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CANADIAN BUSINESS FOR SOCIAL RESPONSIBILITY – PROVIDING OPTIONS FOR SMART BUSINESS
C A NA D I A N BU S I N E S S
F O R S O C I A L R E S P ON S I B I L I T Y
THE CLIMATE CHANGE GUIDECORPORATE CANADA: RESPONSIBLE BUSINESS ACTION ON CLIMATE CHANGE
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Fig01 HighlightsoftheSternreview/theeconomics ofclimatechangeFig02 HighlightsfromtheIntergovernmentalPanel onClimateChangeFig03 OpportunitiesthroughshareholderengagementsFig04 SnapshotofWWFScorecard–CanadaFig05 DriversofclimaterelatedstrategiesFig06 TheClimateChangeGovernacechecklistFig07 Toptentips–DevelopingyourcarbonfootprintFig08 GHGimpactoperationalboundariesFig09 StepsintheriskmanagementprocessFig10 Toptenconsiderations–Carbonrisksand
benefitsdisclosureFig11 GHGreductions–low-hangingfruitFig12 MetricsofsuccessforclimatestrategiesFig13 Tips–MotivateemployeesonclimatechangeFig14 EngagingyoursupplychainFig15 GHGreportingframeworksFig16 BestpracticesforcommunicatingclimatechangeFig17 Communicationsandreportingofclimate changestrategiesFig18 ThebenefitsofvoluntaryoffsettingFig19 Referencedocumentsforvoluntarycarbon offsetprojectsFig20 Soyouwanttobeacarbonneutralleader?
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TABLE OF FIGURES
Foreword 06Acknowledgements 08ExecutiveSummary 10
THE CHALLENGE OF CLIMATE CHANGE 11
GlobalClimateChangeReports 15ClimateChangeRisks 17ClimateChangeOpportunities 19
CANADIAN CLIMATE CHANGE DEVELOPMENTS 21
TheCBSRClimateChangeInterviewSeries 26
THE BUSINESS OF CLIMATE CHANGE 27
DeterminingImpactsandImplications 32QuantifyingGHGEmissions 33AssessingRisksandClimateAdaptationApproaches 36
DevelopingaClimateChangeActionPlan 38FormulatingClimateCommitment StatementsandStrategy 39EstablishingGoalsandTargets 40EvaluatingCarbonManagementAlternatives 41
SecuringBuy-inandCommunicatingProgress 45EngagingStakeholders 46ClimateReportingandCommunications 50
OFFSETTING AND CARBON NEUTRALITY 55
ConcludingComments 61
TOOLS AND RESOURCES 63
CarbonCalculators 70AbbreviationsandAcronyms 70GlossaryofTerms 71References 77
TABLE OF CONTENTS
SHIFTING THE WORLD ONTO A LOW-CARBON PATH COULD EVENTUALLY BENEFIT THE ECONOMY BY $2.5 TRILLION A YEAR1
EQUIVALENT TO TWICE THE SIZE OF CANADA’S 2006 GROSS DOMESTIC PRODUCT (GDP) 2
1.TheGuardianUnlimited“SternReport:TheKeyPoints”http://politics.guardian.co.uk/green/story/0,,1935209,00.htmlandBBCNews“At-A-Glance:TheSternReview”Availableathttp://news.bbc.co.uk/2/hi/business/6098362.stm
2.TheEconomistNewspaperLtd.(2006),“TheWorldin2007”report
THIS GUIDE PROVIDES CORPORATE CANADA WITH BALANCED AND PRACTICAL INFORMATION ALLOWING THE PRACTITIONER TO DEMONSTRATE HOW CLIMATE CHANGE IS A CORE BUSINESS ISSUE.
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IcongratulateCanadianBusinessforSocialResponsibility(CBSR)ontakingtheinitiativetoorganizethistimelyandimportantstudy.Intheninemonthssincetheprojectwascommissioned,wehaveseendramaticshiftsinpublicinterestandcommitmenttocarbonemissionsregulationaroundtheworld,aswellasthereleaseoftheIPCCreportswhichdefinitivelylinkclimatechangetohumaneconomicactivity.
Ourcompanyisinthebusinessofresearchingsolutionstoairpollutionissues,sowehadaheadstartinthinkingabouttheimplicationsofcarbonregulations.Becauseenergyuseandcarbonemissionsareassociatedwitheverysinglebusinessactivity,thereisnobusinessorindividualwhoisn’taffectedbysuchlaws.Carbonisnotjustanothertoxicpollutanttobemanagedbyanenvironmentaloperationsgroupwithinourcompanies,usingtheirtraditionalprocessesandmeasurementtools;andclimatechangeisn’tsimplyaboutwarmerCanadianwinters.Quitethecontrary–theimplicationsarestrategicandcouldforcemassiveindustry-widechangesinglobalbusinessoperations.Ifit’snotalreadythere,theissuebelongsattheCEOandBoardlevelofeverycompany.
Somecompanieswillbemoreimpactedthanothers,ofcourse.Incarbonintensiveindustries,likenaturalresources,companiesmayseegrowthplansdramaticallyaffectedorwillneedsignificantprocessandtechnologydevelopment.Otherindustries–agriculture,transportation,insurance–mayneedtobemorefocusedonthestrategicrisksofclimatechangewithintheiroperatinggeographies.
Ifoursocietyreallywantsmeaningfulreductioningreenhousegases,we’reconvincedthattherearesound,realisticapproaches.Inthiscontext,webelievethatmanyCanadian
companiescanandwillprosperinthisperiodofglobalfocusontheenvironment.Organiza-tionsthatarefirsttoexploitthemanynewopportunitiesandfirsttoimplementeffectivemitigationmeasureswillinevitablybemoreeffectivethantheirslowercompetitors.WebelieveclimatechangeoffersmoreopportunitythanrisktoCanada.Andinthisperiodbeforenewregulationsareactuallyenacted,Canadianbusinesshasagreatopportunitytoinfluencesocietalbehaviourthroughtheircustomers,suppliers,employeesandotherstakeholders.
WhenAdinementionedtheopportunitytoworktogethertodevelopanoverviewofcurrentCanadiancorporatethinkingonclimatechange,wewereverypleasedtobeabletoparticipate.Ithinktheresultsspeakforthemselves.ThisGuideisauniqueandimportantcontributiontothisimportantissueandwehopeyoufinditthoughtprovokingandhelpful.
DavidDemersChiefExecutiveOfficerWestportInnovationsInc.
FOREWORD
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THE CLIMATE CHANGE GUIDE – CBSR
Asourmembercompaniesweregettingthemselvesorientedontheclimatechangecrisis,manyapproachedusforguidanceandassistance.Whileitistruethatthereisagreatdealofinformationonclimatechangeincirculationalready,muchofitisdifficulttonavigateandsomeprovidesconflictingperspectives.WewerealsomissingaCanadianperspectivewithuniquelyCanadianresourcesandcasestudies.
AsCBSR’searlyworkfocusedonmeetingtheneedsofindividualcompanies,wewerekeentoleveragethisinawaythatwouldbenefitmany.ThisbecametheimpetusforCBSRtopublishacomplimentaryCanadianclimateguideanddistributeitwidely.
CBSR’s‘TheClimateChangeGuide’hasseveralgoals:
1.TosimplifythecomplexclimatechangelandscapeforaCanadianbusinessaudience.
2.Toassistbusinessmanagerstounderstandwherethestrategicopportunitiesexist.
3.Tolayoutabasicframeworkforinspiredbusinessaction.
AsthelargestCSRnetworkinCanada,ourprimarygoalistoinspireandadvanceresponsiblebusinessaction.Ifwearetoachievesuccessitwillbebecausewehavebeenabletoeffectivelymobilizeourmembercompanies,buildingontheirexperiencestoreachagreaterscaleanddelivergreaterimpact.
Insidethesepagesyouwillfindwebsiteresources,tools,calculators,casestudiesandmore.Allofthemdesignedtosupportyou–whethertheseareyourcompany’sfirststepsoramuchneededaccelerationtothenextlevelofperformance.
Whilewehavelookedaroundtheglobetobringyoutheverybestinformationthatis
currentlyavailable,wehavemadeitaprioritytoselectCanadiancasestudiestoillustratevariousleadershippractices,whetherthesearefocusedonemissionsreduction,stakeholderengagement,orhighlyeffectiveclimaterelatedcommunications.ConsiderthisGuideasyourClimateChange101text.
Withprojectsofthissizeandscope,CBSRbenefitsfromtheassistanceandinputfromourmembercompanies.AssuchWestportInnovations’generoussupportwascriticaltothesuccessofthisinitiative.KarenHamberg,theauthor,wassecondedforaperiodofninemonthstoCBSRfromWestportInnovations.Karen’sroleasaneducatorandaCSRpractitionermadeheraperfectfitforthisproject.
WehopethatyouwillfindTheClimateChangeGuideasinspiringandpracticalasweintendedittobeand,thatyouwillfindwithinthesepagestheresourcesyouneedtodevelopyourownuniqueblueprintforaction.
AdineMeesPresidentandChiefExecutiveOfficerCanadianBusinessforSocialResponsibility
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INTERVIEW PARTICIPANTS
MarcDuchesneBellCanada
KazFlinnScotiabank
ChrisGatesEnbridgeInc.
GrahamKissackCatalystPaperCorporation
LoriLindahlandDarrellDesjardinVancouverPortAuthority
EricMewhinneyTELUSCorporation
AllisonMorrisonBCHydro
PatricOuelletteWestportInnovationsInc.
GretaRaymondandFionaJonesPetro-Canada
JenniferRobertsonTerasenInc.
WishartRobsonNexenInc.
CliveRockandFrankieKirbyTranslink
NelsonSwitzerRBCFinancialGroup
PEER REVIEWERS
GuyDaunceyBCSustainableEnergyAssociation
PatrickFancottPinchinEnvironmental
LizFerrisSustainabilityOffice,UBC
ChrisGatesEnbridgeInc.
JacquelineKuehnelTheCarbonNeutralCompany
PaulLinglDavidSuzukiFoundation
PeterNemetzSauderSchoolofBusiness,UBC
RyanSchuchardBusinessforSocialResponsibility
CoroStrandbergStrandbergConsulting
CarmenTurnerTeckComincoLimited
PROJECT SUPPORTERS
RESEARCHED AND WRITTEN BYKarenHamberg,MAManager,SustainabilityandEnvironmentalPerformance,WestportInnovationsInc.
CBSR INPUT ON GUIDE BYWesleyGeeMyrnaKhanAnnastasiaPalubiskiMelPhadtare(ProjectDirector)LisaPrincicLorraineSmithHamishvanderVen
DavidDemersCEO,WestportInnovationsInc.
PatricOuelletteVPandChiefTechnologyOfficer,WestportInnovationsInc.
ElaineWongVPFinanceandCFO,WestportInnovationsInc.
BobEltonCBSRChairman
RobMooreCBSRBoardDirector
PHOTOS DONATED BYBCHydroCatalystPaperCorporationKaldorBrandStrategy+DesignTeckComincoLimited
PRODUCTION BYKaldorBrandStrategy+DesignHemlockPrintersLtd.
GUIDE CARBON MANAGEMENT BYPinchinEnvironmental,footprintcalculatorsTheCarbonNeutralCompany,footprintoffsetters
ACKNOWLEDGEMENTS
TorontoOfficeSuite300,360BayStreetToronto,ONM5H2V6Tel: +14167037435Fax: +14167037475
VancouverOfficeSuite508,1111WestGeorgiaStreetVancouver,BCV6E4M3Tel: +16043232714Fax: +16043232715
FURTHER INFORMATIONTofindoutmoreaboutthisGuide,orforcustomizedadviceonclimate,pleasecontactCBSRon:www.cbsr.ca;alternativelycontactourofficesbelow.
CanadianBusinessforSocialResponsibility©CBSR2007
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THE CLIMATE CHANGE GUIDE – CBSR
WestportInnovationsInc.isaleadingdeveloperofenvironmentaltechnologiesthatenablevehiclestooperateonclean-burningalternativefuels.
Enbridgeoperates,inCanadaandtheUnitedStates,theworld’slongestcrudeoilandliquidspipelinesystem,delivering2millionbarrelsperdaytocustomersinCanadaandtheUSMidwest.
LeadingresponsibledevelopmentinCanada’soilsands.
PLATINUM
SILVER
BrandStrategy+Design
GOLD
BRONZE
THE CLIMATE CHANGE GUIDE IS PROUDLY SPONSORED BY:
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EXECUTIVE SUMMARY
Leadingcompaniesareleveragingtheissueofclimatechangetomeetotherobjectivessuchasincreasedenergyefficiency,overallenvironmentalstewardship,riskmanagementandpolicyleadership.Achievingnewandenvironmentallysoundpracticesrequiresabroadanddeepchangeinacompany’scultureandsystems.Themostdurablecorporateclimatechangeprogramswillhavelinkedgoalsthatcanbealignedwithcorporateculturetocreateongoingforwardmovement.3
CBSRhasfieldedagrowingnumberofclimatequeriesfromourcross-sectoralmemberbase.Manyofourmembersinextractiveandclimate-regulatedindustriesaredemonstratingnotonlyCanadianbutinternationalleadershipintheireffortstominimizethecarbonfootprintassociatedwithoperations,andtheyadvocateregulatorypolicyandfullydisclosetherisksandbusinessopportunitiesposedbyclimatechange.Othermembercompanieswithsoftercarbonfootprintsarealsodevelopingcomprehensiveclimatestrategiesandmakingsignificantprogresstoreducetheircarbonimpactsdespitenocurrentregulatoryrequirementtodoso.
ThisCSRpractitioner’sguidetoaddressingclimatechangeislaidoutinfivesections.
SectionOne:TheChallengeofClimateChange,outlinesthescopeoftheissueandthescaleofchangerequiredtopreventseriousenvironmental,economicandsocialconsequences.Acomprehensivelistingofthefinancial,regulatory,physical,litigation,reputationalandcompetitiverisksaswellastherangeofpotentialbusinessopportunitiesisalsoprovided.
SectionTwo:CanadianClimateChangeDevelopments,highlightsthecurrentstateofregulatorydevelopmentsandthebroaderissueofclimatechangeinaCanadiancontext.
SectionThree:TheBusinessofClimateChange,detailstherequiredstepstodevelopacomprehensiveclimatechangeprogramandisdividedintothreesubsections.Thesearesup-plementedwithexamplesofleadingpracticesfromthe13companiesinterviewedaspartofthisresearch.Thethreesubsectionsinclude:
>DeterminingImpactsandImplications,includesquantifyingGreenhouseGas(GHG)emissions,assessingrisksandclimateadaptationapproaches.
>DevelopingaClimateChangeActionPlan,addressesformulatingaclimatecommitmentandstrategy,establishinggoalsandtargetsandevaluatingcarbonmanagementalternatives.
>SecuringBuy-inandCommunicatingProgress,discusseshowtoengagewithstakeholdersandcommunicate/reportclimatestrategy.
SectionFour:OffsettingandCarbonNeutrality,respondstotherecentgrowthofthevoluntarycarbonoffsetmarketandclaimsofcarbonneutralitybyprovidinganoverviewofthesetrends.
SectionFive:ToolsandResources,providesacomprehensive“helplist”includingcarboncalculators,abbreviations,acronymsand,aglossaryofterms.
WehavestructuredthisguidetoprovidehelpfulresourcestoCanadiansustainabilitypractitionersseekingassistanceandguidanceonarangeofclimate-relatedtopics.Whileitcouldbereadasareportfromcovertocover,itismorelikelythatreaderswilldipinandout,accessingthosesectionsmostrelevant
tothem.Itisalsoexpectedthatthetools,strategiesandtacticsoutlinedwithinwillbeofmorevaluetothoseindustrieswithsoftercarbonfootprintsandforwhomproposedGHGreductionregulationsarenotapplicable.
Acknowledgingthatcorporateactiononclimatechangehasbeendelayedinparttotheperceivedcomplexityoftheissue,thisguideprovidesclaritythroughacomprehensivemanagementframeworkthatallowsthepractitionertopositionclimatechangeasacorebusinessissue.
3.BusinessforSocialResponsibility(2006)“AThree-ProngedApproachtoCorporateClimateStrategy”.Availableathttp://www.bsr.org/meta/BSR_Climate-Change-Report.pdf
“ What actions will each of you feel able to take? Everyone can do something because business is not only a major contributor to climate change but can also play a key role in tackling the problems and reducing their impact. The three key areas must be: first, tackling emissions for which they are responsible; secondly, encouraging their suppliers and business customers to take action of their own; and thirdly, designing products and services which will help their customers to reduce the emissions associated with their use.” Patron: HRH The Prince of Wales
> Industrialized countries need to decrease their emissions by 80% by the year 2050, accounting for growth in developing countries.4
> Climate scientists, environmentalists and business leaders view climate change as urgent, difficult but not impossible to address, and requiring immediate and substantial societal action.
> Despite challenges, climate change is a potentially solvable problem. GHG emissions and atmospheric concentrations are measurable thereby allowing society and business to track results and progress.5
> Climate change risk is a business reality for which all organizations must plan. Failing to assess and manage climate risks will have significant implications for businesses and their stakeholders.6
> There are six categories of climate risk for business including financial, regulatory, physical, litigation, reputational and competitive risk.
> Climate change has created business opportunities including new regulatory frameworks, carbon emissions trading schemes, shifting consumer demands and a market for carbon neutral products and services.
THE CHALLENGE OF CLIMATE CHANGE
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4.ECOFYSGermany(2007)“WWFClimateScorecards:AssessmentoftheClimatePerformanceoftheG8plus5countries”WorldWideFundforNature.Availableathttp://assets.panda.org/downloads/wwf_g8_climate_scorecards_final.pdf
5.Heintzman,Andrew(2006)“NewStrategiestoConfrontClimateChange”.CanadianEnvironmentalGrantmaker’sNetwork.Availableathttp://www.cegn.org/TLS/1_TLS_EN.pdf
6.Greenpeace(2007)“ClimateRisk:UnderstandingtheFinancialRiskthatClimateChangePresentstoNewZealandCompanies”.GreenpeaceBriefing.Availableathttp://www.greenpeace.org/raw/content/new-zealand/press/reports/financial-risk-of-climate-change.pdf
GlobalClimateChangeReports 15ClimateChangeRisks 17ClimateChangeOpportunities 19
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THE CHALLENGE OF CLIMATE CHANGE Climatechangeisaglobalchallengewithseriousimpactsandconsequencesforthenaturalenvironmentandoursocialandeconomicinfrastructure.Therisksintroducedbyclimatechangearereshapingthebusinessenvironmentwithforward-lookingcompanies,workingtodevelopinnovativeresponsestothechallengetoprotectbothprofitabilityandtheplanet.Withclearscientificconsensusthatclimatechangeisoccurringandthathumanactivitiesareamajorcontributingfactor,thefocushasshiftedtohowtoachievethelarge-scalereductionsinGreenHouseGas(GHG)emissionsneededinarelativelyshorttimetoavoidthemoreextremeimpactsassociatedwithhigherCarbonDioxide(CO2)concentrationsintheatmosphere.
