

72

TRANSFORMATIONAL INITIATIVES ANDVALUE CREATION

SUPPORTING TECHNOLOGY SOLUTIONSCOMPANIES

Investor perceptions

have changed and these

environmental technology

companies are now seen

as providing excitingopportunities for growth.

Table 3: Definition and examples of transformational initiatives.


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INVESTORS

73

THE ROLE OF BENCHMARKING

CONCLUSION

Authors

Organisation

Enquiries

@


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SGS IS THE WORLDS LEADING INSPECTION, VERIFICATION, TESTING AND CERTIFICATION COMPANY

ARE YOU SERIOUS?SGS VERIFIES THE ACCURACY AND ENVIRONMENTAL INTEGRITY OF GREENHOUSE GAS EMISSIONS REPORTING

Your company, your shareholders and the public need to know that your emissions reporting is accurate, reliable and

consistent with global standards. Our experience stretches from the smallest through to the largest multi-site and

multi-country customers, and from simple through to complex and diverse project portfolios. To get serious about emissions

reductions, visit www.sgs.com/climatechange


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REPORTING

75


A spectacular global political failure in dealing with

climate change has led consumers to vote with their

money, buying hybrid cars and green electricity and

in turn creating huge new markets. Investors too are

voting with their money and organisations such as

the Carbon Disclosure Project offer a unified way for

them to find out about the greenhouse gas emissions

and risk management of many of the worlds largest

corporations.

CLIMATE CHANGE AS A POLITICAL ISSUE

CLIMATE CHANGE AS A CORPORATE ISSUE

THE CARBON DISCLOSURE PROJECT

Responsible investment

for responsible investors


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REPORTING

76


A UNIFIED APPROACH TO CLIMATE CHANGE

THE PRUDENT INVESTOR

Practical steps to take for a concerned shareowner


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REPORTING

77


Author

Organisation

Enquiries

@


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REPORTING

78


Asia ex-Japan results from the 2007 Carbon Disclosure

Project reveal that: 1) a range of Asian companies are

increasingly describing strategic business initiatives

to curtail carbon emissions, 2) companies working

on climate change strategies often rely on industry

associations and global NGOs for guidance, 3) the

degree of top management engagement is a critical

determinant in the disclosure of carbon emissions

and the development of formal initiative, 4) pictures

of regional response characteristics are becoming

apparent and 5) the quality and quantity of responses

from Asias tech and telecoms companies is notable, while Asias banks and utilities lag their global

counterparts.

A MORE STRATEGIC RESPONSE

NEW INDUSTRY RESOURCES

Carbon

emissionsreportingin Asia


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REPORTING

79


GOVERNANCE MATTERS

SECTOR FOCUS: TWO LEADERS, TWOLAGGARDS

Asian bankers waiting for guidance

Energy efficiency

Although climate change

remains a relatively new

policy area in Asia, leading

companies are now taking

the initiative and positioning

themselves to capitalise on

a shift in policy and growing

consumer awareness.

79

Asian companies are

increasingly relying on

industry associations to

shape their emerging carbon

emissions policy responses,carbon reporting and

management strategies.


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REPORTING

80


Harnessing consumer sentiment

Asian utilities hiding under a cloud

Asias tech players demonstrating new carbon

sophistication

Asias leading tech

companies appear to be

making systematic efforts tomatch the breadth and depth

of reporting common to their

global competitors.


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REPORTING

81


Asian telecoms benefitting from carbon linkedtrends

REGIONAL CHARACTERISTICS

SETTING A BENCHMARK

81

Organisation

Enquiries

Telecom respondents

understand they are one of the

few sectors which can benefit

strategically from carbon

linked trends.


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BUSINESS

LEADERSHIP

83


Climate change will have far-reaching consequences

on companies across all sectors of the economy.

Already, billions are being invested in energy efficiency,

renewable energy and development of low carbon

technologies. Company disclosure on climate-related

risks is increasing, carbon costs are being factored intocompany capital planning and corporate leaders are

calling for mandatory caps on greenhouse gases (GHGs).

Nevertheless, while many leading companies are taking

important steps to manage climate change, bolder actions

to maximise energy efficiency, develop climate-friendly

products and curb greenhouse gas emissions throughout

company supply chains will be needed.

