PARTING SHOTS

Have we reached "Tipping Point" on Climate Change?

David Grayson

Following Russia's ratification of the Kyoto Protocol, it will come into force on February 16th 2005. The British Prime Minister Tony Blair has declared that Climate Change will be one of the UK's top priorities when it holds the EU rotating presidency in the second half of 2005 and the presidency of the G8 leading nations in 2005-06.

It appears that at last Climate Change may have hit the political agenda in a meaningful way: Will this be sufficient to give a final impetus to concerted action and joined-up thinking on a level commensurate with the scale of the potential problem?

Evidence of Global Warming continues to mount:
• The Thames Barrage, which protects Londoners from flooding, had to be used on average once every two years in the 1980s. By the 1990s, it was being used on average six times every year.
• The number of people affected by floods worldwide has already risen from 7 million in the 1960s to 150 million today. In Europe alone, the severe floods in 2002 and had an estimated cost of $16 billion.
• The 10 warmest years on record have all been since 1990.

These environmental changes and severe weather events are already affecting the world insurance industry. Swiss Re, the world's second largest insurer, has estimated that the economic costs of global warming could double to $150 billion each year in the next 10 years, hitting insurers with $30-40 billion in claims. I am writing this Parting Shots from Sydney where there is speculation that summer temperatures in the Australian interior could regularly exceed 50 degrees celsius. Even in the USA a 2001 report commissioned by George W. Bush's administration from the National Academy of Sciences agreed that most of the observed warming of the past 50 years was due to the build-up of greenhouse gases in the atmosphere from human activity.

Climate Change is one of those "wicked issues" which defy simplistic solutions and instead require serious platforms for dialogue between different parts of society to create a broad concensus of "who needs to do what, and what must other players in turn do, in order to maximise the overall positive impacts of each player's actions?"
As Tony Blair has argued: "It is not a choice between economic prosperity and tackling climate change. It is technological advances and economic development that will provide the realistic solution. It is the firms and countries that lead the way in adapting to this challenge that will have the competitive advantage in the future."

Already it is possible to identify the beginings of a number of subtantive business contributions across a variety of sectors. These, combined with the actions of other players such as governments, Civil Society (NGOs), the Media and each of us as individual citizens and consumers, suggest that Climate Change may be gathering momentum as an issue for positive, practical action. For example,

• BP's CEO John Browne has exerted pressure to reduce CO2 emissions, requiring every new investment decision to factor in a notional cost of CO2 emissions. This has speeded up development of a range of new technologies and processes at BP to the point where by 2005, 40% of all the products they sell will be cleaner fuels. And incidentally, BP's unilateral emissions reductions target was achieved at no net economic cost: Indeed it created over half a billion dollars US in fuel saved over a four year period
• Airlines which, with some honourable exceptions, have not been particularly visible in the practice of Corporate Responsibility, must engage in serious debate about their environmental impacts. Rod Eddington, CEO of BA, has taken a lead here, giving a cautious welcome to UK Government plans to include aviation in the EU carbon emissions trading scheme "because emissions trading is likely to be the most effective and efficient instrument for dealing with greenhouse gas emissions from aviation." BA improved fuel efficiency by 25 per cent since 1990 and in the past five years has cut carbon dioxide emissions by 15 per cent. The company has also halved the noise impact of its aircraft fleet in the past five years. Eddington notes that: "BA has built up experience of emissions trading by participating in the British government's voluntary scheme. We are the only airline in the scheme and may be the only airline in the world to be actively participating in emissions trading. This experience benefits our business in several ways. The concept of emissions trading helps focus the minds of our management on the importance of environmental improvements. We have gained valuable knowledge on how to gather and report emissions data. And our practical understanding can help us influence the framework for future emissions trading schemes."
• In 1997, Toyota became the first car manufacturer to mass-produce a hybrid vehicle. The Toyota Prius produces up to 90% fewer harmful emissions than the average car on the road today.
Ideas for action on climate change across other sectors include:

• Architectural businesses, property companies and the construction industry need to be much more aggressive in adopting energy conserving design and materials and in lobbying for legislative changes that will reinforce this. For example, in the UK reducing the Stamp Duty on the conveyancing of energy-efficient housing (and equivalent measures outside the UK).
• Insurance companies such as Munich Re and Swiss Re which have done major studies on Climate Change could collaborate by pooling their latest and best evidence on Global Warming, and its consequences, and making this information available in compelling formats through an international communications strategy to reach opinion-leaders around the world.
• Two areas of life where individuals in the developed world can make the biggest contribution to reducing Greenhouse Gas emissions are transport and housing. Insurers could stimulate this further by offering differential premia for car and house insurance depending on the sustainability of the vehicle/building.
• Businesses generally which have employee volunteering programmes (and three quarters of the FTSE 100 largest companies now do) should be in the forefront of using their employee volunteers - who are already self-selecting as having an interest and engagement in the wider world - to promote personal action on energy saving. Companies have to equip their volunteers with what the Australian companies call the "Bar-BQ facts" - the killer statistics and practical suggestions for what individuals can do in their own homes, as motorists and as citizens - which company staff can quote in casual conversations in the pub or over the barbeque.
• Businesses also need to look carefully at the policy stances on Climate Change taken by the trade associations, business representative organisations and Think-Tanks which they fund and/or are members of. The Policy Director of The New Economics Foundation has pointed out that it is Myron Ebell, the representative of the Exxon-funded US Competitive Enterprise Institute, who has argued on the BBC that climate change was a European plot to undermine US economic dominance.

The Asian Tsunami on December 26th 2004 reminds us of the enormous forces that nature can unleash. The Australia Institute argues that billions of dollars worth of aid to rebuild infrastructure devastated by the tsunami could be wasted unless the impacts of rising sea levels due to climate change are taken into account. The Intergovernmental Panel on Climate Change has estimated that by the end of the century sea levels will rise by up to 0.9 metres and much of the low-lying land in the north-eastern Indian Ocean will be subject to inundation. "The recent tsunami in the Indian Ocean has cleared much of the infrastructure from regions threatened by future sea level rise", says Australia Institute Executive Director Dr Clive Hamilton.
"The temptation will be to rebuild on the same sites in the hope that a warning system will prevent another disaster if a tsunami of a similar magnitude occurs in the same region within the next few decades." The Institute argues that it is vital that adequate zones of protection are provided between any new structures and the shoreline; and that the Tsunami creates the opportunity for long stretches of the Indian Ocean coastline to be redeveloped in a way that affords appropriate protection from rising sea levels expected over the coming century. We can also rebuild sustainably - buildings, power supplies (solar), 4 stroke engines for boats and tuks-tuks instead of the deeply polluting two strokes, etc.
Even more fundamentally, surely, the best long-term monument that we can give to those who have lost their lives in the Tsunami, is to work to ensure that man-made climate-change is tackled so that we do not add avoidable, man-made disasters to those that come from nature? Can this now become the "tipping point" leading the world to act decisively before it is too late on Climate Change?