Environmental excellence: Why should

business care ?

Morné du Plessis

Outline

• Environmental footprint: the global context

• Climate change: scary, but true !

• Ecosystem services – free or not ?

• The role of business

• The opportunities – green economy

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2

4

6

8

10

12

14

500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100

Year

1 billion in 1800

4 billion in 1975

2 billion in 1920

6.5 billion in 2005

World Population (billions)

Source: UN Population Division 2004; Lee, 2003; Population Reference Bureau

The Human Ecological Footprint (1961-2005)

WORLD MAP OF RELATIVE ECOLOGICAL FOOTPRINT

Carbon

Cropland

Grazing

Forest

FishingBuildings

Ecological Footprint by Component (1961-2005)

450Putting it in Perspective

389

Stern Report (2006)

Energy intensity of economy per unit GDP (in 2004)

Energy intensity (MJ/US$)

Japan 5United Kingdom 6Italy 7Germany 7France 8United States 9Mexico 11Brazil 13Canada 14China 36South Africa 36India 41Russia 82

Worldwide average 13

•Regulating•Benefits

obtained from regulation of ecosystem processes

•Cultural•Non-material benefits from ecosystems

•Provisioning

•Goods produced or provided by ecosystems

UniqueEcosystem Services

Photo credits (left to right, top to bottom): Purdue University, WomenAid.org, LSUP, NASA, unknown, CEH Wallingford, unknown, W. Reid, Staffan Widstrand

Natural Resource Trends

• Rising threat of water shortages

• Rising unrecycled levels of solid waste disposal resulting in declining soil quality

• Loss and degradation of biodiversity as natural habitat in aquatic and terrestial ecosystems

• Threats to coastal and marine resources

• Increasing internalisation of environmental costs

From: Department of Environmental Affairs and Tourism

Internalisation of Ecosystem Services

Households or businesses—directly pay the ES providers (e.g. a company buys carbon offsets from a farmer).

Businesses pay the ES providers and pass the costs to clients (e.g., a water utility pays for upper watershed conservation activities and increases water bills for consumers by that amount).

Government pays ES providers and pass the costs to consumers (e.g., product taxes and fees) or to taxpayers (e.g., general budget).

A massive response required from business and industry

(top 200 corporations generate 1/3 of global economic activity)

History and Future of Corporate Responsibility

NotNot My BusinessMy Business

Reducing Reducing ImpactImpact

Zero Zero Impact Impact

Net Positive Net Positive ImpactImpact

Selling Solutions to Selling Solutions to the World’s problemsthe World’s problems

Philanthropy toPhilanthropy toOffset ImpactsOffset Impacts

Compliance Compliance And BeyondAnd Beyond

Risk Mgmt & Risk Mgmt & Cost EfficienciesCost Efficiencies

Examples of positive outcomes

• Decouple GHG and GDP In USA 47% less energy per USD of economic growth over last 30 yrs

• Energy efficiency investment of USD 170 B will return savings of USD 900 B by 2020

(annual rate of return of 17%; McKinsey)

• Green-collar jobs 2.3 M jobs in RE versus 2.1 M in ‘Oil & Gas; Construction, Transport, Agric, Fisheries’

• Health economic burden of air pollution amounts to 1.2% of GDP

(add malaria, etc)

The low-carbon sector

Global Low-Carbon EGS in 2008: £3 046bn = $5 trillion

(UK Department of Business Enterprise and Regulatory Reform)

• Traditional EGS 21.6% (waste management, pollution control, recycling)

• Renewable Energy 30.9%(including hydropower)

• Emerging Low Carbon 47.5%(including alternative fuel, alternative fuel vehicles and building technologies)

Source: New Energy Finance, IMF WEO Database, IEA WEO 2007, Boeing 2006 Annual Report

Adjusted for reinvestment. Geared re-investment assumes a 1 year lag between VC/PE/Public Markets funds raised and re-investment in projects.

Total Global New Investment in Clean Energy 2004 – 2007

• 1% of global fixed asset investment

• 19% of global energy industry infrastructure investment

•250% of commercial aircraft investment

$148.4bn

$92.6bn

$58.7bn

$33.4bn

2004 2005 2006 2007

76% Growth

58% Growth

60% Growth

Green resilience

In 2008, a crisis year…

• RE investment ($140bn) exceeded coal investment ($110bn)

• RE (capacity) grew 16% even as world oil use declined.

2009 growth is slower, but faster recovery than in almost any other sector < fiscal support

“We have an opportunity for greatness which has never been offered to any civilisation, any generation in human history, to act as a generation to do the right thing. 

If we fail to act on it, we will become the most vilified generation in human history”

Dr Roger Payne

President, Ocean Alliance