INTRODUCTION

ELECTRIC POWER

Companies:A NEW WORLD OF RISK AND OPPORTUNITY


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BUSINESS

LEADERSHIP

84


OIL AND GAS

BANKING/FINANCE

With renewable portfolio

standards in place in 25 US

states, electric power companies

are moving to diversify their

generation portfolio to include

larger amounts of renewable

energy.


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BUSINESS

LEADERSHIP

85


AUTOMOTIVE

TECHNOLOGY SECTOR

CONSUMER PRODUCTS

BPs energy efficiencyinitiative has been the

companys most profitable

project in the last decade; with

a US$100 million investment,

the company realised US$400

million in savings.


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LEADERSHIP

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CONCLUSION

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PR

OFILE

87


Life in the lowcarbon economy.

Is your businessready?

BECOMING A LOW CARBON BUSINESS

In order to maximise commercial value from the issues arising as a result of climate change, businesses need

to act and they need to act now. Designed to help businesses respond to the challenges of the new operating

environment in a way that enhances brand reputation, operating efficiency and financial performance, KPMGs

Carbon Advisory Group provides a deep understanding of the issues and challenges facing businesses today.

Climate change is

forcing companies of all

sizes to rethink the way

they do business.


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OFILE

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HOW TO PROSPER IN A LOW CARBONECONOMY

WHAT ARE THE KEY SUCCESS FACTORS?

Four key areas in creating an efficient low carbon business.

KPMGs Carbon Advisory

Group is providing insight and

strategies to help companies

understand and manage the

many business implications

of climate change.


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KPMG: SUPPORTING BUSINESS IN MEETING CARBON REDUCTION OBJECTIVESCarbon trading and offsetting investigation and dispute

}}}}

Carbon efficient logistics}}

}}

Carbon management

Environmental tax and incentives

Accounting for carbon

Mergers and acquisitions in the carbon market

Carbon restructuring


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LEADERSHIP

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Caring for Climate:THE BUSINESS LEADERSHIP PLATFORM

The rise of climate change as a fundamental issue

for society has emphasised the need for leadership

and voluntary action on the environment. Against

this background The Global Compact, together with

the United Nations Environment Programme (UNEP)

and the World Business Council for Sustainable

Development (WBCSD), has developed Caring for

Climate: The Business Leadership Platform as a way

to mobilise business action on climate change. Within

months of launching the initiative, 200 companies

from around the world, including many of the worlds

largest transnational corporations, have endorsed the

statement and are already taking action.

INTRODUCTION }

}

}

CARING FOR CLIMATE INITIATIVE


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CARING FOR CLIMATE: THE BUSINESS LEADERSHIP PLATFORM

A Statement by the Business Leaders of the UN Global Compact


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COMPANIES TAKING ACTION ON CLIMATE

CONCLUSION

Author

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Client: Ricoh WO#: TYP.1 RT WO#: TK PO#: NA Pub: Magazines

Job: RIC_11590-01_pass01.inddAgency #: 10011590

Boosting the earths immune system.

To help conserve our one and only planet Earth, it is important not only to reduce environmental impact, but also to maintain and enhance the planets

self-recovery capability. Which is why Ricoh is dedicated to actively promoting ecosystem conservation projects throughout the world in partnership

with environmental NPOs and local communities that place a priority on protecting the habitats of indigenous species as well as the life of human beings.

To learn more about Ricohs efforts to conserve the environment and enhance our employees global citizen awareness visit us at ricoh.com/environment.


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YCHAINS

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Carbon footprintsin the supply chain:THE NEXT STEP FOR BUSINESS?

To mitigate the effect of climate change, business needs

to develop innovative strategies which challenge the

way in which consumer needs are satisfied and which

move beyond incremental improvements in process

efficiency. By undertaking a carbon investigation of

their supply chains, businesses can calculate and

manage the carbon footprint of their products and

unlock significant emissions reductions.

FOCUSING ON THE SUPPLY CHAIN

BENEFITS OF THE HOLISTIC VIEW



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YCHAINS

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ECONOMY-WIDE APPROACH

THE DETAILED METHODOLOGY

CARBON REDUCTION LABEL

SUPPLY CHAIN SUCCESS


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YCHAINS

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WHAT NEXT FOR BUSINESSES?