Thereiswidespreadtechnicalagreementthattheglobalaveragetemperatureincreaseincomparisontopre-industriallevelsshouldbekeptbelow2ºC.Asaconsequence,globalGHGemissionswillneedtopeakinthenext10to15yearsandthendeclinetoafractionofcurrentlevels.Leavingsomeroomforgrowthfordevelopingcountries,industrializedcountriesneedtodecreasetheiremissionsbytheorderof80%bytheyear2050.Thisisamajorchallengeas,currenttrendsaregoingintheoppositedirectionwithhighemissionsindevelopedcountriesandgrowingemissionsinmostdevelopingcountries.8
Economistshaveidentifiedclimatechangeasclassic“marketfailure”.ThesinglelargestcauseofthatfailureisthatinmostoftheworldthereisnopriceplacedonemittingCO2andotherGHGsintotheatmosphere.Thereareseveralwaysinwhichclimatechangeisdifferentfrommorecustomaryexternalities:itscausesandconsequencesareglobalandwillhavesubstantiallydifferentimpactsacrosscountries;
“ One thing that we’ve really broadly started to appreciate more is that climate is not an environmental issue. Climate change is a systemic and fundamental issue about the way our economics work and the way we get our energy.”7
Sonia Labatt and Rodney R. White
itseffectswillpersistlongaftertheoriginalemissionswerereleasedandtheuncertaintiesandrisksintroducedbyclimatechangearebroadinscope.9
Climatescientists,environmentalistsandbusinessleadersviewclimatechangeasurgent–difficultbutnotimpossibletoaddress–andrequiringimmediateandsubstantialsocietalaction.MoserandDilling(2007)identifiedarangeofcharacteristicsspecifictoclimatechangethatmakeitdifficulttounderstand,communicateandcontributetothecurrentstateofparalysis.10
Thesecharacteristicsinclude:
AlackofimmediacyCO2andotherGHGsareinvisibleandatatmosphericconcentrationshavenodirectnegativehealthimpactsonhumans.
TheremotenessofimpactsThereisawidely-heldperceptionsupportedbyscienceandpoliticalrhetoricthatsocietywillbeabletoadapttoanyadverseclimateimpactsinthemid-to-long-term.
TheIssueoftimelagItisurgenttoactnowduetotheextendeddelaysbeforetheimpactisfullyrealized.Globalemissionsarerising,butsimplyhaltingtheriskorpotentialimpactsbystabilizingemissionswillnotbesufficienttostabilizeconcentrations.11Energyandtransportationsystemsandinfrastructurewilldevelopoverdecades,butchangewouldnotbeimmediateevenifwestartednow.
SkepticismaboutsolutionsGiventhescaleandmagnitudeoftheproblem,consumerswonderhowsmallpersonalactionssuchaschanginglightbulbs,maycontributetosolvingaglobalproblem.
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Threatstovaluesandself-interestsProposedsolutionsandpolicymechanismsareviewedbysomeasconflictingwithcloselyheldvalues,prioritiesandinterestssuchasnationalsovereignty,economicgrowthandjobsecurity.
TragedyofthecommonsClimatechangerepresentstheultimatecommonsproblemasallnationsshareoneatmosphere.
PoliticaleconomyandinjusticeSomeregionsaredisproportionatelyaffectedbyclimatechangeandsocietalvulnerability.
Despitetheabove-mentionedfactors,climatechangeisapotentiallysolvableproblem.GHGemissionsandatmosphericconcentrationsaremeasurable,therebyallowingsocietyandbusinesstotrackresultsandprogress.Foracompletelistingofmeansbywhichbusinessescantracktheiremissionsandreductionprogress,referto:SectionFive:ToolsandResources,page63.Theacidrainprobleminthelate1980sandearly1990ssetaclearprecedentforhowtotacklealarge,seeminglyintractable,globalenvironmentalissue.ThecapandtrademechanismsimplementedatthetimeledtodramaticandcosteffectivereductionsinSulphurDioxide(SO2)emissionsthatreducedthethreatinaveryshorttime.Advocatesofmarket-basedmechanismscitethisprecedentasevidencethatsuchsystemsareeffectiveinreducingemissions,arecosteffectiveanddonothampereconomicgrowth.12
7.ReferencedinLabatt,SoniaandWhite,RodneyR.(2007)CarbonFinance:TheFinancialImplicationsofClimateChange.JohnWiley&Sons,Inc.Hoboken,NewJersey
8.ECOFYSGermany(2007)“WWFClimateScorecards:AssessmentoftheClimatePerformance
oftheG8plus5countries”WorldWideFundforNature.Availableathttp://assets.panda.org/downloads/wwf_g8_climate_scorecards_final.pdf
9.Llewellyn,John(2007)“TheBusinessofClimateChange:ChallengesandOpportunities”.LehmanBrothers.Availableathttp://www.lehman.com/#
10.ListadaptedfromMoser,SusanneC.andDilling,Lisaeds.(2007)“Introduction”CreatingaClimateforChange:CommunicatingClimateChangeandFacilitatingSocialChange.CambridgeUniversityPress.NewYork,NYpp1-27
11.Bramley,Matthew(2005)“TheCaseforDeepReductions:Canada’sRoleinPreventingDangerousClimateChange.”TheDavidSuzukiFoundationandThePembinaInstitute.Availableathttp://www.davidsuzuki.org/files/climate/Ontario/Case_Deep_Reductions.pdf
12.Heintzman,Andrew(2006)“NewStrategiestoConfrontClimateChange”.CanadianEnvironmentalGrantmaker’sNetwork.Availableathttp://www.cegn.org/TLS/1_TLS_EN.pdf
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TheSternReviewontheEconomicsofClimateChange,areportanalyzingtheeffectsofclimatechangeontheglobaleconomy,wasreleasedinOctober2006byeconomistSirNicholasSternfortheBritishgovernment.Whileitisnotthefirsteconomicreportonclimatechange,itissignificantasthelargest,mostcomprehensiveandwidelyknownreportofitskind.OneofStern’skeyconclusionsisthatthecostofinactionislikelytobedramaticallygreaterthancostsassociatedwithtimely,effectiveaction.13Thereporthasbeencreditedwithtriggeringashiftinpolicyfromvoluntaryinitiativesbasedlargelyonefficiencyimprovements,towardsamandatoryandcompliance-focusedapproachthatprovidesbusinesseswiththeregulatorycertaintytheyneedforplanningpurposes.
13.Lye,GeoffandElkington,John(2007)“ClimateChange’sRightandWrongFixes”OpenDemocracy.Availableathttp://www.opendemocracy.net/globalization-climate_change_debate/fixes_4311.jsp
FIGURE ONE: HIGHLIGHTS OF THE STERN REVIEW / THE ECONOMICS OF CLIMATE CHANGE
Economic and Environmental Impacts:
> Unabated climate change could cost the world at least 5% of GDP each year; if more dramatic predictions come to pass, the cost could be more than 20% of GDP.
> The cost of reducing emissions could be limited to around 1% of global GDP.
> Shifting the world onto a low-carbon path could eventually benefit the economy by $2.5 trillion a year.
> By 2050, markets for low-carbon technologies could be worth at least $500 billion.
> Average temperatures could rise by 5ºC from pre-industrial levels if climate change goes unchecked.
> Rising sea levels could leave 200 million people permanently displaced.
> Before the industrial revolution, levels of GHGs in the atmosphere were 280 parts per million (ppm) CO2 equivalent (CO2e). The current level is 430ppm CO2e. The level should be limited to 450-550ppm CO2e.
Recommended Actions and Options for Change:
> Carbon pricing, through taxation, emissions trading or regulation will demonstrate the range of economic, environmental and social costs. A global carbon price across countries and sectors should be established.
> Emissions trading schemes, like that which operates across the EU, should be expanded and linked.
> Set new targets for the European Emissions Trading Scheme (EETS) to reduce carbon emissions by 30% by 2020 and 60% by 2050.
> Technology policy should drive the large scale development and use of a range of low-carbon and high-efficiency products.
> Support for energy research and development should at least double with the support for the deployment of low-carbon technologies increased by up to five times.
> Promote cleaner energy and transport technology, with non-fossil fuels accounting for 60% of energy output by 2050.
> Work with the World Bank and other financial institutions to create a $20 billion fund to help developing countries adjust to climate change challenges.
GLOBAL CLIMATE CHANGE REPORTS
Source:TheGuardianUnlimited“SternReport:TheKeyPoints”Availableathttp://politics.guardian.co.uk/green/story/0,,1935209,00.htmlandBBCNews“At-A-Glance:TheSternReview”Availableathttp://news.bbc.co.uk/2/hi/business/6098362.stm
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“ Climate change is a synthesis of all other environmental issues; energy (in)efficiency, deforestation, pollution, species extinction, water use and desertification, urban sprawl … many of the most pressing environmental issues are related intimately to the problem of climate change.”14 Andrew Heintzman
FIGURE TWO: HIGHLIGHTS FROM IPCC FOURTH ASSESSMENT REPORT
> Global increases in CO2 concentration are due primarily to fossil fuel use and land-use change, while those of methane and nitrous oxide are primarily due to agriculture.
> Atmospheric concentration of CO2 in 2005 exceeds by far the natural range over the last 650,000 years (180 to 300 ppm) as determined from ice core samples.
> Eleven of the last twelve years (1995-2006) rank among the twelve warmest years in the instrumental record of global surface temperature (since 1850).
> Average Arctic temperatures have increased at almost twice the global average rate in the past 100 years.
> In the course of this century, water supplies stored in glaciers and snow cover are projected to decline, reducing water availability in regions supplied by meltwater from major mountain ranges, where more than one-sixth of the world population currently lives.
> It is projected that by 2080 many millions more people will be flooded every year due to a rise in sea-level. Most affected will be the mega-deltas of Asia and Africa while small islands are especially vulnerable.
> By 2020, between 75 and 250 million people are projected to be exposed to an increase of water stress (shortage of potable water) due to climate change.
Co-recipientsofthe2007NobelPeacePrize,theIntergovernmentalPanelonClimateChange(IPCC),reportedinFebruary2007thatitis“verylikely”(greaterthan90%)thatheattrappingemissionsfromhumanactivitieshavecausedmostoftheobservedincreaseingloballyaveragedtemperaturessincethemid-twentiethcentury.Evidencethathumanactivitiesarethemajorcauseofrecentclimatechangeisevenstrongerthaninpriorassessments.
ThefindingsoftheIPCCaretheresultofsixyearsofprogressiveresearchbyWorkingGroupsI,IIandIII.TheGroupiscomposedoftheworld’spre-eminentclimatescientists.TheresultsofWorkingGroupIweresupplementedbythesubsequentcontributionsofWorkingGroupII‘Impacts,AdaptationandVulnerability’;andWorkingGroupIII‘MitigationofClimateChange’;andWorkingGroupI‘FourthAssesmentReportoftheIntergovernmentalPanelonClimateChange.’15Thedebateisnolongercentredonwhetherhumaninducedclimatechangeishappeningbuthowthechallengeshouldbestbetackledandwhowillbearthecosts.
14.Heintzman,Andrew(2006)“NewStrategiestoConfrontClimateChange”.CanadianEnvironmentalGrantmaker’sNetwork.Availableathttp://www.cegn.org/TLS/1_TLS_EN.pdf
15.TheUnionofConcernedScientists(2007)“FindingsoftheIPCCFourthAssessmentReport:ClimateChangeScience”Availableathttp://www.ucsusa.org/global_warming/science/ipcc-highlights1.html
Source:TheUnionofConcernedScientists(2007)“FindingsoftheIPCCFourthAssessmentReport:ClimateChangeScience”Availableathttp://www.ucsusa.org/global_warming/science/ipcc-highlights1.html
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THE RISKS
REGULATORY RISK FINANCIAL RISK PHYSICAL RISK LITIGATION RISK REPUTATIONAL RISK COMPETITIVE RISK
Climatechangeriskisabusinessrealityforwhichallorganizationsmustplan.Failingtoassessandmanageclimateriskswillhavesignificantimplicationsforbusinessesandtheirstakeholders.Therightblendofclimateriskstrategiescansubstantiallyreducethecostsofmitigationandgenerateeconomicbenefits.Themostpowerfulandoften-citedexampleofthisisthereducedenergyexpenditurethatmostcompaniesrealizeunderaprogramtoreduceemissions.16
Recentstudieshavenotedfargreaterdisclo-sureanddiscussionofthebusinessopportu-nitiesofclimatechangeascomparedtotherisks.Thelowrateofreportingonrisksmaybebecausecompaniesseeclimatechangenotonlyasathreatbutalsoanopportunityfornewproducts,servicesandtradeinitiatives.Riskscouldbeperceivedtobebeyondcurrentbusinessplanninghorizonsorcompaniesmaynothaveidentified,exploredorquanti-fiedrisksassociatedwithclimatechangeandmaythereforenotbeinapositiontoreportonrisks.17Thereisstilllimitedagreementonastandardizedmethodologyforassessingclimaterisksasthisisrequiredforcompaniestomakecrediblestatementsaboutrisksandenableinvestorstoanalyzeormakemeaning-fulcomparisons.18
Acomprehensiveriskmanagementanalysiswillfacilitateanunderstandingofthepotentialmeansbywhichaclimateriskcoulddirectlyandindirectlyaffectoperations,resources,
reputation,financialpositionandcompetitiveadvantage.Therearesixcategoriesofclimateriskincludingregulatory,financial,physical,litigation,reputationalandcompetitiverisk.
REGULATORY RISKRegulatoryexposurefromnationaland/orinternationalGHGemissionreductionpolicieswillcausethegreatestfinancialimpactformostfirms.Regulatoryriskisviewedintermsofacompany’srecordofcompliancewithrespecttoanycarbonpoliciesthatarematerialtoitsfinancialperformance.19Whileanoptimalglobalpolicywouldimposeaconsistentchargeonemissionsacrossallsectors,regulationsarelikelyinpracticetobesectororindustryspecificwithemphasisontheautomobileindustry,utilities,integratedoilandgas,build-ing,constructionand,cementmanufacturing.
FINANCIAL RISKClimatechangeislikelytodriveincreasesinthecostofenergy,rawmaterials,insurancepremiumsandcapitalexpenditures.Additionalandprohibitiveoperationalcostsareexpectedasbusinessesadaptsitesandprocessestomitigatetheimpactsofclimatechange.20Revenueswillbeimpactedbytheinabilitytopassthesecostsontoconsumerswhileexploitingnewmarketopportunitiesandmaintainingmarketshare.21Significantemissionsinanyindustries’supplychainmaystillresultinincreasedcosts(upstream)orreducedsales(downstream).22 AspaymentforGHGemissionsmaybedirectthroughacarbontaxoremissionstradingscheme,orindirectthroughincreasedenergyprices,acompany’sfinancialliabilitycanbereducedbyreducingabsoluteemissionsandenergyuse.
PHYSICAL RISKPhysicalrisksarethosethatarisefromthechangingclimateitselfsuchasdamagetopropertyandinfrastructurefromextreme
CLIMATE CHANGE RISKS
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weatherevents.Industriesthatareparticularlyexposedincludeagriculture,fisheries,forestry,tourism,water,realestateandinsurance.Acompanyshouldaskitselfwhattheimpactsofsuchunforeseenrisksasalteredweatherpatterns,severestorms,sealevelrise,wateravailabilityandpotentialhealthrisksduetothespreadofdiseasecouldhaveonitasaresultofclimatechange.24Oncethesequestionsareaddressed,companiesareencouragedtoanalyzeanddisclosethematerial,physicaleffectsthatclimatechangemayhaveonthecompany’sbusinessandoperations.25
LITIGATION RISKLegalrisksarisewhenlitigationisbroughtagainstcompaniesthatcontributetoclimatechange.Companiesthatgeneratesignificantcarbonemissionsmayfacethethreatoflawsuitssimilartobutpotentiallymoreexpensivethanthosecommoninthetobacco,pharmaceuticalandasbestosindustries.26ThroughthereductionofGHGemissions,prudentcompaniesarereducingtheirexposuretoclimatelitigation.Companiesthatfailtoreduceorincreasetheiremissionsand/orimpedetheintroductionofregulationsarehighlyexposed.27Threemajorareasoflitigationriskhavebeenidentified:28
RegulatoryAnincreasingnumberofcompaniesmayfindthemselvesinvolvedincourtroombattlesagainstvaryinglevelsoflocalandglobalagenciesdefendingtheircontributiontotheincreaseofGHGsintheatmosphere.
ShareholdersTheamountofshareholderresolutionsfiledworldwidehasmultiplied.Themajorityarecallingforplanstoreduceemissions.29Companiesareatriskofshareholderlawsuitsclaimingthatimproperclimatechangeplanningcausedpoorfinancialperformance.
MasstortsAsclassactionslawsuitsarebecomingmorecommon,itisforeseeablethatcompaniesmaybethreatenedbysuchactioninareaswherecitizensandcommunitiesarefeelingtheeffectsofclimatechange.
REPUTATIONAL RISKCompaniesthatareviewedasunderminingactionstoaddressclimatechange,orhaveprojectsandpracticesthatcontributetoclimatechange,riskbeingthetargetofdamagingpubliccampaigns.Reputationalriskcanalsohinderacompany’sabilitytocompeteinthemarketplace.30Incompetitivesectorswherebrandloyaltyisacriticalelementofcorporatevalue,consumerpreferencesmaychangewithincreaseddemandsforclimate-compatiblegoodsandabacklashagainstthoseproductsorservicesthatareperceivedtocontributetoclimatechange.Inacompetitivelabourmarket,reputationalriskcanadverselyaffectacompany’sabilitytorecruitandretainqualifiedandskilledemployees.
COMPETITIVE RISKCompaniesthatdonotaddressclimatechangeareatriskoflaggingbehindtheircompetitorswithrespecttoinnovationandnewproductdevelopment.Consumerexpectations,preferencesandneedsarelikelytochangeastheybecomemoreawareoftheimpactsofclimatechange.Demandsformoreclimatecompatiblegoodsarelikelytoincreaseattheexpenseofthosegoodsand/orservicesthatareperceivedtocontributetotheproblem.
WhiletherisksassociatedwithclimatechangeposeanimminentthreattoCanadianbusiness,thereisalsoanopportunitytomanagethoseriskseffectivelyandleverageabusiness’progressiveactionintoacompetitiveadvantage.Turntopage38forsomeusefultoolstoconsiderwhenreportingcarbonrisksandbenefitstostakeholders.
