Corporate Environmentalism: Stop Seeing Green as a Burden

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Despite the fact that Europe’s Emissions Trading Scheme is in a mess, over time the price of carbon will inevitably rise. So says Robert Napier, chief executive of WWF UK, who recently told Ethical Corporation’s annual Europe conference in June: "Large emitters are going to find life very uncomfortable."

Customers and potential employees, he said, would soon boycott any company that is a “carbon dinosaur … regulation, tax, the market, public opinion will kill [it] off”.

The first round of carbon allocations across Europe was flawed, but with improvement, according to Napier, the scheme will make a serious difference to business carbon costs.

Many member states’ national allocations were based on company projections of emissions rather than actual emissions. Allocations ought to come from “base data” rather than projections in future phases, Napier said. “The EU has just simply got the allocations wrong,” he said.

The key is consistency across EU members and “tighter caps”, which are “sensible, practical, and good for business”. The current fluctuations in the carbon trading price are “just a sign of an immature market”.

Napier believes that investors have got the message on carbon risk, since many of them, representing trillions of dollars of investments, now ask companies for policies and actions on climate change through the Carbon Disclosure Project.

Here today, gone tomorrow

A former corporate chief executive himself, Napier lambasted what he calls the “discount factor” that curtails company leaders in making long-term decisions. The average tenure of a chief executive in a FTSE 100 company is 4.3 years, and “they discount risks beyond these periods”, said Napier. Important issues “may well bite in year six”, and, as many chief executives realise this, they do not take action on issues like the environment.

Napier also criticised some corporate responsibility rankings, as benefiting those “who are just good at filling in forms” and not focusing on actual performance.

On the positive side, Napier said companies “can become environmentally cost competitive in a carbon constrained world”. He said: “Investors, consumers and policy makers will be driving companies towards cleaner production.” Business must now “stop regarding it as a burden and see it as a reality” and “seize the opportunity” to reduce costs and attract customers.

“We should embrace the technologies of low carbon economies as huge opportunities in technology are already proven,” Napier told the conference in London.

Global leadership

Europe’s history of shipyard and aviation engineering should enable the region to be leading the world in wind turbines, he believes. He says EU scientists ought to be pushing the boundaries in the economics of “combined heat and power”.

In terms of preventing energy waste from UK power stations, WWF believes that the development of “distributed power generation” is important. Napier told the conference that Europe could be a huge exporter of clean technologies to economies such as Brazil, Russia, India and China.

“This debate is about opportunity. With the right amount of regulation, the right amount of enabling, Europe’s companies can compete in an environmentally friendly way,” he said. WWF believes that environmental leadership in business will be a key differentiator as awareness grows of global environmental challenges.

But, Napier concluded, companies “need certainty, of a rising real price of carbon” for carbon markets to work. Governments must provide that, and the key is “the right leadership from the European Commission”.

WWF says the European Commission should support:

• Early plans for the EU Emissions Trading Scheme to continue beyond 2012
• Consistency in EU states’ National Allocation Plans
• National Allocation Plans based on absolute CO2 reductions rather than projections data
• Tighter phase 2 and 3 carbon caps across the EU to drive down emissions
  
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  Reprinted with permission of Ethical Corporation, a GreenBiz News Affiliate.
  

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