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IN 1871 THERE WERE NO WORRIES

A LONG TERM COMMITMENT

For many years we have heard about the ozone hole over Antarctica, the greenhouse effect and other possible

effects of mans activities on our planet. For a long time these alarms had little effect outside the world of

biologists and other specialists. But today, with an increasing number of indications, the environment and

climate issues have finally reached a whole new level of attention among entire populations. The time has come

to take what Mother Earth tells us seriously.

Listeningto theplanet


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REDUCING AIR EMISSIONS ANDPURIFYING WATER

THE ENVIRONMENTAL CENTRE IN MUNKEDAL

THE ROLE OF FSC CERTIFICATION

A whole range of FSC certified papers

The Munkedal mill

is now one of the most

environmentally friendly

paper mills in the world.

Organisation

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INSURANCE

100


With core competencies in risk management and

finance, the insurance industry is uniquely positioned

to further societys understanding of climate change

and advance creative solutions to minimise its

impacts. Insurers have now begun to embrace this

huge opportunity, which will enable them to prosperwhile reducing the claims from climate change.

INTRODUCTION

Responding toclimate change THE INSURANCE INDUSTRY PERSPECTIVE


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INSURANCE

101


A PROACTIVE APPROACH TO CLIMATECHANGE

ADVANCING SOLUTIONS

Figure 1: Range of insurer activities documented in this article.


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INSURANCE

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1. Understanding the climate change problem

2. Promoting loss prevention

3. Aligning terms and conditions with riskreducing behaviour

4. Crafting innovative insurance products

5. Offering carbon risk management and carbon

reduction services

6. Financing climate protection improvements

Insurers have an enormous

opportunity to develop new

profit centres by providing

innovative insurance products

for energy users or providers

of clean energy services.

Figure 2: Range of carbon footprints for global

insurers (each symbol represents one insurer).


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INSURANCE

103


7. Investment in climate change solutions

8. Public policy

9. Leading by example

10. Carbon risk disclosure

TOWARDS BEST PRACTICES

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LEGAL

104


Climate changelitigation:A CATALYST FOR CORPORATE RESPONSESThis overview considers a variety of legal actions

against both governments and government agencies

(public actions), and against corporate entities (privateactions). It is generally considered that governments

and corporations in non-Kyoto Protocol ratifying

nations are the most vulnerable to litigation, eg USA

and Australia. However, nations that are dramatically

failing to meet Kyoto obligations will also be at risk, eg

Canada. As the gap between Kyoto obligations and the

stringent cuts recommended by the Intergovernmental

Panel on Climate Change (IPCC) grow, no nation and no

corporation can consider themselves safe.

AN OVERVIEW OF CLIMATE CHANGELITIGATION


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LEGAL

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PUBLIC LAW ACTIONS (INTERNATIONAL)

PUBLIC LAW ACTIONS (DOMESTIC)

New Zealand

Australia

USA

In 2007, increasing

scientific certainty, emerging

legal precedent and growing

public awareness of climatechange, are combining to

create potent motivators for

legal action.


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LEGAL

106


Nigeria

PRIVATE LAW ACTIONS

Public nuisance

Director liability

Climate change litigation

now presents a real and

present financial risk for

corporations. Actual costs of

litigation are likely to be far

outweighed by associatedcommercial risks.


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LEGAL

107


CORPORATE RESPONSES

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MARKETM

ECHANISMS

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The Clean Development Mechanism is addressing both

climate and development issues. It is up and running but

the challenge now is to increase efficiency, and scale up

the mechanism so that CDM can fulfil its potential.

NUTS AND BOLTS OF CDM

}

}

}

The Clean DevelopmentMechanism EVOLVING TO MEET CLIMATE AND DEVELOPMENT CHALLENGES


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ECHANISMS

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ACHIEVING POTENTIAL

In a few short years, more

than 840 projects have been

registered, and about another1,800 are in the validation/

registration pipeline.

A number of variables

impacting on the ability of

sub-Saharan African countries

to attract CDM investment are

the same constraints that

limit FDI in the region.


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ECHANISMS

110


THE CHALLENGE OF AFRICA

MICROFINANCE AND CDM

Credit is available from

informal commercial and non-

commercial money lenders,

but usually at a very high cost

to borrowers.