16.Greenpeace(2007)“ClimateRisk:UnderstandingtheFinancialRiskthatClimateChangePresentstoNewZealandCompanies”.GreenpeaceBriefing.Availableathttp://www.greenpeace.org/raw/content/new-zealand/press/reports/financial-risk-of-climate-change.pdf
17. TheGlobalReportingInitiativeandKPMG’sGlobalSustainabilityServices(2007)“ReportingtheBusinessImplicationsofClimateChangeinSustainabilityReports”.Availableathttp://www.globalreporting.org/NR/rdonlyres/C451A32E-A046-493B-9C62-7020325F1E54/0/ClimateChange_GRI_KPMG07.pdf
18.TheCarbonNeutralCompany(2006)“ClimateChange:FollowersandLeaders”Availableathttp://www.carbonneutral.com/uploadedfiles/018%20FTSE%20Book%20%2021%2006%2006.pdf
19.Labatt,SoniaandWhite,RodneyR.(2007)CarbonFinance:TheFinancialImplicationsofClimateChange.JohnWiley&Sons,Inc.Hoboken,NewJersey
20.Ibid.
21.Lash,JonathanandWellington,Fred(2007)“CompetitiveAdvantageonaWarmingPlanet”.HarvardBusinessReview.March2007onlineedition
22.CERES(2006)“GlobalFrameworkforClimateRiskDisclosure:AStatementofInvestorExpectationsforComprehensiveCorporateDisclosure.”Availableathttp://www.ceres.org/pub/docs/Framework.pdf
23.Llewellyn,John(2007)“TheBusinessofClimateChange:ChallengesandOpportunities”.LehmanBrothers.Availableathttp://www.lehman.com/#
24.MarshInc.,(2006),RiskAlert:ClimateChange,http://global.marsh.com/risk/climate/climate/documents/climateChange200604.pdf
25.CERES(2006)
26.Lash(2007)
27.Greenpeace(2007)
28.MarshInc.,(2006)
29.EthicalFundsmaintainsanactiveFocusListforShareholderActionProgram(http://www.ethicalfunds.com/pdf2/sri/climate_change.pdf)toencouragebettercorporateandenvironmentalperformance.
30.Greenpeace(2007)
“ Climate change will impose change on business slowly, but inexorably. Just because an influence is slow-moving however does not mean that its effects will always be commensurately slow. Slow-moving forces can on occasion impact business quite sharply and suddenly.”23
John Llewellyn
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CLIMATE CHANGE OPPORTUNITIES
strategies,reductiontargets,newproductlinesandstakeholderengagementefforts–offerstheopportunityforacompanytodifferentiateitselffromitscompetitors.Companiescanbenefitfromtheseclimatechangeactivitiesbyenhancingtheirbrandasaclimatechangefriendlyorganization.Animprovedcorporatereputationcanassistwiththerecruitmentandretentionofkeytalent.
GAININGANDMAINTAININGCOMPETITIVEADVANTAGETheorganizationsthatrecognizetheimportanceofclimatechange,worktounderstandtheimplicationsfortheirindustryandimplementmitigationstepsinadvanceofregulationorpolicywillprosper.Companiesthatdevelopanabilitytoout-competesectoralpeersonefficiency,drivingdownthecostofenergyandimprovingmarginsandprofitability,willseeanincreasedcompetitiveadvantage.34Newtechnologyinnovationopportunitieswillbelinkedtotheincreaseddemandforcleanandrenewablesourcesofenergy.Climatechangeawarenessamongstconsumerswilllikelyincreasethedemandfor“climate-friendly”productsandservices.
31.Hoffman,Andrew(2006)“GettingAheadoftheCurve:CorporateStrategiesThatAddressClimateChange”.ThePewCenteronGlobalClimateChange.Availableathttp://www.pewclimate.org/global-warming-in-depth/all_reports/corporate_strategies/
32.Hoffman(2006)
33.TheGlobalReportingInitiativeandKPMG’sGlobalSustainabilityServices(2007)“ReportingtheBusinessImplicationsofClimateChangeinSustainabilityReports”.Availableathttp://www.globalreporting.org/NR/rdonlyres/C451A32E-A046-493B-9C62-7020325F1E54/0/ClimateChange_GRI_KPMG07.pdf
34.Greenall,David(2006)“TheCarbonDisclosureProjectReport2006:Canada280”.TheConferenceBoardofCanada.Availableathttp://www.cdproject.net/cdp4reports.asp
FIGURE THREE: OPPORTUNITIES THROUGH SHAREHOLDER ENGAGEMENTS
Tackling potential shareholder questions early on can help companies reveal key climate change opportunities. Sharing the results of such internal inquiries can enhance reputation. Shareholder questions typically encompass the following areas:
Climate risk mitigation: Does the organization have a plan of action to assess the potential financial impacts of climate change?
Response to regulatory changes: How will the company maximize shareholder value as climate change regulations continue to develop and influence business practices?
GHG performance: How much tonnage does the company currently emit and what are its plans to reduce GHGs?
Source:MarshInc.,(2006),RiskAlert:ClimateChange,http://global.marsh.com/risk/climate/climate/documents/climateChange200604.pdf
THE OPPORTUNITIES
Companieswithahistoryofworkingonclimatechangearenowtryingtoshifttheirfocusfromriskmanagementandbottom-lineprotectiontobusinessopportunityandtop-lineenhancements.31Climatechangehascreatedbusinessopportunitiesincludingnewregulatoryframeworks,carbonemissionstradingschemes,shiftingconsumerdemandsandamarketforcarbonneutralproductsandservices.Theinterrelatedbusinessopportunitiesyieldedbyclimatechangeactivitiesinclude:
CONTRIBUTINGTOREGULATORYDEVELOPMENTAddressingcarbonemissionsimmediatelylendscredibilitytocorporateeffortsandallowscompaniestoparticipateintheprocessofpolicyandregulatorydevelopments.Compa-niesthatcontributetoclimate-relatedregulatorydevelopmentwillstayabreastofupcominglegislativechangesandwidelyacceptedoperationalstandards.Constructiveengagementwithgovernmentislinkedtoashiftinfocusfromriskmanagementtonewclimate-relatedbusinessopportunities.32
REALIZINGCOSTREDUCTIONSFormanycompanies,theinitialandmostsignificantfinancialbenefitsarederivedthroughincreasedenergyefficiencies,operationalimprovementsandresourceproductivity.ClimatechangealsointroducesaninnovationopportunityfornewGHGfriendlyorcarbonneutralmaterialsandproducts,leadingtonewmarketsandrevenuestreams.Mechanismssuchascarboncap-and-tradeschemesarethemostmarket-orientedopportunitiesarisingfromclimatechangeandarethereforethemostfinanciallytangible.33
ENHANCINGCORPORATEREPUTATIONLeadershiponclimatechangethroughthedevelopmentofcorporatecommitments,
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The Fairmont hotel chain was looking for a way to reduce negative impacts on the environment and increase operational efficiencies while enhancing their guests’ hotel experience. Some of the initiatives from “The Fairmont Green Partnership Program” included:
> Tracking energy used in each room though the use of sub-meters in the Hotel Vancouver.
> Allowing guests the opportunity to have their sheets replaced less often, reducing water and energy usage at a number Fairmont locations.
> Replacing and fixing leaky steam traps and fixing leaks to reduce steam consumption by 30 million pounds which saved the Royal York Hotel more than $200,000 annually.
> Installing automated climate control systems in Ottawa’s Château Laurier to return room temperature to a pre-set point upon guest check out.
> Replacing old refrigerators that required ozone-depleting freon.
> Replacing chlorine in the swimming pool with a more pleasant baking soda and salt solution.
> Planting an organic rooftop herb garden at one hotel that produces food for the restaurants and increases guests’ meal enjoyment.
Through their efforts the Fairmont reported an increase in cost savings and a reputation as an environmental leader in the hotel industry, giving the hotel chain a competitive advantage.
Source:NaturalResourcesCanada(1998),MeetingClimateChangeChallengesThroughEnergyEfficiency–Commercial/InstitutionalSuccessStories,Availableat:http://www.oee.nrcan.gc.ca/publications/infosource/pub/ici/eii/m27-01-1035e.cfm?attr=20
> Canada’s GHG emissions are per capita among the highest in the world, thus highlighting Canada’s responsibility to play a leading role in the global effort to cut GHG emissions.
> Business supports stronger policy as voluntary action by select companies and their investors will not achieve the emission reductions needed to solve the problem.
> In the absence of stringent regulations, businesses are forced to demonstrate leadership on climate change and work to advocate and influence government policy.
> Federal regulations announced in April 2007 propose to reduce Canada’s emissions to 20% below 2006 levels by 2020.
> In May 2007, CBSR initiated an interview series to reveal the challenges faced and progress made by leading organizations as they integrate climate change into their core business strategy and operations.
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“ It is not enough; in fact it is dishonourable, for Canada to say that Canadians emit only 2% of global GHG emissions and therefore what we do as a nation is irrelevant. Our per capita emissions level is one of the highest in the world, as is our capacity to act.”36
Climate Action Network Canada
Canadian emissions by sector:
Canadian energy sources:
Summary:
WASTE 4%AGRICULTURE 7%
ELECTRICITY AND HEAT 36%
INDUSTRY 16%
TRANSPORT 26%
HOUSEHOLDS AND SERVICES 11%
OIL 35%GAS 30%
NUCLEAR 7%
HYDRO 11% BIOMASS / WASTE 4%
COAL 11%
SOLAR / WIND / OTHER 0.03%
GEOTHERMAL 0.00%
FIGURE FOUR: SNAPSHOT OF THE WWF CLIMATE SCORECARD – CANADACANADIAN PERFORMANCE
Canada’sresponsibilitytoplayaleadingroleintheglobalefforttocutGHGemissionscouldnotbemoreevidentas,ouremissionsofGHGsonapercapitabasisareamongthehighestintheworld.Ourexportoffossilfuelsresultsinadditionalemissionsoutsideourborder,intermsofGDP.AsCanadaisoneoftheworld’swealthiercountries,wehavethetechnologicalknow-howtodriveinnovation,andyetsomeofthemoresevereimpactsofclimatechangearealreadyunfoldinginourarcticterritory.37TheissueofclimatechangehasbeenthrustintotheCanadianpoliticalarenaand,willremainfrontandcentreforallpoliticalpartieswhowanttobeviewedasproactiveandrespondingtoboththebusinesscommunityandthepublicatlarge.Intheabsenceofstringentregulationshowever,businessesareforcedtodemonstrateleadershiponclimatechangeandworktoadvocateandinfluencegovernmentpolicy.
TheWorldWideFundforNature(WWF)recentlyreleaseditsannualclimatescorecards,providingacomparablesnapshotofthecurrentsituationacrosstheG8andfiveothercountriesincludingCanada(seeFigureFour).38Thesescorecardsoutlineeachcountry’sclimateperformancesummarybasedonthecorebenchmarkthatcountriesimplementenoughmeasurestoreduceemissionsbytheorderof80%by2050soastokeeptheglobalaveragetemperatureincreasebelow2ºCincomparisonwithpre-industriallevels.Canada’sperformancewasdescribedasafailingeffortwithincreasingemissions,littleconcreteactiontakentominimizeemissionstodate,veryhighemissionratespercapitacomparedtotheaverageofindustrializedcountriesand,acurrentactionplanonlyfocusedonlargeemitters.39
> Strongly increasing emissions. > Far from reaching the Kyoto target. > Very high emission rates per capita compared to the average industrialized countries.> Relatively large share of renewable energy in fuel mix, but almost completely
large-scale hydro.> Plans to exploit oil from tar sands, which is very CO2 intensive.
Source:ECOFYSGermany(2007)“WWFClimateScorecards:AssessmentofthePerformanceoftheG8plus5Countries”.TheWorldWideFundforNature.
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“ Let us not let the issue of targets get in the way of getting started, in a real, productive and constructive way that benefits our global environment and works to truly position Canada as a global clean energy leader.”40
John Drexhage
Itisrecommendedthatthegovernmentestablishaclearframeworkforbusinesstooperatewithin–onethatstrikesabalancebetweenregulationsandallowingoperationalfreedom.Climatechangeisaclassic`catch-22´;governmentsrefrainfromintroducingnewpoliciestoreduceemissionsbecausetheyfearcorporateresistance,whilecompaniesfinditdifficulttotaketheirinvestmentsinlow-carbonsolutionstoscalebecauseofthelackoflong-termclimatepolicies.TheConferenceBoardofCanadastatesthatadurableCanadianpolicyrequiresthreebasicelements:
i) itrequiresglobalengagement,withnofreeridersamongmajoremitters,whiletakingactionathometocurbourownemissions;
ii) itmustincludegreaterclarityonattainabletargetsforGHGreductions;and
iii)theoptimalmixofpolicieswithaheavyrelianceonmarket-orientedsolutions.
Anidealpolicyframeworkmayincludeacombinationofcarbontaxes,cap-and-tradesystems,specificregulatoryinterventionandincentivesfornewtechnologies,mandatedGHGreportingand,supportforindustries,communitiesandindividualspredictedtobethemostaffectedbyclimatechangeimpacts.41TheNationalRoundTableonEnvironmentandtheEconomy(NRTEE),takesasimilarapproachnotingthatenergyandclimatepolicyinthe21stcenturyrequiresCanadatoaddressbothenergyuseandenergyproductionasreductionswillbeachievedonlyifenergyisusedmoreefficientlyandproducedwhileemittinglesscarbon.Theyrecommendstricttargetsforabsoluteemissionsreductions,cooperativeandcollaborativeinternationalpartnerships,aCanadiancap-and-tradesystemand,aneconomicassessmentofthepotentialcoststoournationaleconomyandqualityoflifefromtheprojectedimpactsofclimatechange.42
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Businesssupportsstrongerpolicyasvoluntaryactionbyself-selectedcompaniesandtheirinvestorswillnotachievetheemissionreductionsneededtosolvetheproblem.Asgovernmentactionisinevitableandpolicydecisionswillhavesubstantialimplicationsforfutureprofits,businessleadersareincreasinglyengagingwithpolicymakerstohelpinfluencethosedecisions.Mostfavourmarket-basedmechanismssuchascapandtradesystemsthatgivebusinessesflexibilityeithertoreducetheirownemissionsorbuycreditsfromotherswhocanreduceemissionsatalowercost.ThelaunchoftheMontrealClimateExchangeattheendof2007createsthefirstenvironmentalproductsmarketinCanada,whichwillenableemissionstradingandthesaleofenvironmentalfinancialproducts.
FederalregulationsannouncedinApril2007proposetoreduceCanada’semissions20%below2006levelsby2020–areductionof150megatonnes–andsetintensity-basedtargets,asopposedtoabsoluteemissioncaps,forindustrytoachievethis.AccordingtoThePembinaInstitute,thesetargetsfallshortoftherequirementsbasedonourscientificknowledgeofclimatechange,thetargetsadoptedbythedevelopedcountriesmakingthestrongestGHGreductioncommitmentsand,Canada’slegalobligationsundertheKyotoProtocol.43
36.ClimateActionNetworkCanada(2007)“CanadaandtheFutureofGlobalClimatePolicy:TheImportanceofCanadianActionNow”.Availableathttp://www.davidsuzuki.org/files/climate/Canada_Global_Climate_Policy_Future_2007_JAN_29.pdf
37.Bramley,Matthew(2005)“TheCaseforDeepReductions:Canada’sRoleinPreventingDangerousClimateChange.”TheDavidSuzukiFoundationandThePembinaInstitute.Availableathttp://www.davidsuzuki.org/files/climate/Ontario/Case_Deep_Reductions.pdf
38.G8countriesincludeCanada,France,Germany,Italy,Japan,Russia,theUnitedKingdomandtheUnitedStates.
39.ECOFYSGermany(2007)“WWFClimateScorecards:AssessmentofthePerformanceoftheG8plus5Countries”.TheWorldWideFundforNature.Availableathttp://assets.panda.org/downloads/wwf_g8_climate_scorecards_final.pdf
40.Drexhage,John(2007)“Canada’sBillC-30:TheCleanAirAct(StatementtotheHouseofCommonsLegislativeCommitteeonBillC-30”.Availableathttp://www.iisd.org/pdf/2007/com_bill_c30.pdf
41.Hodgson,Glen(2007)“ACanadianClimateChangeStrategy”.TheConferenceBoardofCanadaExecutiveActionSeries.AvailablethroughtheConferenceBoarde-Libraryatwww.e-library.ca
42.NationalRoundTableontheEnvironmentandtheEconomy(2006)“AdviceonLong-TermStrategyonEnergyandClimateChange”.Availableathttp://www.nrtee-trnee.ca/eng/programs/Current_Programs/Energy-Climate-Change/EEC-Wedge-Advisory-Note/ECC-Wedge-advisory-note_e.pdf
43.Bramley,Matthew(2007)“AnalysisoftheGovernmentofCanada’sApril2007GHGPolicyAnnouncement”.ThePembinaInstitute.Availableathttp://pubs.pembina.org/reports/Reg_framework_comments.pdf
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INTERVIEW PARTICIPANTS
BC Hydro Bell Canada Catalyst Paper Corporation Enbridge Inc. Nexen Inc. Petro-Canada RBC Financial Group Scotiabank TELUS Corporation Terasen Inc. Translink Vancouver Port Authority Westport Innovations Inc.
InMay2007,CBSRinitiatedaninterviewseriestosupplementTheGuidewithexamplesofchallengescorporationsinCanadafaced,astheyintegrateclimatechangeintotheircorebusinessstrategyandoperationalconsiderations.Invitationstoparticipatewereextendedtomorethan30CBSRmemberandnon-membercompanies.Itisworthnotingthatmanyofthoseapproacheddeclinedtobeinterviewed.Reasonscitedfornotparticipatingincludedconcernsthattheirorganizationhadnotyetdevelopedaclimatechangecommitmentstatementorstrategy,hadnotconductedacomprehensiveemissionsinventory,hadnotadvancedclimatechangeontotheagendaofseniormanagementor,wouldprefertotelltheirstoryayearfromnowwhentheyexpectmoreprogresswillhavebeenmade.
ThissignalsacommonvulnerabilityforbigbusinessinCanadaandvalidatestheneedforCBSR’sGuideand,otherclimatechangeresourcesforbusiness.
Thetrends,analysis,lessonslearned,challengesandsuccessesgleanedfromthe13interviewsundertaken,arehighlightedthroughoutTheGuide.
THE CBSR CLIMATE CHANGE INTERVIEW SERIES
Many of the companies interviewed identified an emissions inventory exercise as a critical first step in determining energy usage patterns, identifying cost saving opportunities and implementing data collection and analysis systems to further understand the organization’s carbon footprint. Once GHG emissions are quantified, emission reduction efforts, targets and priorities can be better defined.
> The potential impacts of climate change can be understood by focusing on risk management and bottom-line protection.
> Leaders realize there is a business opportunity and focus on how they can most effectively integrate climate change strategy with core business strategy.