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ECHANISMS

111


RESPONDING AND EVOLVING

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Microfinance as a

development strategy

combines massive outreach,

far-reaching impact and

financial sustainability,

which makes it unique among

development interventions.


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ECHANISMS

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The use of targets or

market mechanisms foremissions reductionsin developing countries

There is a strong perception among developed

countries that net global greenhouse gas emissions

(GHG) reductions are only possible by imposing

targets on developing countries. But to do so is neither

politically feasible nor technically practicable. We

should not waste time designing targets into any

post-Kyoto climate change regime. Instead, we should

explore other options, such as market mechanisms.

This article looks at the arguments for doing so.

Target obsession and political deadlock

Targets in the form of equal global quota

TARGETS AGAINST BUSINESS AS USUAL

TARGET SETTING FOR DEVELOPINGCOUNTRIES


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ECHANISMS

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Vulnerability to external factors

Transformation of industrial structure

HIGH IMPACT OF NON-CLIMATE POLICIES

Agreeing on specific targets

Agreeing on target level of per capita emissions

Difficulty of verification

DIVERSE MODIFIED TARGETS

Intensity targets

Sectoral targets

The technical difficulties

and uncertainties involved inprojecting a future emission

trajectory are making many

developing countries uneasy

and reluctant to accept any

form of target.


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MARKETM

ECHANISMS

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No-lose targets

Pledge and review targets

Compatibility of climate action and economic

goals

WHY NOT MARKET MECHANISMS

The Clean Development Mechanism

If targets are not workable,

market mechanisms couldprovide incentives for

developing countries to act

on climate change.

Originally designed

as an Annex 1 compliance

mechanism, the CDM can

function as an incentive

mechanism for emission

reduction projects in

developing countries.


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ECHANISMS

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NET GLOBAL EMISSIONS REDUCTIONS

A CER discounting scheme

CONCLUSION

Author

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The emission reductions

expected from unsold CER

represent a real, tangible and

measurable option, while

emissions reductions based

on a fictitious BAU target can

never be verified or certified.


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ECHANISMS

118

Purchasing carbon offsets can set an internal price

for carbon, allowing a company to assess the cost

of other emissions-reducing initiatives. It can also

help companies gain a greater understanding of

carbon markets and support existing corporate

responsibility policies. But offsetting has also been

seen as an easy get-out from tougher internal choices

with some media casting doubts over the extent to

which offsets represent real and additional emissions

reductions. This simple 10 step guide is designed

to help companies avoid the pitfalls and use carbon

offsetting as a useful part of overall greenhouse gas

(GHG) reduction strategy.

STEP 1: UNDERSTAND WHAT OFFSETS ARE

PurchasingcarbonoffsetsA HOW-TO GUIDE

MARKETM

ECHANISMS

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ECHANISMS

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STEP 2: DECIDE HOW MANY OFFSETSNEEDED

STEP 3: DEVELOP A TAILORED OFFSETSTRATEGY

Questions to consider during the process

The GHG Protocol and

ISO 14064 provide globally

recognised standards for

measuring and reporting

the carbon footprint of an

organisation.

OFFSETTING CASE STUDIESSky

HSBC


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ECHANISMS

120

STEP 4: DECIDE HOW TO BUY OFFSETS

STEP 5: CHOOSE THE OFFSET STANDARDTHAT BEST SUITS YOUR COMPANY

Being aware of the keystandards in the voluntary offset

market will help companies

take advantage of the flexibility

and competitive prices offered,

while ensuring offsets are really

delivering the reductions inemissions they claim.


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ECHANISMS

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STEP 6: UNDERTAKE DUE DILIGENCE ONPROJECTS

STEP 7: TALK TO DIFFERENT SELLERS

STEP 8: ENSURE OFFSETS ARE RETIRED ONA CREDIBLE GHG REGISTRY

STEP 9: BE TRANSPARENT ABOUT OFFSETPURCHASES

STEP 10: REVIEW THE APPROACH TOOFFSETTING ON A REGULAR BASIS

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CARBON

RATIONING

122


Contraction andConvergence:THE PROPORTIONATE RESPONSE TO CLIMATE CHANGE

The United Nations Framework Convention on Climate

Change (UNFCCC) was agreed in 1992 with the objective

to halt the rising concentration of greenhouse gas

(GHG) in the atmosphere. In 2007, efforts to this end

remain insufficient and the danger of runaway rates

of global climate change taking hold is increasing.