> Rising energy prices and increased operation efficiency / cost reduction are the top two drivers of climate related strategies, followed closely by social responsibility considerations.44
> CERES published the Climate Change Governance Checklist to highlight fourteen specific governance actions for companies to address climate change.45
> A comprehensive climate change management program includes an emissions inventory, product development, risk assessment, climate adaptation plan, commitment statement, publicly stated goals and targets, stakeholder engagement and communications strategy.
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44.GatheredfromCBSRClimateChangeInterviewSeries(May2007)
45.CERES(2006)“GlobalFrameworkforClimateRiskDisclosure:AStatementofInvestorExpectationsforComprehensiveCorporateDisclosure”.Availableathttp://www.ceres.org/pub/docs/Framework.pdf
STEP 1 Page 32DeterminingImpactsandImplications
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STEP 2 Page 38DevelopingaClimateChangeActionPlan
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STEP 3 Page 45SecuringBuy-inandCommunicatingProgress
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STEP 2 PP 38DevelopingaClimateChangeActionPlan
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DeterminingImpactsandImplications 32QuantifyingGHGEmissions 33AssessingRisksandClimateAdaptationApproaches 36
DevelopingaClimateChangeActionPlan 38FormulatingClimateCommitmentStatementsandStrategy 39EstablishingGoalsandTargets 40EvaluatingCarbonManagementAlternatives 41
SecuringBuy-inandCommunicatingProgress 45EngagingStakeholders 46ClimateReportingandCommunications 50
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CLIMATE STRATEGY DRIVERS
Thepotentialimpactsofclimatechangecanbeunderstoodbyfocusingonriskmanagementandbottom-lineprotection.Leadingorganizationshoweverhaveshiftedthatfocustoclimatechangeasabusinessopportunityortop-lineenhancementandhowtheycanmosteffectivelyintegrateclimatechangestrategywithcorebusinessstrategy.Thissectionoftheguidecontainsanoverviewofacomprehensiveclimatechangemanagementprogramincludinganemissionsinventory,riskassessment,climateadaptationplan,commitmentstatement,publiclystatedgoalsandtargets,stakeholderengagementandcommunicationsstrategy.Eachcomponentoftheprogramissupplementedwithprofilesofbestpracticefromtheleadingcompaniesinterviewedaspartofthisproject.Pleasenote:Stepsoutlinedinsubsequentsectionsmay,ormaynotbe,followedinasequentialmanner.
Hoffman(2006)notesthatthreeoverarchingdriversprovideimpetusforacompanytotakeactiononclimatechange:costsavings,socialresponsibilityandcorporatereputation.46AnadaptedversionofaquestionposedtocompaniesprofiledinGettingAheadoftheCurve:CorporateStrategiesthatAddressClimateChangewasaskedofoursample:“Howimportantwerethefollowingdriversinleadingyourcompanytopursueitsclimate-relatedstrategy?”.FigureFiveoutlinesboththeinternalandexternaldriversofclimate-relatedstrategieswhichalignwiththesethree‘drivers’.Asexpected,financialconsiderationsincludingrisingenergypricesandcostreductionsassociatedwithenergyandoperationalefficiencieswerecitedasthemostsignificantdrivers.Socialresponsibilityconsiderations(“doingtherightthing”)alsorankedhighlyasearlyactiononclimateisviewedtobe
consistentwithcorporatesustainabilityvalues.Conversely,climatechangemanagementwasnotviewedasanewstrategicdirectionformostcompaniesandpressurefromNGOswasnotcitedasasignificantdriver.ItisworthnotingthatmorethanhalfofthedriversindicatedinFigureFive,hadeitherasignificantimpactorsomeimpact,onleadingacompanytopursueaclimate-relatedstrategy.
TwoCBSRmembercompanies:CatalystPaperCorporationandBellCanada,havepartneredwiththeWWFindifferentcapacities:
CatalystPaperCorporationisthefirstCanadiancompanytosignaWWFClimateSaversagreementpledgingtoreduceitsCO2emissionsby70%belowits1990levelsby2010,agoalithasalreadyachieved.
BellCanadaandWWF-CanadaareworkingtobetterdocumentandcommunicatetheclimatechangebenefitsofBell’stelecommunicationssolutionssuchasteleconferencing,tele-working,energymonitoringandelectronicbilling.Inaddition,Bellwilldonate$1foreverymobilephoneorPDAreturnedthroughitsMobileTake-BackProgramtosupportWWF- Canada’sclimatechangeandconservationwork.
46.Hoffman,Andrew(2006)“GettingAheadoftheCurve:CorporateStrategiesThatAddressClimateChange”.ThePewCenteronGlobalClimateChange.Availableathttp://www.pewclimate.org/global-warming-in-depth/all_reports/corporate_strategies/
47.Ibid.
Three overarching drivers provide impetus for a company to take action on climate change: cost savings, social responsibility and corporate reputation.47
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FIGURE FIVE: DRIVERS OF CLIMATE RELATED STRATEGIES
Risingenergyprices
Increasedoperationalefficiency/costreduction
Socialresponsibilityconsiderations
Industryinnovationopportunity
Increaseemployeemotivationandengagement
Consistencywithexistingcorporateculture
Leadershipopportunity
Remainingcompetitivewithindustrypeers
Compliancewithprojectedregulations
Improvingcorporatereputationamongconsumers
Protectingtheglobalclimate
Shareholderdemandsforaccountability
Compliancewithexistingregulations
Policyadvocacyopportunity
Opportunityfornewsourcesofcapital
Newstrategicdirectionforcompany
PressurefromNGOs
1NOIMPACT
2LIMITEDIMPACT
3AVERAGEIMPACT/
NEUTRALRESPONSE
5SIGNIFICANT
IMPACT
4SOMEIMPACT
AlldatagatheredfromCBSRinterviewseriesconductedin2007.
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FIGURE SIX: THE CLIMATE CHANGE GOVERNACE CHECKLIST
CERES published the Climate Change Governance Checklist to highlight 14 specific governance actions for companies seeking to address climate including:
01 Assigning a director’s committee for environmental affairs.
02 Conducting a board-level review of climate change strategies.
03 Having the Chief Environmental Officer report directly to the CEO or to an executive committee.
04 Making attainment of GHG emissions targets an explicit factor in employee compensation.
05 Issuing a clear statement from the CEO about the company’s climate change strategy.
06 Including a statement on climate risks and opportunities in its securities filings.
07 Issuing a sustainability report.
08 Calculating emissions savings and offsets from projects.
09 Inventorying emissions and reporting results to shareholders.
10 Establishing an emissions baseline to gauge trends.
11 Making projections of future emissions and setting targets to manage and control them.
12 Hiring a third-party auditor to certify emissions data.
13 Participating in an external GHG emissions-trading program.
14 Purchasing or developing renewable energy sources.
Source:CERES(2006)“GlobalFrameworkforClimateRiskDisclosure:AStatementofInvestorExpectationsforComprehensiveCorporateDisclosure”.Availableathttp://www.ceres.org/pub/docs/Framework.pdf
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> Leading organizations view climate change as a business opportunity or top-line enhancement and are focusing on how they can most effectively integrate climate change strategy with core business strategy.
> A GHG emissions inventory exercise can lead to a heightened consciousness of climate change issues within a company and set the stage for a wider analysis of the strategic risks and opportunities posed by the emissions.48
> Risk management is generally recognized as a starting point for addressing climate-related vulnerabilities. 49
> Once an emissions inventory and preliminary risk assessment is done, the next steps include developing and implementating company-wide goals and policies to reduce climate risk exposures, reducing emissions, instituting corporate preparedness plans and making climate risk initiatives public.
> The same basic concepts apply to corporate preparedness and business-continuity management (BCM) for climate risk as for other risks, as each organization must understand the potential means by which climate risk could affect their operations, resources, reputation competitive advantage and financial position.
DETERMINING IMPACTS AND IMPLICATIONS
STEP 2 Page 38DevelopingaClimateChangeActionPlan
STEP 3 Page 45SecuringBuy-inandCommunicatingProgress
STEP 1 Page 32DeterminingImpactsandImplications
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THE CLIMATE CHANGE GUIDE – CBSR
QUANTIFYING GHG EMISSIONS
BusinesseswillnothavesimilarenvironmentalimpactsbutGHGemissionsaresignificanttotheperformanceofallsectors.GHGmanagementprogramsareinfluencedbyfactorssuchasindustrialsector,typesofemissions,businessgrowth,geographicdistributionofoperationsandcorporateculture.50AGHGemissionsinventoryexercisecanleadtoaheightenedconsciousnessofclimatechangeissueswithinacompanyandsetthestageforawideranalysisofthestrategicrisksandopportunitiesposedbyemissions,includinganypotentialliabilityorexposure.51
Awell-designedandmaintainedGHGinventorycanserveseveralbusinessgoalsincludingmanagingrisksandidentifyingreductionopportunities,assistingwithpublicandmandatoryreportinginitiatives,participatinginGHGmarkets,gainingrecognitionforearlyvoluntaryactionandsubsequentlymeasuringandreportingprogress.
GenerallyacceptedfinancialaccountingandreportingprinciplesinfluenceanddriveGHGemissionsaccountingandreportingtoensurethatthedisclosedinformationrepresentsatrue,accurateandfairaccountofanorganization’semissions.TheGHGProtocolCorporateAccountingandReportingStandardisthemostwidelyacceptedandusedstandardformandatoryandvoluntaryGHGprograms.Thestandardandguidanceweredesignedtoachievethefollowingobjectives:
>TohelpcompaniesprepareaGHGinventorythatrepresentsatrueandfairaccountoftheiremissions,throughtheuseofstandardizedapproachesandprinciples;
>TosimplifyandreducethecostsofcompilingaGHGinventory;
>ToprovidebusinesswithinformationthatcanbeusedtobuildaneffectivestrategytomanageandreduceGHGemissions;
>ToprovideinformationthatfacilitatesparticipationinvoluntaryandmandatoryGHGprograms;and,
>ToincreaseconsistencyandtransparencyinGHGaccountingandreportingamongvariouscompaniesandGHGprograms.52
Anemissionsinventorywillmakeanexplicitlinkbetweenanorganization’sclimateimpactandenergyuseasenergyconsumptionpatternsarealsodisclosed.Companiesshouldbeawareoftherangeofpossibleemissionscategoriesandtheextenttowhichtheirbusinessactivitiescontributetoeachone.54FigureEightillustratestheoperationalboundariestofacilitatemappingdirectandindirectemissions.
Stepsforacomprehensiveemissionsinventoryinclude:
Definingoperationalandorganizationalboundaries
Identifyingdirectandindirectemissions
Selectingabaseyear
Collectingdata
Gatheringemissionsfactorsforeachactivity
Calculatingemissions
Settinggoalsandtargets
“ Efforts to integrate adaptation to climate change into decision making are limited by information gaps, unproven risk management approaches and a lack of knowledge among business and financial leaders.”53
Greg Hoover and John Roberts
48.Lash,JonathanandWellington,Fred(2007)“CompetitiveAdvantageonaWarmingPlanet”.HarvardBusinessReview.March2007onlineedition.
49.Hoffman,Andrew(2006)“GettingAheadoftheCurve:CorporateStrategiesThatAddressClimateChange”.ThePewCenteronGlobalClimateChange.Availableathttp://www.pewclimate.org/global-warming-in-depth/all_reports/corporate_strategies/
50.ThePartnershipforClimateAction(2005)“BuildingaGHGManagementProgramme:AFrameworkBasedonReal-WorldCorporateResponses”.TheBusinessofClimateChange:CorporateResponsestoKyoto.Begg,Kathryn,VanDerWoerd,FransandLevy,David(eds.)GreenleafPublishing.Sheffield,UKpp.90-103
51.Lash,JonathanandWellington,Fred(2007)“CompetitiveAdvantageonaWarmingPlanet”.HarvardBusinessReview.March2007onlineedition.
52.WorldBusinessCouncilonSustainableDevelopment(WBCSD).GHGProtocolCorporateAccountingandReportingStandard.Availableatwww.ghgprotocol.org
53.Hoover,GregandRoberts,John(2007)“OperationalizingAdaptationtoClimateChange”TheConferenceBoardofCanada.AvailablethroughtheConferenceBoarde-Libraryatwww.e-library.ca
54.Hoffman,Andrew(2006)“GettingAheadoftheCurve:CorporateStrategiesThatAddressClimateChange”.ThePewCenteronGlobalClimateChange.Availableathttp://www.pewclimate.org/global-warming-in-depth/all_reports/corporate_strategies/
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FIGURE SEVEN: TOP TEN TIPS – DEVELOPING YOUR CARBON FOOTPRINT
01 Have a clear understanding of why you are developing your carbon footprint and use a recognized standard to guide the process.
02 Use external expertise to help kick-start the process.
03 Engage your colleagues to ensure accurate and timely data.
04 Develop a business case to gain senior management support.
05 Develop clear indicators.
06 Consider the carbon footprint across your value chain.
07 Be transparent about how business changes impact your carbon footprint.
08 Develop a road map with manageable steps to enable you to reach end goal.
09 Build in-house expertise.
10 Empower people to get involved. Identify internal champions not only to be active participants in existing initiatives but to encourage others to be part of the process.
Source:TheClimateGroup(2007)TopTenTipsforDevelopingYourCarbonFootprint.Availableathttp://theclimat-egroup.org/index.php/news_and_events/news_and_comment/top_ten_tips_for_developing_your_carbon_footprint/
The Vancouver Port Authority views climate change as an opportunity to become the green port of choice and a leader in addressing climate impacts associated with marine transport. The Port has conducted:
> extensive climate risk assessments, corporate preparedness exercises and adaptation planning including hydrological modelling projections with 50, 75 and 100 year timelines;
> community impact evaluations, and water salination studies.
The expansion planned for the third berth at the Deltaport was also designed to incorpo-rate the changes predicted as a result of these efforts.
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THE CLIMATE CHANGE GUIDE – CBSR
CO2 SF6 CH4 N20 HFCs PCFs
PURCHASED ELECTRICITY GAS FOR MANUFACTURING MATERIALS PRODUCTION
CONTRACTOR OWNED VEHICLES
EMPLOYEE TRAVEL
WASTE MANAGEMENTCOMPANY OWNED VEHICLES
RAW MATERIALS PROCESSING
SCOPE 1DIRECTSCOPE 2
INDIRECTSCOPE 3
INDIRECT
FIGURE EIGHT: GREENHOUSE GAS IMPACT OPERATIONAL BOUNDARIES
Source:NewZelandBusinessCouncilforSustainableDevelopment
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“ The effects of climate change must be taken into account when it comes to technical design, financial evaluation and delivery methods for all goods and services.”55
Greg Hoover and John Roberts
ASSESSING RISKS AND CLIMATE ADAPTATION APPROACHES
Riskmanagementisgenerallyrecognizedasastartingpointforaddressingclimate-relatedvulnerabilities.Withtimeandexperience,companiesshifttheirclimatestrategiestoemphasizebusinessopportunitiesandtop-lineenhancements.56Foracompanytofullyunderstandtherisksposedbyclimatechangeandtheirpotentialimpacts–andwhetherthoserisksandimpactsarenear-termandsudden,versuslong-termandgradual–acomprehensiveclimateriskmapshouldbedevelopedtorankrisksbyfrequencyandseverity.FigureNineoutlinesastandardriskassessmentframeworkforanalyzingpotentialimpactsofclimatechange.
55.Hoover,GregandRoberts,John(2007)“OperationalizingAdaptationtoClimateChange”TheConferenceBoardofCanada.AvailablethroughtheConferenceBoarde-Libraryatwww.-e-library.ca
56.Hoffman,Andrew(2006)“GettingAheadoftheCurve:CorporateStrategiesThatAddressClimateChange”.ThePewCenteronGlobalClimateChange.Availableathttp://www.pewclimate.org/global-warming-in-depth/all_reports/corporate_strategies/
Establishing context> define the business to be assessed and the scope of the
assessment;> clarify the objectives of the company;> identify stakeholders and their interests and concerns;> establish success metrics against which business risks
can be evaluated;> determine key functional areas of the company to structure
the process; and> determine potential climate change scenarios for the assessment.
Identifying risks > describe and list how climate changes could impact each
functional area of the company.
Analyzing risks> review established policies, procedures and responses that
deal with each specific risk;> assess the consequences of each risk against business objectives,
taking into account the extent and effectiveness of existing controls;> form a judgment about the likelihood of each identified
risk leading to the consequences identified; and> determine the level of risk to the organization, for each of the
climate change scenarios used in the analysis.
Evaluating risks> reaffirm the judgments and estimates;> rank the risks in terms of their severity;> screen out minor risks which would otherwise distract the
attention of management; and> identify those risks for which more detailed analysis is recommended.
Treating risks> identify relevant options to manage or adapt to the risks and
their consequences; and> select the best options, incorporate these into forward plans
and implement them.
Source:AustralianGreenhouseOffice(2006),“ClimateChangeImpacts&RiskManagement,AGuideforBusinessandGovernment”Availableatwww.greenhouse.gov.au.
Com
mun
icat
ing
and
Con
sult
ing M
onitoring and Review
ing
FIGURE NINE: STEPS IN THE RISK MANAGEMENT PROCESS
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THE CLIMATE CHANGE GUIDE – CBSR
FIGURE TEN: TOP TEN CONSIDERATIONS – CARBON RISKS AND BENEFITS DISCLOSURE
01 Respond to the Carbon Disclosure Project (CDP). Investors are increasingly requesting information on carbon risks and benefits to incorporate climate change impacts into their investment decisions. Each year the CDP sends a climate change questionnaire to the largest publicly listed companies globally.
02 Carbon and climate risk is just another business risk that needs to be strategically managed and treated as carefully as any other. Stakeholders will be interested in understanding how your business assesses and manages the risks.
03 Describe the opportunities and explain how they are integrated into corporate strategy.
04 Report on climate and carbon issues in the context of your business.
05 Break down information to fit your business operations. Not only do emissions intensity and climate change-related risks vary within sectors but there can also be substantial variations between countries of operation and subsidiaries.
06 Use a known standard to report your carbon footprint.
07 Engage investors on the issue where it is material to your business.
08 Use your position on climate change to gain competitive advantage.
09 Report forward-looking information focusing on the expected financial implications of climate change and potential risks.
10 Companies actively implementing climate change strategies can further their commitment through industry/regional collaboration and engaging key stakeholders such as employees, customers, and suppliers in their impact reduction efforts.
Source:TheClimateGroup(2007)TopTenThingstoConsiderWhenDisclosingCarbonRisksandBenefits.Availableathttp://theclimategroup.org/index.php/news_and_events/news_and_comment/top_ten_things_to_consider_when_disclosing_carbon_risks_and_benefits/
Itisrecommendedthatonceanemissionsinventoryandpreliminaryriskassessmentiscompleted,thenextstepsinclude:
>thedevelopmentandimplementationofcompany-widegoalsandpoliciestoreduceclimateriskexposures;
>reducingemissionswherepossible;
>institutingcorporatepreparednessplans;and
>makingclimateriskinitiativespublicwherepractical.FigureTenoutlinesanumberofconsiderationstoassistwiththedisclosureofcarbonrisksandbenefits.
Thesamebasicconceptsapplytocorporatepreparednessandbusiness-continuitymanagement(BCM)forclimaterisk,asforotherrisks.Eachorganizationmustunderstandthepotentialmeansbywhichclimateriskcoulddirectlyandindirectlyaffecttheiroperations,resources,reputations,competitiveadvantageandfinancialposition.Preparednessplansmustbereviewed,updatedandtested.
KEY QUESTIONS1.Whatcommunicationscapabilitieswillbe
neededwithemployees,criticalsuppliers,vendorsandotherstakeholders?
2.Doseniormanagershaveeffectivecrisismanagementskills?
FIGURE NINE: STEPS IN THE RISK MANAGEMENT PROCESS
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> Publicly stated climate change commitments generally include the company’s current position on climate change, its responsibility to address climate change and its engagement with governments and advocacy organizations to affect climate change regulation and policy.57
> In making the business case for climate mitigation, companies typically focus on cost reductions and operational improvements associated with energy efficiency projects.
> Once the business case for the climate strategy has been developed it is critical to engage stakeholders, measure progress towards stated goals, communicate setbacks and successes and continue to monitor and anticipate regulatory actions which may adversely impact the strategy.
> To succeed in reducing carbon emissions, an organization will need both targets and technology, which will be created by analyzing risks and opportunities within their many business units.58
> Setting public emissions targets is the best indicator of a serious commitment and, while they are not legally binding, they do put real pressure on companies to perform.59
> For companies who have not actively pursued energy efficiency and operational improvements, there are likely to be many “low-hanging fruit” opportunities to make immediate progress against stated emissions reductions goals.
> For companies who have already captured low hanging fruit, continued improvement can be achieved through collaborative research and development (such as the business-to-business partnerships between Talisman Energy Inc. and the University of Saskatchewan or Westport Innovations and Terasen Gas), refining current programs/policies to maximize savings, educating and engaging employees, ensuring all areas of sustainability are addressed (waste, air quality, water, transport) and by opening dialogue with key stakeholders to harness feedback and solutions.
DEVELOPING A CLIMATE CHANGE ACTION PLAN
STEP 1 Page 32DeterminingImpactsandImplications
STEP 2 Page 38DevelopingaClimateChangeActionPlan
STEP 3 Page 45SecuringBuy-inandCommunicatingProgress
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A climate strategy can be defined as the set of goals and implementation plans within a corporation that are intended to reduce GHG emissions, produce significant GHG reduction co-benefits, or that otherwise respond to climate related changes in markets, public policy or the physical world.60
Andrew Hoffman
Enbridge has developed a Climate Change Policy that has been approved by senior management. The policy outlines the company’s engagement with various levels of government and other stakeholders to help policy makers better understand the company’s business. The policy reinforces full support for the GHG emission reduction targets set by the Corporate Social Responsibility Committee of the Board and encourages all Canadians to work towards reducing their own GHG emissions.
FORMULATING CLIMATE COMMITMENT STATEMENTS AND STRATEGY
Developingpublicly-statedclimatechangecommitmentsandpoliciesareoftentheinitialstepsthatanorganizationtakeswhenformulatingitsclimatestrategy.Thesestatementsgenerallyincludethecompany’scurrentpositiononclimatechange,itsresponsibilitytoaddressclimatechangeanditsengagementwithgovernmentsandadvocacyorganizationstoaffectclimatechangeregulationandpolicy.61AclimatestrategycanbedefinedasthesetofgoalsandimplementationplanswithinacorporationthatareintendedtoreduceGHGemissions,producesignificantGHGreductionco-benefits,orthatotherwiserespondtoclimaterelatedchangesinmarkets,publicpolicyorthephysicalworld.62
Climatestrategymustgaugerisksandopportunities,evaluatetherangeofavailableandpotentialoptions,setclimate-relatedgoalsandtargets,identifyfinancialmechanismstosupportclimateprogramsanddevelopeffectivecommunicationsefforts.Thestrategymustlinktotheoverallbusinessplantoensuretoplevelexecutivecommitmentandalignwithalreadyestablishedmanagementsystems,whileallowingforflexibilityinemergingareas.Oncethebusinesscasefortheclimatestrategyhasbeendevelopeditiscriticaltoengagestakeholders,measureprogresstowardsstatedgoals,communicatesetbacksandsuccessesandcontinuetomonitorandanticipateregulatoryactionswhichmayadverselyimpactthestrategy.
57.CERES(2006)“GlobalFrameworkforClimateRiskDisclosure:AStatementofInvestorExpectationsforComprehensiveCorporateDisclosure.”Availableathttp://www.ceres.org/pub/docs/Framework.pdf
58.Hoffman,Andrew(2006)“GettingAheadoftheCurve:CorporateStrategiesThatAddressClimateChange”.ThePewCenteronGlobalClimateChange.Availableathttp://www.pewclimate.org/global-warming-in-depth/all_reports/corporate_strategies/
59.TheCarbonNeutralCompany(2006)“ClimateChange:FollowersandLeaders”.Availableathttp://www.carbonneutral.com/uploadedfiles/018%20FTSE%20Book%20%2021%2006%2006.pdf
60.Hoffman,Andrew(2006)“GettingAheadoftheCurve:CorporateStrategiesThatAddressClimateChange”.ThePewCenteronGlobalClimateChange.Availableathttp://www.pewclimate.org/global-warming-in-depth/all_reports/corporate_strategies/
61.CERES(2006)“GlobalFrameworkforClimateRiskDisclosure:AStatementofInvestorExpectationsforComprehensiveCorporateDisclosure.”Availableathttp://www.ceres.org/pub/docs/Framework.pdf
62.Hoffman(2006)
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Since 2001, TELUS Corporation has had a target to reduce energy consumption per unit of revenue by 10% by 2007. They are currently at 6%, due mainly to solid revenue growth based on more efficient use of energy. In 2003, a GHG intensity target of 2% reduction year over year (also normalized to revenue) was added and has since been met. A 20% reduction in absolute GHG emissions was also achieved between 2003 and 2006.
ESTABLISHING GOALS AND TARGETS
Tosucceedinreducingcarbonemissions,anorganizationwillneedbothtargetsandtechnology.GoalsandtargetsneednotbelimitedtoGHGreductionsbutcanalsoincludestrategicinitiativesandclimateadaptationstrategies.Ultimatelythegoalsmustfitthecompany’scapabilities,cultureandbusinessmodel.64
Mostcompaniesdevelopgoalsbyanalyzingrisksandopportunitieswithintheirmanybusinessunits.EnergyefficiencytargetsandGHGreductiontargetsareoftendevelopedinparallel.Howevermanyorganizationsalsolinkbroaderenvironmentalgoalssuchaswaterandwasteminimization,toefficiencyimprove-mentsandclimatemitigationefforts.Energyefficiencyoffersnear-termrealizedfinancialbenefitswhilethevalueofGHGreductionsaremoredifficulttoquantifyandconnecttoacompany’sbottomline.Inmakingthebusinesscaseforclimatemitigation,companiestypicallyfocusoncostreductionsandoperationalimprovementsassociatedwithenergyefficiencyprojects.
Climatetargetsshouldbesensiblylinkedtoorganizationalgoalsandcompaniesshouldavoidcreatingoneuniversalreductiontarget.Developingasetofdiversetargetsrelatedtoemissionsreductions,costsavings,operationalimprovementsamongothersacrossdifferentbusinessunitsthatallcontributetooverallbusinessobjectiveswillbemosteffective.65Morethananyotheraction,settingpublicemissionstargetsisthebestindicatorofaseriouscommitmentandwhiletheyarenotlegallybinding,theydoputrealpressureoncompaniestoperform.66Leadingorganizations
realizethatreducingclimateimpactsisjustonecomponentofhowtheyraiseoverallcorporateperformanceandreputation.
63.ThePartnershipforClimateAction(2005)“BuildingaGHGManagementProgramme:AFrameworkBasedonReal-WorldCorporateResponses”.TheBusinessofClimateChange:CorporateResponsestoKyoto.Begg,Kathryn,VanDerWoerd,FransandLevy,David(eds.)GreenleafPublishing.Sheffield,UKpp.90-103
64.Hoffman,Andrew(2006)“GettingAheadoftheCurve:CorporateStrategiesThatAddressClimateChange”.ThePewCenteronGlobalClimateChange.Availableathttp://www.pewclimate.org/global-warming-in-depth/all_reports/corporate_strategies/
65.Hoffman(2006)
66.TheCarbonNeutralCompany(2006)“ClimateChange:FollowersandLeaders”.Availableathttp://www.carbonneutral.com/uploadedfiles/018%20FTSE%20Book%20%2021%2006%2006.pdf
“ Targets are generally expressed in accordance with four parameters: start date, target achievement date, base year (reference year) and a specific quantity of targeted emissions based on a percentage of the reference year’s emissions. Each sets a target that limits its emissions at some predetermined and measurable amount, representing a downward trend and delivering some guaranteed environmental performance.”63
The Partnership for Climate Action
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THE CLIMATE CHANGE GUIDE – CBSR
Catalyst Paper Corporation achieved its goal of a 70% reduction in emissions over 1990 levels by 2010 – an amount equal to eliminating nearly one million tonnes of GHGs annually. This goal has been realized by switching to cleaner fuels like renewable biomass, improving production efficiency and using methane gas recovered from a landfill as energy for its Paper Recycling Division.
Both Bell Canada and TELUS Corporation cite their ability to provide Canadians with telecom products and services that offer added value in terms of GHG reductions. Transferring information rather than people or materials via teleconference or videoconference, will result in fewer emissions and other environmental benefits such as decreased paper use.
EVALUATING CARBON MANAGEMENT ALTERNATIVES
Withnoshortageofoptionstoreducecarbonemissionsandaddressclimatechange,perhapsthemoredifficulttaskisdeterminingwhichsolutions,ormixofsolutionswillreduceemissionsonthescaleofwhatisneededtoavoiddisastrousclimatechangeimpacts.Theevaluationofoptionsisoftenconductedinaniterativefashionwithgoalsetting.Somecompaniessetgoalsandthensearchforwaystoachievethemwhileothersconsideroptionsforreducingemissionsandthensetgoalsaccordingly.Ultimately,thegoalistofindwaystoreduceGHGemissionsinamannerthatsupportsotherbusinessobjectives.67
Anincreasedemphasisonenergyefficiencycanhelpslowthepaceatwhichclimatechangeriskincreases,notreversethetrend.Forcompanieswhohavenotactivelypursuedenergyefficiencyandoperationalimprovements,thereislikelytobemuch“low-hangingfruit”andopportunitiestomakeimmediateprogressagainststatedemissionsreductionsgoals.Increasingenergyefficiencyappliestoallaspectsofacompany’soperationsfromproductdesign,rawmaterialssourcing,infrastructure,transportation,manufacturing,productionprocessesandtheusefulendlifeofproducts.68
Arangeofcriteriacanbeusedtoevaluateandprioritizereductionactivitiesincludingbutnotlimitedto:
>coststoimplement;
>collateralbenefitstothecompany,theenvironmentandthecommunity;
>anunderstandingoftheopportunitiesinherentintheemissionsinventory;
>netreturnoninvestment;
>timetoimplement;
>contributiontothecorebusiness;
>contributiontobrandimage;
>barrierstoimplementation;and
>otherderivedindirectGHGreductionssuchaswaterefficiencystandardsandrecycledcontentprocurementpolicies.
Leadingcompanieshavenowstartedtoexplorepotentialopportunitiesbeyondefficienciesincluding:creatingnewclimate-friendlyproductsandservicestoserveemergingmarkets;sourcingnewfuelorrenewabletypes;reducinglossesthroughoperationalorinfrastructureimprovements;findingalternateusesforrecoveredgas;implementingcarboncaptureandsequestrationsystems;and,developingcustomer,employeeandsupply-chainengagementprograms.Foramorecomprehensiveoverviewofoffsettingandcarbonneutrality,pleaserefertoSectionFour,Page55,ofthisguide.
67.Hoffman,Andrew(2006)“GettingAheadoftheCurve:CorporateStrategiesThatAddressClimateChange”.ThePewCenteronGlobalClimateChange.Availableathttp://www.pewclimate.org/global-warming-in-depth/all_reports/corporate_strategies/
68.BusinessforSocialResponsibility(2006)“AThree-ProngedApproachtoCorporateClimateStrategy”.Availableathttp://www.bsr.org/meta/BSR_Climate-Change-Report.pdf
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FIGURE ELEVEN: GHG REDUCTIONS – LOW-HANGING FRUIT
The Overwaitea Food Group (OFG) has a long history of demonstrating commitment to the environment. It has twice been awarded BC Hydro’s Power Smart Excellence Award, most recently in 2007 in the category of “Outstanding Energy Efficiency Project”. Recently constructed and renovated stores include energy efficiency measures such as high output lighting and energy efficient heaters on glass-door freezers. In addition to these features, newer store designs include a glycol heat reclaim system that takes heat generated by the refrigeration system and redistributes it throughout the store, significantly reducing natural gas consumption; timed bakery ovens that only pre-heat and operate when needed; and a building automation system that automatically adjusts operating systems like lighting, heating and air-conditioning based on occupancy. Thanks to these improvements, on an annual basis, in its British Columbia stores alone, OFG saves enough electricity to light over 6,175 family homes.71
LIGHTINGLightingconsumes40%ofelectricityincommercialbuildingsandisaccountableforanother10%ofthecostofcoolingtheheatitproduces.
Maximizedaylight:Installskylightsandlargerwindows.High-efficiencywindowsarethemostcommonday-lightingtoolproducingexcellenttransmissionofvisiblelightandlowthermalconduction.Windowswithahigherhead(top)willallowlighttocreepfartherintothebuilding.
Increasebulbefficiency:Uselowerwattageandmoreefficientfluorescentbulbs.Compactfluorescentbulbsmaycostmoreup-front,but,theylastlonger,requirelesslabourthanincandescentbulbsand,uselessenergy.
Installdimmerswitches:Usingtasklampsanddimmerswitcheswillpersonalizeemployeeworkspacesandimprovecomfortlevels.
Installlightshelves:Theseshelveshaveareflectivesurfaceinsideoroutsideofabuildinglocatedatthebaseofwindows.Theirfunctionistoreflectlightdeeperintothebuildingandintoplaceswherenaturallightisneededmost–ongroundfloorsandininternalcavities.
Uselow-wattage‘ExitSigns’:Thesereduceenergyusage24hoursaday.
Useoccupancysensors:Thesesensorsautomaticallyturnofflightsinunoccupiedrooms.
Utilizeautomaticdevices:Technologiessuchaspowermonitorsandsmartmeterswillreduceenergyconsumption.69
HEATING AND COOLINGSpaceheatingandcoolingaccountsfornearly30%ofprimaryenergyusageincommercialbuildings.
Increaseinsulation:Usinghigher“R-value”insulatingmaterialswillreducetherateofheattransfertoandfromtheoutsideenvironment.
Replacewindows:Usewindowsthatemploynon-conductiveargongasbetweenthepanesandlow-emissivitycoatings.Lowcostalternativesarewindowfilmsandshadesthathelptolimitheattransfer.
Coatroofs:Usewhiteorreflectiveroofingmaterialsorcoatingstoreflectheatandcoolbuildingsbyreducingambienttemperaturesandloweringthe‘heatisland’effect.
Installthermostatsinworkstations:Allowingemployeestofine-tunetheirworkingenvironments,increasingtheircomfortandproductivity.
Adjustheatsettings:Duringwinter,heatyourbuildingtoamaximumof21°Cwhenoccupied,16°Cwhenunoccupied.
Reducetemperatures:Investibules,stairwells,lobbiesandunusedspacesreduceorsimplyturnoffheating.
Installbuildingautomationsystems:Thesesystemscansave5-30%inenergycosts,andhaveapaybackoftwotofouryearsdependingonthehoursofoperationused,typeofsystem,andequipmentcontrolled.70
COMPUTERS AND APPLIANCESAcrossCanada,appliancesinstandbymodeareestimatedtobeusingatleast5.4terawatt-hours.Reducingstand-bypowerconsumptionalonecouldgenerateenoughelectricitytopowereveryhouseholdinManitobaandPrinceEdwardIsland.
Exercisepowermanagement:EncourageemployeestousetheirPCspowermanagement
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THE CLIMATE CHANGE GUIDE – CBSR
AT&T estimates that in 1999, its teleworkers avoided 87 million miles of driving, preventing emissions of 41,000 tons of CO2, 93,000 tons of nitrogen oxides, 1.4 million tons of carbon monoxide, and 180,000 tons of hydrocarbons.74
featuresorhavetheinformationtechnology(IT)departmentdoit.
LookforENERGYSTARlabels:ENERGYSTARsoftwareusedtoenable“sleepmode”onPCmonitorscansave$10/yearwithmonitor-approximately170kWh/year/monitor.
Turnoffmonitors:EncourageemployeestoturnofftheirPCmonitorswhenawayfromtheircomputers.ActivatescreensaversforeachPCtosecurefurtherreductions.
Specify80PLUSpowersupplywhenorderingcomputers:80PLUScertificationensuresthatacomputer’spowersupplyisatleast80percentefficientandwillsave88kWh/year/computer.
Turnoffphotocopiers:Operatingphotocopyequipmentefficientlybyturningitoffafterhours,willreduceenergyuseby25%ormore.
Considerlaptops:Laptopsprovidemobilityforstaffanduse50%lessenergythantheaveragedesktopunit.72
TRANSPORTATIONOnroadtransportationaccountsfor17.9%ofCanada’stotalGHGemissions.
Explorealternativestoplanetrips:Airtravelisthemostcarbonintensivetravelmethod;considerteleconferencingandvideoconferencingasalternativestoin-personmeetings.
Considerteleworking:Usingcommunicationstechnologytoworkatadistanceratherthancommutingisanalternativetotraditionalcommutingforsomeemployees.
Encouragecarpooling:Createincentivesforemployeestousecarpoolsorotheralternativemethodsfortheirworkcommute,suchaswalking,cycling,andmasstransit.
Offertransitpasses:Providediscountsonmasstransittoemployeesorallowemployeestousepre-taxdollarstopayforcommuting.
Encouragecycling:Provideaplacewhereemployeescansecuretheirbicycles.