The science-based, global climate policy framework

of Contraction and Convergence (C&C) offers an

equitable solution to cutting carbon emissions in

the hope that global collective efforts to reduce

emissions can be successful. Three elements are

at the core of the C&C campaign: the constitutional

concept of Contraction and Convergence (C&C); the

techniques and processes developed to focus the

debate on rates of C&C that are relevant; the sustainedeffort to present C&C as the basis of the proportionate

response to climate change.

THE BASIS OF C&C

}

}

It becomes possible to go

beyond the merely aspirational

character of the current

debate around the UNFCCC, to

communicating the rationale

and constitutional calculus

of C&C.

CARBON

RATIONING

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CARBON

RATIONING

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THE LONG TERM PAST

THE SHORT TERM PAST AND FULL TERMFUTURE LIMITS

Figure 1: Data from ice cores 500,000 years ago

to present day and beyond.

Instead of 100 years, we

now realise that to reduce

human CO2

emissions and

other GHGs in the atmosphereto zero globally, we have only

the next 50 years.

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CARBON

RATIONING

124


}

}

}

}

}

United Nations Framework Convention on climate change

OBJECTIVE PRINCIPLES Precaution & EquityContraction & Concentrations Contraction & Convergence

Figure 2: Charting the UNFCCC Objective & Principles, the Development Benefits of Growth versus the

growth of Climate Change Related Damage Costs.

CARBON

RATIONING

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CARBON

RATIONING

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DAMAGES

A FRAMEWORK-BASED MARKET

Treating climate change

as a global emergency is nowlong overdue and responding

proportionately is vital.

Global damage costs/development benefits of climate change

DANGEROUS CLIMATE CHANGE UN/SUSTAINABLE DEVELOPMENTContraction & Conversion Damage Costs & Insecurity

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CARBON

RATIONING

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}

}

}

Author

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C&C overcomes the

stand-off where a one sided

agreement is not an agreement

and where half an argument

is not, nor will ever become, a

whole solution. It recognises

that separate development is

not sustainable development.


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CARBON

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The considerable reduction of carbon emissions

needed to prevent climate catastrophe cannot be

achieved on a voluntary basis. Instead, the urgent

transition to very low energy lifestyles requires

government to set mandatory targets based on per

capita carbon rationing. Such a strategy will lead

to a far greater and faster take-up of energy saving

practices and energy efficient measures than would

otherwise occur and an essential process that industry

will be increasingly motivated to facilitate.

INTRODUCTION

SLEEPWALKING

Carbon

rationing:the onlyrealisticstrategy


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CARBON

RATIONING

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FALLACIOUS ASSUMPTIONS

}

}

}

}

}

}

QUIS CUSTODIET?

THE NEED FOR A COMPREHENSIVESTRATEGY

TRADABLE PERSONAL CARBON ALLOWANCE

There is a failure to alert

the public to the awesome

prospects for life on Earth later

this century and beyond if

businesses dependent on high

use of fossil fuels continue

on a path of growth.


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CARBON

RATIONING

129


PROMOTING CARBON THRIFTY BEHAVIOUR

THE BUSINESS COMMUNITY

CONCLUSIONS

The PCA will act as a parallel

currency to real money with a

key feature being the buying

and selling of its units.

Author

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@


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EN

ERGY

130


Energy is a basic need, yet the world relies primarily on

polluting and exhaustible fossil and atomic energies.

Consequently, we are faced with three essential

geopolitical challenges: local security of energy supply;

global depletion of conventional energy resources; and

climate change. A solution for these problems is the

speedy development of renewable energies. Renewable

energies have been a shining star in some national

economies and global investments are now exceeding

US$50 billion/year with the creation of hundreds of

thousands of new jobs. An overview of the current

positioning of renewable energies is given here.

THE CASE FOR RENEWABLE ENERGYPROMOTION

Sustainable energy:A NEW PARTNERSHIP WITH THE SUN

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EN

ERGY

131


THE RE SHARE IN TODAYS ENERGYMARKETSPower generation

Wind power

Small hydro (units of less than 10 MW)

Bio power

Photovoltaics


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EN

ERGY

132


Concentrator solar power plants

Geothermal power

Renewable biofuels for transport

Solar heat collectors

Geothermal heat

Bioenergy

Passive solar buildings


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EN

ERGY

133


OUTLOOK

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SPECIA

LFEATURE

134


In recent years, the debate about global warming and

its consequences has reached new heights. What

started as a grassroots movement has become a fully

integrated issue in the global public debate and the

hunt for sustainable solutions has intensified. One of

these solutions is wind power.