Evaluateofficelocations:Considerproximitytopublictransportationasakeyfactorwhenrelocatingoffices.73
69.NaturalResourcesCanada–OfficeofEnergyEfficiency(1998)“MeetingClimateChangeChallengesThroughEnergyEfficiency–Commercial/InstitutionalSuccessStories.”Availableat:http://www.oee.nrcan.gc.ca/publications/infosource/pub/ici/eii/pdf/m27-01-1035E.pdf
70.CenterforEnergy&ClimateSolutions(2007)“BuildingsandProductivity:Lighting.”Availableat:http://www.cool-companies.org/guide/s1.cfm?Get=yesBCHydro(2005)“PowerSmartTipsandPractices:LightingSystems.”Availableat:http://www.bchydro.com/business/investigate/investigate844.html.
71.BCHydro(2007)“2007PowerSmartExcellenceAwards;OutstandingEnergyEfficiencyProject”.Availableat:http://www.bchydro.com/business/success/success51865.html.
72.BCHydro(2005)“PowerSmartTipsandPractices:ComputersandOfficeEquipment.”Availableat:http://www.bchydro.com/business/investigate/investigate850.html.
73.PuttdelPino,SamanthaandPankajBhatia(2002)“Working9to5onClimateChange:AnOfficeGuide.”WorldResourcesInstitute.Availableat:http://www.safeclimate.net/business/measuring/WRI_CO2Guide.pdf
74.Ibid.
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FIGURE TWELVE: METRICS OF SUCCESS FOR CLIMATE STRATEGIES
When evaluating carbon management options, it is obvious that the most attractive approaches are those that result in emissions reductions, cost savings, increased efficiency, operational improvements and strengthened competitive advantage.Fred Wellington and Rob Bradley
Figure Twelve outlines the most important metrics of climate change program/initiative success as cited by our interview participants. Easily quantifiable metrics such as improved energy efficiency or cost savings were noted as very important while those that are more difficult to measure such as improving risk management approaches or protecting the global climate were assigned somewhat less relative importance. A number of respondents indicated that protecting the global climate is an ambitious goal but, one that cannot be influenced by the actions of one company.
Source:Wellington,FredandBradley,Rob(2006)“TheWedgeApproachtoClimateChange.”WorldResourcesInstitute.Availableathttp://www.wri.org/climate/topic_content.cfm?cid=4229
Energyefficiency
Costsavings
Operationalimprovement
Elevatingcorporatereputation
Enhancingcorporateculture
Anticipatingandinfluencingregulations
Attractionandretentionoftalent
Identifyingnewmarketopportunities
Improvingriskmanagement
Protectingtheglobalclimate
1NOTATALLIMPORTANT
3AVERAGEIMPORTANCE/
NEUTRALRESPONSE
5VERYIMPORTANT
2LIMITEDIMPORTANCE
4SOMEWHATIMPORTANT
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> Stakeholder engagement is essential in this age of accountability. Best practice companies are providing opportunities for employees, customers and suppliers to learn how to reduce GHG emissions.
> To mobilize an entire organization on climate change and ensure the integration of climate strategy with key business objectives, a company must communicate reduction targets, identify and empower internal champions and ‘horizon-scan‘ to flag changes in legislation, reputation or stakeholder expectations.
> The extent to which climate roles and responsibilities are defined and institutionalized throughout the company is another determinant of success.
> Most companies have moved past the debate of climate change and are acknowledging that it is an important business issue via a range of forums including corporate websites, sustainability reports and in public addresses delivered by executives. Similarly, companies are making a stand and investing in specific climate change events, research pieces and resources.
> Communication of actions, commitments and strategies can help to demonstrate that the company is integrating its climate change targets strategically into its business operations.
SECURING BUY-IN AND COMMUNICATING PROGRESS
STEP 1 Page 32DeterminingImpactsandImplications
STEP 2 Page 38DevelopingaClimateChangeActionPlan
STEP 3 Page 45SecuringBuy-inandCommunicatingProgress
> >
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Petro-Canada conducted an extensive stakeholder mapping exercise in early 2007 to develop strategic positioning and climate change priorities from a corporate perspective. The stakeholder map included customers, government, regulators, media, NGOs, industry associations, employees, potential employees, shareholders, business partners, competitors, representatives of the financial community, ethical investors and the public at large.
The RBC Financial Group has also proactively conducted a stakeholder mapping exercise – specific to climate – and disclosed the results on their website. They spoke with clients, employees and environmental NGOs to gain a better under-standing of their issues and expectations, as these relate to climate change and other environmental issues.
ENGAGING STAKEHOLDERS
Stakeholderengagementisessentialinthisageofaccountability.Organizationalchangecanbeacomplexprocessandthisisespeciallytruerelativetoeffortstoalterpoliciesandpracticesregardingclimatechangeasfuturepotentialeconomicandenvironmentalbenefitsarepittedagainstimmediate,bottom-linepressuresandcosts.76Itisimportanttodevelopadialoguewithstakeholdersaroundclimatechangewithmessagesthatareaction-orientedandsolutions-based.Anorganization’sclimatestakeholderswilltypicallyincludeemployees,shareholders,customers,suppliers,NGOs,thepublicatlarge,government,stockanalysts,industryassociations,insuranceprovidersandothers.ThisGuidehighlightsemployee,supplychainandbusiness-to-businesspartnerships,askeystakeholderengagementopportunities,pages46-49.
EMPLOYEESAswithotherbusinessobjectives,externalperceptionofcorporateactiononclimatechangemustnotbedifferentfrominternalreality.Tomobilizeanentireorganizationonclimatechangeandensuretheintegrationofclimatestrategywithkeybusinessobjectives,acompanymustcommunicatereductiontargets,identifyandempowerinternalchampionsandhorizon-scantoflagchangesinlegislation,reputationorstakeholderexpectations.Hoffman(2006)notesthatemployeeswilldeviseinnovativewaystoachieveclimategoalswhentheyunderstandthelinkagewiththecompany’svisionandvaluesascommunicationsstrategiesworkbestifclimateissuesarelinkedtomorefamiliarissues.77Activeandvisibleseniorleadershipremainscritical.
Muchhasbeenwrittenabouteffectivechangemanagementandmanyofthesamebestpracticesapplytotheintegrationofclimatechangesuchas:
1)supportingabroadbaseofchangeagentswithintheorganization;
2)buildinginternalcapacity;
3)fosteringacultureofempowerment;
4)allowingsufficienttimeandresourcesforimplementation;and
5)communicatingearly,fullyandoften.78
76.Moser,SusanneC.andDilling,Lisaeds.(2007)“Introduction”CreatingaClimateforChange:CommunicatingClimateChangeandFacilitatingSocialChange.CambridgeUniversityPress.NewYork,NYpp.1-27
77.Hoffman,Andrew(2006)“GettingAheadoftheCurve:CorporateStrategiesThatAddressClimateChange”.ThePewCenteronGlobalClimateChange.Availableathttp://www.pewclimate.org/global-warming-in-depth/all_reports/corporate_strategies/
78.BusinessforSocialResponsibility(2006)“AThree-ProngedApproachtoCorporateClimateStrategy”.Availableathttp://www.bsr.org/meta/BSR_Climate-Change-Report.pdf
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“ Climate advocates need to present visionary, positive messages: find the best possible organizational leaders and allies rather than waiting for the ideal; be flexible and use creative approaches to provoking and guiding organizational change.”79
Keith James
FIGURE THIRTEEN: TIPS – MOTIVATE EMPLOYEES ON CLIMATE CHANGE
01 Align messages with your corporate commitment. Ensure employee engagement is aligned with climate commitment to prevent mixed messages on what they should be doing.
02 Provide an incentive. Encourage behaviours that will help reach your corporate climate goals as well as developing positive actions that will also work at home.
03 Choose an initiative that will reach everyone.
04 Monitor progress to ensure the initiative is working. Understanding the take-up and monitoring of the actual climate benefit will also demonstrate that employees are contributing to making corporate commitments.
05 Provide positive feedback.
06 Allocate resources to support action.
07 Be imaginative to ensure ongoing engagement. Capture the imagination of employees and you are likely to increase the success of your engagement program.
08 Keep the momentum going.
09 Continue to improve the process.
10 Empower people to get and stay involved. Identify internal champions not only to be active participants in existing initia-tives but also to encourage others to be part of the process.
Source:TheClimateGroup(2007)TenThingsYouCanDoToMotivateEmployeesonClimateChange.Availableathttp://theclimategroup.org/index.php/news_and_events/news_and_comment/top_ten_things_you_can_do_to_motivate_employees_on_climate_change/
Scotiabank held several in-house screenings of “An Inconvenient Truth,” Al Gore’s Oscar-winning documentary on climate change. Senior leaders also speak to employee focus groups across the company to build awareness of the organization’s climate impact and how they can contribute to minimizing not only Scotiabank’s, but their own carbon footprint.
79.James,Keithetal.(2007)“ChangingOrganizationalEthicsandPracticestowardsClimateandEnvironment”.CreatingaClimateforChange:CommunicatingClimateChangeandFacilitatingSocialChange.Moser,SusanneC.andDilling,Lisa(eds.)CambridgeUniversityPress.NewYork,NYpp.303-318
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Translink, the Greater Vancouver Transportation Authority includes climate-related topics in weekly employee newsletters. For example, the results of the Angus Reid polls conducted in March 2007 identifying trends in climate change perceptions and Canadian’s willingness to alter behaviours were summarized and circulated to employees along with a high-level analysis of how these trends could impact the company and the provision of public transit.
AllofthecompanieswithintheCBSRClimateChangeInterviewSeriesidentifiedanumberofsuccessfultacticstoengageemployeesincluding:videotapedmessagesfromtheCEO;promotingtransitridership;hostingLunch̀n´Learneventswithtopicsrelatedtoclimatechange,energyefficiencyandenvironmentalstewardship;andsupportingemployee-ledGreenTeamsworkingtodriveorganizationalimprovements.Therewasalsoanecdotalevidenceoftheintangibleemployee-relatedbenefitsderivedfrominternalengagementactivitiesinthattheymayenhanceemployeerecruitmentandretentionefforts.
ThepositioningofclimatechangewithintheorganizationchartandattheBoardlevelissignificantasitspeakstothepriorityassignedtotheissue.Beyondthejobtitleofthepersonresponsibleforclimatechange,theextenttowhichclimaterolesandresponsibilitiesaredefinedandinstitutionalizedthroughoutthecompanyisanotherdeterminantofsuccess.WhiletheinitialorganizationalchampionsofclimatechangewereleaderswithinEnvironmentalorCSRdepartments,thisportfolioisincreasinglybeingsharedwithotherdepartmentssuchascorporateaffairs,businessdevelopment,strategicplanning,marketingandengineeringormaintenanceoperations.
SUPPLY CHAINAscurrentclimatemitigationeffortshavefocusedoninternaloperationalimprovements,costreductionsandenergyefficiencies,therearefewerexamplesofcompanieswhoaremanagingthecarbonfootprintoftheirproductsacrossthesupplychain.Bestpracticecompanies,however,areleveragingtheirsupplychain.
“ When our employees saw the risks of climate change, they got very creative designing solutions that reduced our emissions and helped our bottom line by lowering costs and improving productivity.”80
Keyareasthatcompaniescanreviewwithinitssupplierpracticesforallpurchasedgoodsandservicesinclude81:
>Allprocessesforextractingnaturalresourcesandproducingmaterials,includingenergyusage;
>Anytransportationofmaterialspurchased;
>Outsourcingofservices,machinery,buildingsandotherbusiness-relatedactivities;and
>Usageanddisposalofproductsbyfinalcustomer.
PARTNERSHIPSIntheshifttoamorecarbonconstrainedworldbusinesswillultimatelyhavetomeetconsumerneedsinawaythatgeneratesfewercarbonemissionsandcollaborationacrossthevaluechainhasthepotentialtorealizeverylargereductions.82Businesspartnershipswilllikelyprovetobeoneofthemosteffectivemeansofaddressingclimatechangeriskandtakingadvantageofcommercialopportunities.
80.QuotefromInterfaceCanadaaslistedinStrandberg,Coro(2007)“StepstoGoingCarbonNeutral”.Availableathttp://www.corostrandberg.com/pdfs/Going%20Carbon%20Neutral%20Primer.pdf
81.SocialPurchasingNetwork(2007),ReducingPurchasing-RelatedCarbonEmissionspresentation.Availableathttp://www.buysmartbc.com/UserFiles/File/SPN-W-Mar22_07-CarbonFinalPresentation.pdf
82.TheCarbonTrust(2006)“CarbonFootprintsintheSupplyChain:TheNextStepforBusiness”Availableathttp://www.carbontrust.co.uk/Publications/
publicationdetail.htm?productid=CTC616
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In 2003, Westport Innovations and Terasen developed and engineered a system to enable the capture and reuse of Liquefied Natural Gas (LNG). LNG used in the testing of Westport’s heavy-duty engine fuel system is injected to the Terasen pipeline for use by other commercial and residential customers. Since its installation, the system has prevented the emission of more than 15,000 tonnes CO2 equivalent (CO2e).
A number of leading companies are developing product carbon footprints. To create a product carbon footprint the Social Purchasing Network recommends the following steps: 83
> Identifying and mapping the supply chain of a particular product.
> Approaching identified supply chain companies and gathering information on their emissions and energy usage.
> Identifying high leverage areas for emissions reduction that lead to efficiencies and cost savings.
> Engaging supply chain companies in developing reduction plans and supporting them throughout the implementation of these strategies.
83.SocialPurchasingNetwork(2007),ReducingPurchasing-RelatedCarbonEmissionspresentation.Availableathttp://www.buysmartbc.com/UserFiles/File/SPN-W-Mar22_07-CarbonFinalPresentation.pdf
FIGURE FOURTEEN: ENGAGING YOUR SUPPLY CHAIN
Marks and Spencer, a large UK retailer, has a goal of making their company carbon neutral. They have determined that a majority of their emissions come from their suppliers and customers so collaboration with those stakeholders is essential for Marks and Spencer to meet their goal. A few of their strategies include:
> Sourcing as much food locally as possible and investing in research and development projects to help UK farmers improve production.
> Working with a supplier to open a ‘green’ factory and creating four ‘green’ model retail outlets .
> Sharing best practices with their supplier network.
> Developing low carbon products for customers and creating campaigns to increase awareness at the consumer level.
Source:Marks&Spencer(2007),Marks&Spencerlaunches‘’PlanA’’-£200m‘eco-plan’www.marksandspencer.com
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CLIMATE REPORTING AND COMMUNICATIONS
Effectiveandcomprehensiveclimatechangecommunicationinvolves:
i)publicacknowledgementofclimatechange;
ii)dimensionsofclimatechangematerialtoindustryandbusiness;
iii)linkagestoandintegrationwithbusinessstrategy;
iv)companyperformance;and,
v)positiononpublicpolicy.85
Mostcompanieshavemovedpastthedebateofclimatechangeandareacknowledgingthatitisanimportantbusinessissueviaarangeofforumsincludingcorporatewebsites,sustainabilityreportsandinpublicaddressesdeliveredbyexecutives.Someorganizationsuseanarrativeapproachwhichprovidestherationalefortheiractionsanddemonstratesawillingnesstoengageindialoguewhileothersissueformalpositionstatementsonclimatechangethatareusedasbaselinereferences.FigureFifteenoutlinestheGHGreportingframeworksthatpubliclytradedCanadiancompaniescanusetoreportordiscloseemissions,risks,targetsandotherelementsoftheirclimatestrategies.
Leadershipcompaniesdisclosethedimensionsofclimatechangethatarematerialtotheirindustryandbusinessincludingrisksandopportunitiesandindoingso,prioritizeactionstobetaken.Opportunitiessuchasnewproductdevelopmentandimprovedenergyefficiencyarealsohighlightedinordertoprovideabalanceddiscussiononhowclimatechangecanprovidepositiveimpactsonbusinessvalue.
Companiescommunicateorganizationalcommitmentsandbusinessstrategiesto
“ The private sector will play a key role in responding to the growing market for energy and / or climate-friendly goods and services and for the innovation necessary to transition to a low-carbon future. When businesses go public about integrating climate change into their bottom lines, it sends a powerful message about the realities of climate change and the means of addressing it.”84
John Atcheson
addressclimatechange.Commitmentsmaybenearorlong-termgoalsandtargetsand,businessstrategiesmayrangefromboardlevelpoliciestofacilitatingconsumeractionstoseekingcollaborativepartnershipswithexternalorganizations.Thecommunicationofactions,commitmentsandstrategiescanhelptodemonstratethatthecompanyisintegratingitsclimatechangetargetsstrategicallyintoitsbusinessoperations.Climatechangereportingismostprevalentintheenergyandfinancialservicessector.ThistrendisnotsurprisingduetothelinkbetweenenergyandGHGemissionsandtheemergingnewopportunitiestoprovidefinancialservicesrelatedtoclimatechange.86
84.Atcheson,John(2007)“TheMarketasMessenger:SendingtheRightSignals”.CreatingaClimateforChange:CommunicatingClimateChangeandFacilitatingSocialChange.Moser,SusanneC.andDilling,Lisa(eds.)CambridgeUniversityPress.NewYork,NYpp339-358
85.CanadianBusinessforSocialResponsibility(2006)“KeyElementsofClimateChangeMessaging”.Workingpaperindraft.
86.TheGlobalReportingInitiativeandKPMG’sGlobalSustainabilityServices(2007)“ReportingtheBusinessImplicationsofClimateChangeinSustainabilityReports”.Availableathttp://www.globalreporting.org/NR/rdonlyres/C451A32E-A046-493B-9C62-7020325F1E54/0/ClimateChange_GRI_KPMG07.pdf
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FIGURE FIFTEEN: GHG REPORTING FRAMEWORKS
A common theme identified from the interview series includes: How an organization’s sustainability report provides an effective forum to communicate progress and challenges on climate change and a range of other environmental issues. A sustainability report provides the mechanism by which leading companies can leverage and profile their climate change management program.
Canadian publicly traded companies currently report GHG emissions data through various voluntary and regulatory reporting mechanisms:
> Voluntary corporate CSR, sustainability or environmental reports;
> Climate Change Registry (formerly the Voluntary Challenge Registry);
> Facility-level GHG reporting in Ontario and Alberta via the provincial Ministry of the Environment;
> Statistics Canada for large industrial emitters with annual emissions >100 Kt; and
> Industry association initiatives such as Responsible Care (chemicals), Canadian Association of Petroleum Producers’ Stewardship Initiative (petroleum) and Towards Sustainable Mining (minerals and metals).
There are also international GHG reporting frameworks such as:
> World Resources Institute/World Business Council for Sustainable Development GHG Reporting Protocol; and
> ISO 14064 GHG Quantification, Reporting and Verification Standard.
Source:Greenall,David(2006)“TheCarbonDisclosureProjectReport2006:Canada280”.TheConferenceBoardofCanada.Availableathttp://www.cdproject.net/cdp4reports.asp
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“ Frame the issue in the context of higher-level values such as responsibility, stewardship, vision, ingenuity. Actions to prevent climate change should be characterized as being about new thinking, new technologies, planning ahead, smartness, forward-thinking, balanced alternatives, efficiency, prudence and caring.”87
Simen Retallack
Candid corporate comments: The companies profiled in this Guide have faced challenges and realized success via their ongoing efforts to minimize the climate impact of their operations and/or products. Each was asked to provide some candid observations about the obstacles or barriers they have faced or continue to struggle with. The following is a sample of some of those comments:
> “ Goals and targets will be achieved when climate change is viewed as a business issue and not solely an environmental issue.”
> “ Internal communications in a large organization with a global presence is still a challenge.”
> “ With an increased focus on climate change and carbon footprint, there is some concern that we are diluting other important CSR or sustainability messages.”
> “ There is not a lot of “low-hanging fruit” going forward; we need to prioritize our next actions.”
> “ We are concerned that perhaps we are getting too far ahead of the pack.”
> “ We must identify and implement key performance indicators (KPIs) to ensure accountability for climate change.”
Tofurtherrelateactiononclimateandachievementtowardsearlier-statedcommit-ments,companiespublishyearoveryeardataonGHGemissionstoindicateprogresstowardsreductiontargets.Adiscussionofperformanceisincludedtoprovideadditionalunderstandingofsuccessorsetbacksinmeetingorfallingshortoftargets.Itshouldalsobenotedthatreportreadersoftenassessmanagementcommitmenttoissuessuchasclimatechangeinpartbytheseniorityofmanagersresponsiblefortheissue.
Businessleaderspubliclyacknowledgetheneedforclimateregulation,engageinpublicpolicydialogueandcommunicatethecompany’spositioninthedevelopmentofthesepublicpolicies.Increasingly,transparencyofcorporateinfluenceonclimatepolicyisbecomingaCSRissueaslobbyingeffortsareundergoingscrutinyasameasureofCSRperformance.
87.Retallack,Simon(2006)“AnkeloheandBeyond:CommunicatingClimateChange”.OpenDemocracy.Availableathttp://www.opendemocracy.net/globalization-climate_change_debate/ankelohe_3550.jsp
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FIGURE SIXTEEN: BEST PRACTICES FOR COMMUNICATING CLIMATE CHANGE
The current best practices for communicating climate change have been influenced by marketing, psychology, and education:
> Recognize that information is not sufficient. People do not learn alone as consumption choices are part of social conversations about status, social cohesion, group norms and the pursuit of personal and cultural meaning. Enabling people to change means changing what is socially acceptable.
> Find ways to make positive behaviours into unconscious habit.
> Simplify message and prioritize action steps.
> Do not make people feel bad, irrelevant and/or useless. Help people to understand (and trust) that they are making a difference.
> Balance the solution to the scale of the problem.
> Choose credible messengers. Not just those with scientific authority but common-sense and likable intermediaries and trusted NGOs.
> Motivate people to change as a region, a town, a team or other personal identity group.
> Help people move beyond small, insignificant or token behavioural change.
> Make it a pleasure – associate positive behaviour not with duty but with leisure, pleasure, health or fulfillment.
Source:AccountAbility(2007)“WhatAssuresConsumersonClimateChange?:SwitchingonCitizenPower”Availableathttp://www.accountability21.net/blogs.aspx?id=996
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Figure Seventeen illustrates the noted importance of various stakeholder groups or audiences when considering the communication of climate change related strategy and progress.88 Many of our case study organizations made a distinction between climate change communications as both an attraction and recruitment vehicle for new employees and an important retention tool for current employees.
FIGURE SEVENTEEN: COMMUNICATIONS AND REPORTING OF CLIMATE CHANGE STRATEGIES
88.SurveyquestionadaptedfromHoffman(2006)“GettingAheadoftheCurve:CorporateStrategiesthatAddressClimateChange”ThePewCenterforGlobalClimateChange.
Media
Executiveteam
Government
Employees
Investorsandsharholders
Public
NGOs
Industryassociations
Insuranceproviders
Stockanalysts
Suppliers
1NOTATALLIMPORTANT
2 3AVERAGEIMPORTANCE/
NEUTRALRESPONSE
5VERYIMPORTANT
2LIMITEDIMPORTANCE
4SOMEWHATIMPORTANT
> Offsetting is a way of compensating for the emissions produced by a business, an individual, an event or an activity with an equivalent carbon savings.
> Offsetting involves the purchase of emission reduction or carbon credits generated by initiatives that have reduced GHG emissions such as small-scale or large industrial renewable energy projects, energy efficiency technologies or reforestation efforts.
> Companies need to take a multi-dimensional approach reviewing both strategic and regulatory considerations when determining the quality of voluntary offset products in this rapidly growing market.
> To become carbon neutral, the footprint or impact of the company, product or event involved must first be measured and the steps to reduce emissions to zero identified.
> Standardization about what it means to be carbon neutral will provide those companies wanting to voluntarily make a commitment to reduce their climate impact with much needed clarity and confidence.89
OFFSETTING AND CARBON NEUTRALITY
4
55
89.TheClimateGroup(2007)“CarbonDown,ProfitsUp”.Thirdedition.Availableathttp://theclimategroup.org/assets/resources/cdpu_newedition.pdf
STEP 1AssessCarbonFootprint
>
STEP 2AccountforEmissionsFreePurchases
>
STEP 3ImplementEmissionsReductionMeasures
>
STEP 4CalculateRemainingEmssions
>
STEP 5PurchaseCarbonOffsets
>
STEP 6CommunicateCarbonNeutrality
>
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FIGURE EIGHTEEN: THE BENEFITS OF VOLUNTARY OFFSETTINGOnceanorganizationhascompletedaGHGemissionsinventoryandeffortshavebeenmadetoreducethoseemissions,carbonoffsettingisavailableasameansoffurthermitigatingitsclimatechangeimpactbytakingfullresponsibilityforthoseremainingemissions.Offsettingisawayofcompensatingfortheemissionsproducedbyabusiness,anindividual,aneventoranactivitywithanequivalentcarbonsavings.Asthereisalimitedavailabilityofzerocarbonintensityenergyandmaterials,mostorganizationswillbeunabletoreduceemissionsassociatedwiththeiractivities,productsand/orservicestozerointheshort-term.
OffsettinginvolvesthepurchaseofemissionreductionorcarboncreditsgeneratedbyinitiativesthathavereducedGHGemissionssuchassmall-scaleorlargeindustrialrenewableenergyprojects,energyefficiencytechnologiesorreforestationefforts.Inpractice,offsettingisdoneintwostages:
Step1.calculatingtheamountofemissionstobeoffsetfromtheactivitycarriedoutwithresultsofcalculationspresentedintheformofcarbon,CO2orCO2equivalent;and
Step2.investinginprojectsthatpreventorremoveanequivalentamountofemissionsfromtheatmosphere.91
Itisimportanttonotethedifferencebetweenvoluntaryoffsettingandcarbontradingtomeetacompliancerequirement.Regulatedcompaniesmaybuyorsellwhateverlegalinstrumentsarethemostcost-effectivetoachieveatargetwhereasvoluntaryoffsettingactivitiesconsistofprojectoffsetspurchasedtocompensateforaspecificemissionandmaynotberesold.92
“ Getting offsets right means stepping back to appreciate that climate change is driving political, economic, social and technological shifts that are fundamentally changing businesses’ relationship with the environment and that offsets provide a qualitatively unique yet minor lever for improving and sustaining financial and environmental performance.”90
Business for Social Responsibility
> It demonstrates to stakeholders that the organization recognizes the full extent of its climate impacts and is prepared to take action to address them.
> By assigning a price to climate change impacts, it focuses attention on actions to reduce emissions.
> The effective communication of the offset project can help to engage and educate key stakeholders such as employees and customers.
> By supporting projects that offset emissions, companies can provide local social and environmental benefits and help to stimulate the adoption of low-carbon technologies.
> It may facilitate a look beyond a company’s direct emissions to its indirect emissions impact such as the carbon footprint of its supply chain and identify further opportunities for improvement and reduction.
Source:TheCarbonNeutralCompany(2006)“TheCarbonNeutral®Protocol2006:AFrameworkforEffectiveActiononClimateChange”Version1.2
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tionofTheVoluntaryCarbonStandardandtheGoldStandardforVoluntaryOffsetsdevelopedbytheWWFandpartnerorganizationshasaimedtoprovidegreaterconfidenceinthismarket.TheVoluntaryCarbonStandard(www.v.c.e-org)waslaunchedinJuly2007andprovidesprojecteligibility,criteria,verification,certificationandregistrationprocessesforemissionsreductionprojects.TheGoldStandard(www.cdmgoldstandard.org)looksbeyondthevolumeofprojectedemissionsreductionsandconsidersissuessuchaslocalstakeholdersupportandthepromotionofsustainabledevelopmentgoals.94Inaddition,theUK’sDepartmentforEnvironment,FoodandRuralAffairs(DEFRA)haslaunchedaconsultationonavoluntaryCodeofBestPracticeforcarbonoffsetting.
Tobecomecarbonneutral,thefootprintorimpactofthecompany,productoreventinvolvedmustfirstbemeasuredandthestepstoreduceemissionstozeroidentified.Whileinprinciplethismayappeartobeastraightfor-wardprocess,thereareanumberofissuesthatmayaffectthecredibilityoftheclaimin-cludingthescopeofemissions(bothupstreamanddownstream)includedinthefootprinttobeneutralized,howmanyreductionsaremadebeforeusingoffsetsandthequalityoftheactualoffsetsthemselves.Aswithoffsetting,standardizationaboutwhatitmeanstobecarbonneutralwillprovidethosecompanieswantingtovoluntarilymakeacommitmenttoreducetheirclimateimpactwithmuchneededclarityandconfidence.95
US-basedBusinessforSocialResponsibilityhascompiledalistofcompanies,non-profits,governmentagencies,eventsandjurisdictionsthatareclaimingtobe,orannouncingtheirintenttobecomecarbonneutral.96Withthenumberofclaimsorintentionsgrowinginboth
AcomprehensiveoverviewofthecarbonmarketsandcapandtrademechanismssuchasthoseestablishedundertheKyotoProtocolortheEuropeanUnion’sEmissionsTradingScheme(EUETS)isbeyondthescopeofthisGuide.PleaserefertoCarbonFinance:CarbonFinance:TheFinancialImplicationsofClimateChangebySoniaLabattandRodneyWhiteforaCanadianperspectiveonthisglobalbusinessissue.AdditionalinformationcanbefoundwithintheToolsandResourcessectionofthisguide.
Asarapidlygrowingmarket,determiningthequalityofvoluntaryoffsetproductscanposeachallengeandrequiresbothstrategicconsiderationsandamethodologicalapproach.Businessesshouldbewaryofpurchasingoffsetsthathavenotmetrigorousqualitystandards,asthepublicrelationsfalloutfromoffsetsthatarelaterexposedasdisingenuouscanbedamaging.
Thebasiccomponentsofaprocessforcarbonoffsettinginclude:
i) definingprojectgoals;
ii) evaluatingoptionsinthemarketplace;
iii)determiningbenefitsandlimitationsofoffsetprojects;
iv)ensuringqualitythroughadditionalityandverification;and
v)communicatingcommitment.93
ThedocumentslistedinFigureNineteenarecomprehensiveguidesonthesubjectandexplainoffsetissuesrelatedtoquality,pricing,screeningcriteria,projecteligibility,additionality,socialimpactsandverificationamongothers.
Thelackofformalregulationinthevoluntarymarkethasattractedcriticism.Theimplementa-
numberandtype,NGOsandbusinesseswillneedtoworktogethertosetguidelinesforcarbonneutrality.
90.BusinessforSocialResponsibility(2007)“GettingCarbonOffsetsRight:ABusinessBriefonEngagingOffsetProviders”.Availableathttp://www.bsr.org/CSRResources/Environment/ResourcesDocs/BSR_Getting-Carbon-Offsets-Right.pdf
91.DEFRA(2007)“ConsultationonEstablishingaVoluntaryCodeofBestPracticefortheProvisionofCarbonOffsettingtoUKCustomers”.DepartmentforEnvironment,FoodandRuralAffairs.Availableatwww.defra.gov.uk
92.TheCarbonNeutralCompany(2006)“TheCarbonNeutral®Protocol2006:AFrameworkforEffectiveActiononClimateChange”Version1.2
93.Strandberg,Coro(2007)“StepstoGoingCarbonNeutral”.Availableatwww.corostrandberg.com
94.F&CInvestments(2007)F&CGuidetoCarbonOffsetting(2007)Availableathttp://www.fundworksinvestments.com/fn_filelibrary/File/Carbon%20Offsetting%20-%20FINAL%205107.pdf
95.TheClimateGroup(2007)“CarbonDown,ProfitsUp”.Thirdedition.Availableathttp://theclimategroup.org/assets/resources/cdpu_newedition.pdf
96.BusinessforSocialResponsibility(2007)“Who’sGoingCarbonNeutral?”Availableatwww.bsr.org/CSRResources/Environment/ResourcesDocs/BSR_Carbon-Neutral-Chart.pdf
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FIGURE NINETEEN: REFERENCE DOCUMENTS FOR VOLUNTARY CARBON OFFSET PROJECTS
> The Carbon Trust three stage approach to developing a robust offseting strategy.
> Business for Social Responsibility Getting Carbon Offsets Right: A Business Brief on Engaging Offset Providers and Offsetting Emissions: A Business Brief on the Voluntary Carbon Market.
> Clean Air-Cool Planet A Consumer’s Guide to Retail Carbon Offset Providers.
> Tufts University Climate Initiative Voluntary Offsets for Air-Travel Carbon Emissions: Evaluations and Recommendations of Voluntary Offset Companies.
> State of the Voluntary Carbon Markets 2007: Picking Up Steam by Ecosystem Marketplace.
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FIGURE TWENTY: SO YOU WANT TO BE A CARBON NEUTRAL LEADER?
Companies that seek to do more than reduce their own carbon emissions may want to develop climate change strategies adopted by other leading businesses. These are some ideas for developing your own strategy:
> Get your own house in order – follow the steps outlined in this guide.
> Offer innovative products and services that address climate change and enable your customers to reduce their footprints (e.g. green car loans, green building materials, locally produced goods and services).
> Use your purchases and investments to influence the behaviour of your suppliers and to get those who manage your money to invest in sustainable companies.
> Provide public education and awareness on climate change issues and what they can do about them.
> Work with others through carbon neutral working groups and stakeholder collaborations to influence local, provincial and federal governments to take action on climate change.
“ Whatever mix of incentives and regulation is provided, climate reduction strategies simply have to be intelligently designed for the long-term, so that businesses have the consistency and clarity they need for planning their investments and their operation.”97
Patron: HRH The Prince of Wales
Source:Strandberg,Coro(2007)“StepstoGoingCarbonNeutral”.Availableatwww.corostrandberg.com97.Patron:HRHThePrinceofWales
“ Despite serious signs emerging from climate science, this is not the time for hopelessness or despair but a time for deep concern, creative engagement and informed, committed and forward-looking action.”100
Susanne C. Moser and Lisa Dilling
CONCLUDING COMMENTS
AcommonthemethroughoutthisGuideshowstheneedforbusinessesto:
>takeownershipoftheiremissions;and
>committoarangeofactionsrequiredtoreducetheircarbonfootprint.Intheabsenceofstringentregulations,strongpoliticallead-ershipandarealpriceoncarbonemissions,businessesfindthemselvesinaverypower-fulpositiontoinfluencesocietalbehaviourthroughtheirinfluencewithcustomers,suppliers,employeesandotherstakeholders.
ThisGuidedemonstratesthatclimatechangehasbecomeareputationalandstrategicbusinessissueforthosesectorsnotcurrentlyregulated.AcomprehensiveGHGmanagementframeworkincludinganemissionsinventory,target-setting,anevaluationofcarbonreductionalternativesandthedisclosureofimpacts,isrequiredforallorganizationstopositionclimatechangeasthecorebusinessissueithasbecome.Quantifyingemissions,improvingenergyefficienciesandengagingkeystakeholdersaretheinitialstepsallcompaniesmusttaketoachievethelarge-scalereductionsinemissionsneededinarelativelyshorttimetoavoidthemoreextremeimpactsassociatedwithhigherCO2concentrationsintheatmosphere.
Thechallengeposedbyclimatechangewillalsorequirearangeofpossiblesolutions;economicsystemssuchascap-and-tradesystems,carbonmarkets,feesandtaxes;regulatorymechanisms;andtechnologicaldevelopmentslikecarboncaptureandsequestrationand,newrenewableformsofenergy.98
Whileincreasedenergyefficiency,operationalimprovementsandnewclimate-friendlyproductsandserviceshavetheirplace,theseactionsarenotyetatthescaleneededtomeetemissionsreductionobjectivesormitigatethemostseriousconsequences
associatedwithclimatechange–financiallyandenvironmentally–asillustratedbyvariousreports.Itisapparentthat,longer-termandmoredifficultfixesincludeconservation,regulationandenforcement,meaningfulincentives,politicalwill,leadershipandaction.99Businesswillbeexpectedtoleadthisfundamentalshiftfromthetacticsoutlinedinthisguidetolong-term,sustainableapproachesthatconservethenaturalenvironmentandstrengthensocialandeconomicinfrastructure.Leadersneedtoinitiatethiscriticaldialogue,movingtheconversationbeyondsciencetoenableadiscussionofsolutions,valuesandvisionforthefuture.
98.WorldBusinessCouncilforSustainableDevelopment(2007)“ManagingClimateChange:DoingEverything,EverywhereforaVeryLongTime”.Availableathttp://www.wbcsd.org/plugins/DocSearch/details.asp?type=DocDet&ObjectId=MjU2NDc
99.Lye,GeoffandElkington,John(2007)“ClimateChange’sRightandWrongFixes”.OpenDemocracy.Availableathttp://www.opendemocracy.net/globalization-climate_change_debate/fixes_4311.jsp
100.Moser,SusanneC.andDilling,Lisaeds.(2007)“Introduction”CreatingaClimateforChange:CommunicatingClimateChangeandFacilitatingSocialChange.CambridgeUniversityPress.NewYork,NYpp.1-27
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ACCOUNTABILITYwww.accountability21.net/blogs.aspx?id=996WhatAssuresConsumersonClimateChange?:SwitchingonCitizenPower. Business,governmentsandconsumersintheUSandUKareincreasinglyconcernedaboutclimatechange.54%ofconsumersarewillingtomakepersonalsacrificestopreventglobalwarmingbutonly10%trusttheguidancetheyreceivefrombusinessandgovernmentonthisissue.TheresearchdrawsonaconsumeropinionsurveyconductedintheUSandtheUKandtherelevantworkofexpertswhohaveconcentratedonunderstandingthescienceofglobalwarming,whatinfluencesconsumerbehaviour,whatiseffectivesustainabilityassurance,whatisneededforrigourousGHGaccountingandtheconsumptionpathwaysthathavethegreatestimpacts.