MODERN ENERGY

FIGURES THAT SPEAK FOR THEMSELVES

The wind is always blowing

somewhere in the world

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LFEATURE

135


MORE THAN A DROP IN THE OCEAN

NO WASTE FOR FUTURE GENERATIONS

Wind power has developed

from being an alternative form

of energy to its status as a

large scale reliable source of

energy integrated in the energy

mix along with oil and gas.

It is worth remembering

that the fuel for a wind turbine

is free, and not subject to theuncertainty of future energy

prices.


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LFEATURE

136


ENERGY WITHOUT BORDERS ORLIMITATIONS

WIND POWER IN A LONG TERM PERSPECTIVE

WHAT IS NEEDED FROM A CLIMATEPOLITICAL PERSPECTIVE?

Wind turbines do not use

even one drop of water when

generating electricity.

Wind turbines generate nowaste at all when producing

electricity.

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LFEATURE

137


@

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@

In its Survey of Energy

Resources from 2004, the World

Energy Council concluded that

the worlds total consumption

of electricity could be covered

several times over by exploiting

just one-tenth of the technical

potential of the Earths wind

resources.


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EN

ERGY

138


Back to

the future:INVESTING IN CLEAN ENERGY

Investments in clean energy reached new heights in

2006 with over US$100 billion financial transactions

in the global sustainable energy sector. Looking back

from 2050, researchers might see this investment-high

as the tipping point for the future energy market; the

point where renewable energy and energy efficiency

technologies not only moved to the mainstream, butbecame the fundamental components of the global

energy system.

SIGNALS

We are beginning to

experience full scale industrial

development, not just a tweaking

of the energy system.


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EN

ERGY

139


BEATING PREDICTIONS

TRENDS}

}

}

}

}

}

}

The US$21.5 billion of

financing in renewable energy

plants represents about 18

per cent of total power sector

investment in 2006. Suchnumbers are hardly trivial.


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EN

ERGY

140


DOT COM BUBBLE OR REAL BOOM?

Some may simply regard

circular economy as waste

recycling, yet the fundamental

goal is to systematically

prevent and reduce wastes in

the industrial process.

Author

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EDF has a long-standing commitment to sustainable development. As one of the worlds

premier energy firms, EDF wants to be part of the solution to the climate/energychallenge the world is facing. One of the objectives for EDF is to remain the companyreleasing the least amount of CO2 per kWh of the seven major European electricitycompanies through the optimisation of its energy mix, through its investment choices andthrough the creation and promotion of commercial offers and advice for energy efficiencyfor all its customers. EDF aims to replace current end of life power plants withcompetitive generating units releasing little or no CO2 in line with national policies,through R&D focusing on generation technologies and promoting in the same time thehigh-efficiency use of electricity in households, industry and transport.

EDF Group in Europe : learning the carbon marketThe corporate leadership of the Group designs its overall strategy around therequirements of particular national circumstances. Considerations of carbon constraintare integrated within the risk policy of each entity of the Group in order to optimise theuse of generation units. Synergies are activated appropriately. A Carbon Fund managed

by EDF-T, our trading company, has been set up in order to cover a part of the CERsneeds. Also, carbon constraints are included in analysis of investment portfolios. InEurope, our new investments will be strongly driven by the existing and emergingregulation in place. Accordingly, CO2 externalities will be taken into account in astraightforward manner.

Some insight in our present investmentsEDF France has decided on an ambitious programme of 40 billion of investments overthe next five years. Its generation investment choices are directed by the objective tocontinue emitting the least of the seven leading European electricity companies. The CO2emissions of the generation fleet are less than 0,05 t/MWh in France and 0,125 t/MWhfor the Group as a whole. In comparison, the other leading European electricity

companies average over 0,400 t/MWh. A new 1650 MW nuclear reactor, the FlamanvilleEPR, will be operational in Normandy in 2012. EDF is also involved in the recentinternational nuclear revival. New investments in France, Italy and the UK, will be madefor fossil-fired generation. The Group is developing the next generation in fossil firedtechnologies, notably by developing clean technologies, such as clean supercritical

pulverized coal, highly efficient combined cycle systems. EDF is developing a majorrenewable energy program to create 3300 MW of mostly wind power by 2010, mainly inEurope. The project represents an investment of about 3 billion. EDF is also consideringwind projects in China. Tenesol, of which EDF owns 50 per cent, is investing in solarenergy in combination with EDFs plans to grow these technologies. Finally EDF isinvesting in a 1000 MW dam at Nam Theun in Lao, which will be operational by the endof 2009, providing electricity to the people of Lao and Thaland.

Recent commitments and future investmentsLast July EDF SA signed a joint statement within the Global Compact (Caring forclimate) that highlights the importance of climate commitments. EDF is presentlycommitting to reduce its CO2 absolute emissions in France by at least 20% by 2020compared to 1990 (averaged climatic years). Moreover, EDF Energy took its ClimateCommitment which stipulates that reducing specific CO2 emissions by 60 per cent in2020 compared to 2006. Outside Europe new investments will be scrutinized throughdifferent criteria such as contribution to the climate policy of the country, efficiency,clean coal technologies, and the ease of upgrading to CCS technologies.

Preparing the future with R&DEDFs R&D teams also work on energy issues, such as the depletion of natural resources,climate change and nature conservation. Efforts focus on planning ahead for the new

energy landscape, by developing energy efficient technologies and services in houses andbuildings, cooperating to grow renewable infrastructure and to make these technologiesmore efficient and cheaper. EDF devotes almost 400 million each year to research anddevelopment. Two-thirds of this budget is assigned to carbon free technologies research.EDF is further investing in CCS technologies to reduce the impact of the existing worldfossil fuel dependence.

The EDF Climate Change Policy


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ERGY

142


The solutions to climate change already exist. The

science is looking bleaker by the day. So how, asks

the UKs largest renewable energy trade association,

can technological solutions to climate change be

better mobilised and quickly?

A NEW INFRASTRUCTURE FOR THEOLDEST ENERGY

If these advances inrenewables are to be

captured and accelerated, it

is essential that our energy

systems stand at the ready

to incorporate them.

A reappraisal ofinfrastructure to drive the

renewables revolution


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ERGY

143


A MOVE AWAY FROM CENTRALISEDPOWER SYSTEMS

A CHANGE TO THE BUILT ENVIRONMENT

Figure 1: Centralised energy yesterdays technologies.

If we are to unleash the

promise of a renewablesrevolution we need to focus

far greater political and

professional interest on the

infrastructure beyond new

generation technologies.


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EN

ERGY

144


REGULATORY BARRIERS

SMART GRIDS

DECENTRALISED AND OFF-GRID

Figure 2: Decentralised energy future todays technologies.


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ERGY

145


A RENEWABLES INFRASTRUCTURE

Decentralised combustion

generation plants, brought

closer to users, enables thecapture of waste heat for

distribution via heat networks

to commercial, industrial or

domestic buildings.

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EN

ERGY

147


Wind energy presents environmental and economic

advantages over other energy alternatives. The picture

of current global energy shows a year on year increase

in global demand for wind power, with the potential,

through effective legislation, to meet 12-14 per cent

of Europes electricity demand. It is not only to the

advantage of businesses and governments to embrace

and support renewable energies such as wind power,

but imperative in order to mitigate the impacts of

climate change.

WIND ENERGY TODAY

AN ENVIRONMENTALLY FRIENDLY SOURCEOF ENERGY

Wind energy why businesses should say yes


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ERGY

148


FUEL EXPORTERS AND IMPORTERS

A FINANCIAL ADVANTAGE

EMPLOYMENT OPPORTUNITIES

In 2006, global demand

for wind power capacity grew

by 32 per cent, following an

increase in the market of more

than 40 per cent in 2005.

While oil and gas prices

fluctuate, wind energy, being

an indigenous power source,

can guarantee security of

supply at a predictable cost.


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ERGY

149


A BOOST TO THE ECONOMY

PUBLIC OPINION

A PRESENT AND FUTURE NECESSITY

Governments that install

more wind power capacityindirec

climate action book lowres[1] copy

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