BUSINESS FOR SOCIAL RESPONSIBILITYwww.bsr.orgBSRhaspublishedrecentreportsrelatedtoclimatechangeincluding:“GettingCarbonOffsetsRight”aguidetobuyingretailcarbonoffsets;“Who’sGoingCarbonNeutral?”;acompilationofthemostprominentcorporateinitiativestowardcarbonneutraloperations;“AThree-ProngedApproachtoCorporateClimateStrategy”whichprovidesabackgroundonbusinessandreactionstoclimatechangeandasimplespectrumofactions,and;“OffsettingEmissions:ABusinessBriefontheVoluntaryCarbonMarket”whichoutlinestherangeofmarketopportunities.
CANADIAN BUSINESS FOR SOCIAL RESPONSIBILITYwww.cbsr.caCBSRisabusiness-led,non-profitCSRconsultancyandpeer-to-peerlearningorganizationthatprovidesitsmemberswithcandidcounselandcustomizedadvisoryservicesastheyformulatepowerfulbusinessdecisionsthatimproveperformanceandcontributetoabetterworld.CBSR’sAdvisoryServicesexpertareasinclude:EmployeeEngagement;StakeholderEngagement;CSRStrategyDevelopment;and,ReportingandCommunications.CBSRintegratesclimatechangeperspectivesintoallofthepracticeareasabovetohelpmembercompaniesunderstandtheimpactsofclimatechangeontheirCSRinitiatives.
CANADIAN STANDARDS ASSOCIATIONwww.csa.ca/climatechangeCSAClimateChangeiscommittedtothedevelopmentofstandardsfortechnology,
products,proceduresandmanagementsystemssuchasISO14064tomanage,reduce,monitor,reportandmeasureGHGemissions.CSAacquiredCanada’sClimateChangeVoluntaryChallengeandRegistryInc.(VCRInc.)onJanuary1,2005;avoluntarypubliclyaccessiblenationalregistryofGHGbaselines,targetsandreductions.TheprimaryobjectiveofthisregistryrenamedtheCanadianGreenhouseChallengeRegistryistochallengebothcurrentandpotentialregistrantsfromalleconomicsectorsandgeographicregionstodemonstratemeaningfulactionswhichcontributetowardsthereductionofCanada’sGHGemissions.
THE CARBON DISCLOSURE PROJECT www.cdproject.orgTheCarbonDisclosureProject(CDP)isacoalitionof280institutionalinvestors(including25inCanada)globallymanagingmorethan$40trillioninassets.Itrecognizesthatclimatechangeisbecomingadriveroflong-termshareholdervalueanditencouragescompaniestounderstandanddisclosetheimplicationsofclimatechangetotheirbusiness.TheCDPistheworld’slargestregistryofcorporateGHGemissionsdatawiththeaimtoinforminstitutionalinvestorsabouttheorganizationalrisksandopportunitiespresentedbyclimatechange.In2006,theCDPsentarequesttomorethan2,000companiesandthesuccessoftheCDPisindicativeofthegrowingwillingnessofcompaniestosharetheircurrentandfuturepoliciesregardingclimatechange.
CARBON FOOTPRINTS IN THE SUPPLY CHAIN: THE NEXT STEP FOR BUSINESSwww.carbontrust.co.uk/Publications/publicationdetail.htm?productid=CTC616Stabilizingclimatechangewillrequirefundamentalchangestothewaythatbusinessesdeliverproductsandservicestoconsumers.Thisresearchidentifiesradicalnewwaysforbusinessestocutcarbonemissionsacrosstheirsupplychainbyanalyzingthecarbonimpactatallstagesofaproduct’slife-cycle.TwopilotstudiesrunwithWalkersandTrinityMirrorintheUKidentifiedsavingsworth28,000tonnesofCO2and£2.7millionayear.
THE CARBONNEUTRAL COMPANYwww.carbonneutral.comFoundedin1997,TheCarbonNeutralCompanycreatedsomeofthetoolswhichhavenowbeenwidelyadopted:legalcontractsforcarboncredits,carboncalculators,positivemessagingthataimstospuractionand“measure,reduce,offset”,themantraofCarbonNeutral,itsregisteredtrademark.TheCarbonNeutralCompanyofferscarbonoffsetandclimateconsultingservicestohelpits
clientsmeasure,reduceandoffsettheiremissions.WithheadquartersinLondonandaninternationalnetworkofoffices,TheCarbonNeutralCompanyworkswithover200largecorporationsandthousandsofsmall-to-mediumsizedenterprises(SMEs)andindividualsoncarbonoffsetprojects,climate-consultingintheareaofmeasurement,reductionsandstrategyandclimatemarketingservices.
CARBON TRUSTwww.carbontrust.co.ukTheCarbonTrustisaprivatecompanyestablishedin2001bytheBritishgovernmentinresponsetothethreatofclimatechange,withtheaimofacceleratingthemovetoalow-carboneconomy.Toachievethisgoal,theCarbonTrustworksinfivecomplementarybusinessareas:Insights,Solutions,Innovations,EnterprisesandInvestmentswhichinturnexplain,deliver,develop,createandfinancelow-carbonenterprise.
CHICAGO CLIMATE EXCHANGEwww.chicagoclimatex.comTheChicagoClimateExchange(CCX)istheworld’sfirstandNorthAmerica’sonlylegallybindingrules-basedGHGallowancetradingsystem.CCXmembersareleadersinGHGemissionsmanagementandrepresentallsectorsoftheeconomyaswellaspublicsectorinnovators.CCXemittingmembersmakeavoluntarybutlegallybindingcommitmenttomeetannualGHGemissionreductiontargets.Thosewhoreducebelowthetargetshavesurplusallowancestosellorbank;thosewhoemitabovethetargets,complybypurchasingCCXCarbonFinancialInstrument(CFITM)contracts.TheCCXsupportstradingbetweenoffsetproviders(suchasfarmsandforests)tooffsetpurchasers(suchasproducersandusersoffossilfuels)foroffsetprojectsinNorth,SouthandCentralAmerica,whichareregisteredontheexchange.TheCCXregisterissupportedbythird-partyverifiers,manyofwhomarealsoworkingwiththeEUETS.101
CLIMATE ACTION NETWORKwww.climateactionnetwork.caTheClimateActionNetworkCanada(CANCanada)iscomposedofmemberorganizationsandindividualscommittedtopreventingdangerouslevelsofhumaninterferencewiththeglobalclimatesystem,protectingenvironmentalsustainabilityandpublichealth,whileupholdingprinciplesofjusttransition,equityandsocialjustice.ItsmissionistosupportandempowerCanada’sgovernments,privatesector,labourandcivilsocietybydesigning,developingandimplementingeffectivestrategiestoreduceGHGemissions
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atinternational,nationalandlocallevels.CANCanadapromotessolutionsandprovidesabasisforcollaborativeactionandaforumforcommunication,policydevelopmentandcoordinationtoitsindependentmembersrecognizingthatpreventingdangerousinterferencewiththeglobalclimatesystemwillinvolvesignificantchangesinthewaysocietyutilizesenergy,naturalresourcesandland.
THE CLIMATE CHANGE GOVERNANCE CHECKLIST www.ceres.org/pub/docs/Ceres_corp_gov_and_climate_change_0306.pdfThisreportexamineshow20oftheworld’slargestcorporateemittersofGHGsarefactoringclimatechangeintotheirbusinessstrategiesandgovernancepractices.Effectivecorporateresponsesarebuiltonafoundationofwellfunctioningenvironmentalmanagementsystemsandproperlyfocusedgovernancepractices.Thisfoundationisthecriticalfirststepcompaniesmusttaketomakemeaningfulprogressincontrollingtheiremissionsandorientingtheirbusinessesforacarbonconstrainedworld.Thereportidentified14specificgovernanceactionsforcompaniestoaddressclimate.
THE UKCIP BUSINESS AREAS CLIMATE IMPACTS ASSESSMENT TOOL (BACLIAT)www.ukcip.org.ukThistoolprovidesasimplechecklistfororganizationstoassessthepotentialimpactsofclimatechangeontheirbusiness.Thechecklistcanbeusedatthelevelofasingleorganizationoranentirebusinesssectortoencourageconsiderationandamorecompre-hensiveunderstandingoftheclimaterisksandopportunitiesunderthebroaderheadingsoflogistics,finance,markets,process,people,premisesandmanagementimplications.
THE CLIMATE GROUPwww.climategroup.orgTheClimateGroupisanindependent,non-profitorganizationdedicatedtoacceleratingtheinternationaluptakeofcorporateandgovernmentbestpracticeinemissionsreduction.Proactivecompanies,states,regionsandcitiesaroundtheworldaredemonstratingthatthecutsinGHGrequiredtostopclimatechangecanbeachievedwhilegrowingthebottomline.Usingtheworkoftheseleadersasacatalyst,TheClimateGroupstrivestoaccelerateinternationalactiononglobalwarmingwithanew,strongfocusonpracticalsolutions.102
THE CONFERENCE BOARD OF CANADAwww.conferenceboard.caInpartnershipwithTheCarbonDisclosureProjectsecretariat,TheConferenceBoardofCanadaproducesanannualCDPreportfocusingonthecarbonmanagementstrategiesanddisclosurepracticesofthe280mostvaluableTSXcompanies,bymarketcapitalization.
THE CORPORATE LEADERS GROUP ON CLIMATE CHANGEwww.cpi.cam.ac.uk/programmes/energy_and_climate_changeTheCorporateLeadersGroup(CLG)onClimateChangeintheUKwasconvenedbytheUniversityofCambridgeProgrammeforIndustryonbehalfofHRHThePrinceofWales’sBusinessandtheEnvironmentProgramme.ItoperatesfromthepositionthatonlybytakingambitiousdomesticpolicyactionwilltheUKbeabletoconvincerapidlydevelopingcountriessuchasChinaandIndiathattheUKanditsEUpartnersareseriousabouttacklingclimatechange.TheCLGsenttheirfirstlettertoPrimeMinisterTonyBlairinMay2005,offeringtoworkwiththeGovernmenttostrengthenclimatepolicyinthefollowingsevenareas:
1.Strengtheningmarketsforemissionsreductions;
2.Supportfor“early-stage”low-carbontechnologies;
3.Scalinguplow-carboninvestmentinrapidlydevelopingeconomies;
4.Improvingenergyefficiencyinthelargecommercialsector;
5.Stimulatingconsumeractiononclimatechange;
6.Strengtheningproductandbuildingregulations;and
7.Reducingtheimpactoftransportonclimatechange.
In2007,theCLGrecommendedthatastrengthenedEUETSshouldbekeytotheUK’sclimatechangestrategyandcallsonthegovernmenttoensurethatnonETScountriesareprovidedwithstrongincentivestoparticipate.TheEUETSshouldbebroadenedtoincludesectorssuchasaviationthatareexpectedtogenerateanincreasingshareofoverallemissions.ThegovernmentswithintheEUshouldsetcleartargetsfortheETSoutto2021sothatnotonlythebusinessesrepresentedbytheCLGbutallbusinessescanhavetheconfidencetomakelong-terminvestmentsinemissionsreduction.
DAVID SUZUKI FOUNDATIONhttp://www.davidsuzuki.org/Climate_Change/What_You_Can_Do/carbon_neutralSince1990,theDavidSuzukiFoundationhasworkedtofindwaysforsocietytoliveinbalancewiththenaturalworldthatsustainsus.Focusingonfourprogramareas–oceansandsustainablefishing,climatechangeandcleanenergy,sustainability,andtheNatureChallenge-theFoundationusesscienceandeducationtopromotesolutionsthatconservenatureandhelpachievesustainabilitywithinageneration.Itsclimatechangeandcleanenergyprogrampromotessustainablesolutionstoenergyneeds,fromrenewablesourceslikewindandsolarpower,toenergyefficiencyandimprovedpublictransportation.TheDavidSuzukiFoundation’sCarbonNeutralprogramprovidesbackgroundinformation,resources,andguidanceonbestpracticesforbusinesses,individuals,andotherswhowanttoreduceand/oroffsettheirclimatefootprint.
EARTHWATCH INSTITUTEwww.earthwatch.orgTheEarthwatchInstituteisaninternationalnon-profitorganizationthatsupportsscientificfieldresearchbyofferingvolunteerstheopportunitytojoinglobalresearchteams.Earthwatchrecruitsmorethan4000volunteerseveryyeartocollectfielddataintheareasofrainforestecology,wildlifeconservation,marinescience,archaeologyandmore.TheyhavepublishedaClimateChangePositionStatementwhichoutlinestheircommitmenttoasustainableenvironmentviathepromotionofresearchandeducationaroundthescience,impactsandresponsestoclimatechange.Earthwatchaddressesclimatechangebyfocusingresearch,influencinggovernmentagencies,not-for-profitorganizationsandtheprivatesectortoaddressclimatechange,developingeducationandengagementprogramsspecifictoclimateandstrivingtominimizetheInstitute’sowncarbonfootprint.
THE EUROPEAN UNION EMISSIONS TRADING SCHEME (EU ETS) 103 www.europa.eu.int/comm/environment/climat/emission.htmTheEUETSrepresentstheEuropeanUnion’scommitmenttospearheadeffortstocombatclimatechange,bothbysettinganexample,andbyfulfillingitspledgetoreduceitsemissionsby8%from1990levelsby2012.TheEUETScameintoeffectinJanuary2005,priortotheratificationoftheKyotoProtocolandisthelargestmulti-country,multi-sectorGHGemissionstradingscheme.ItisacapandtradesystemwhichcoversCO2emissionsfromapproximately12,000installationsin27countriesandsixmajorindustrialsectors.
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ProposalsarecurrentlybeingconsideredtoincludeCO2emissionsfromaviationandnon-CO2gasesinindustrialapplications.ItallowsaccesstotheKyotoprojectmechanismsincludingJointImplementation(JI)andtheCleanDevelopmentMechanism(CDM).TheseallowprojectsindevelopedanddevelopingcountriesthatcancoversixGHGsandallemittingsectors.TheEUisactivelyengagedwithothergovernmentsatnationalandstatelevelstoallowthelinkingofemergenttradingsystemswiththeEUETS.TherearegoodreasonstosuspectthattheEUETSorasystemsimilartoitwillfeaturestronglyinanemergentnationalsystem.
TheprincipalobjectiveoftheEUETSistointernalizetheexternalcostofcarbon;i.e.institutionalizethepolluterpaysprincipleandusemarketforcestoencourageinnovationandcarbonreductioninitiatives.
GRI REPORTING INITIATIVE INDICATORS SPECIFIC TO CLIMATE CHANGEwww.globalreporting.org/HomeTheGlobalReportingInitiative(GRI)isasystemthatissuessustainabilityguidelinesforreportingontheeconomic,environmentalandsocialdimensionsofcorporateactivities,productsandservices.UsingtheGRIguidelines,companiescandisclosesignificantinformationregardingtheirclimateriskinamannerthatissimilarlyalignedwiththeCarbonDisclosureProject.Exactlyhoworganizationsshouldcommunicatetheirresponsetoclimatechangeisaquestionfacingmanycompanies,particularlysincetheintroductionofthenewindicatorintheG3guidelines(EC2:FinancialImplicationsandOtherRisksandOpportunitiesfortheOrganization’sActivitiesduetoClimateChange).OtherindicatorsspecifictoclimatechangewithintheGRIincludeEN16whichallowsfordisclosureonthetotalamountofGHGemissionsandEN18whichdisclosestotalreductionsachievedandinitiativesforreducingtheamountofemissionsproduced.
GOLD STANDARDwww.cdmgoldstandard.orgTheGoldStandardoffersaqualitylabeltoCleanDevelopmentMechanism(CDM)/JointImplementation(JI)voluntaryoffsetprojects.TheGoldStandardisendorsedbymorethan40non-governmentalorganizationsworldwideandispreferredbyarangeofgovernmentandprivatesectorcompanies.Renewableenergyandenergyefficiencyprojectswithsustainabledevelopmentbenefitsareeligible.
THE GREENHOUSE GAS PROTOCOL www.ghgprotocol.orgTheGHGProtocolisamultiple-stakeholderpartnershipofbusiness,NGOs,andgovernments,ledbytheWorldResourcesInstitute(WRI)andtheWorldBusinessCouncilforSustainableDevelopment(WBCSD).ItisanexcellentsourceofinformationaboutcorporateGHGaccountingandreportinganddrawsontheexpertiseandcontributionsofindividualsandorganizationsfromaroundtheworld.TheGHGProtocolInitiativecomprisestwoseparatebutlinkedstandards:
i)GHGProtocolCorporateAccountingandReportingStandardprovidescomprehensiveguidanceonaccountingforandreportingcorporateGHGemissionsandisthemostwidelyusedstandardformandatoryandvoluntaryGHGprograms;and
ii)GHGProtocolProjectQuantificationStandardaguideforquantifyingreductionsfromGHGmitigationprojects.Otherinternationalstandards,suchastheISO14064standard,arealsocompatiblewiththeGHGProtocol.Thestandardsareanalogoustothegenerallyacceptedfinancialaccountingstandardsforcompanies’consistentaccountingandreportingpractices.
WORLD RESOURCES INSTITUTE (2006) HOT CLIMATE, COOL COMMERCE: A SERVICE SECTOR GUIDE TO GHG MANAGEMENThttp://pdf.wri.org/hotclimatecoolcommerce.pdfBecauseheavyindustryisaleadingsourceofGHGemissions,mostofthebusiness-focusedprogramsrespondingtotheproblememphasizeparticipationby“emitters”,manufacturersandutilities.Actionbyindustryalone,however,isnotenough.Longtermsolutionsrequireemissionsreductioneffortsbytheentireeconomy,andthispublicationaddressesservice-sectorcompaniessuchasbanks,lawfirms,retailersandrealestatemanagers.AdescriptionofthecomprehensivestepsneededtoplananddevelopaGHGinventoryandmanageGHGemissionsisprovided.ThisguideusestheestablishedframeworkoftheGHGProtocoltoensurethatservice-sectorcompaniesdevelopeffectiveclimatechangeresponsestrategiesthatarecompatiblewithothersinthebusinesscommunityandvoluntaryandmandatoryclimatechangeprograms.
IDENTIFYING ADAPTATION OPTIONS UK CLIMATE IMPACTS PROGRAMME www.ukcip.org.ukIdentifyingAdaptationOptionsexploresthenatureandcharacteristicsofadaptationinthecontextofclimateriskandprovidesfurther
backgroundinformationandexamplesofadaptationstrategiesandoptions.Itincludesasimpleadaptationchecklistwhichidentifieskeyprinciplesthatareinalignmentwithgoodadaptationdecisions.Theprinciplessuggestthatgoodadaptationisfoundedontheengagementofaninformedcommunitywithawillingnessandabilitytoadapt.104
INTERGOVERNMENTAL PANEL ON CLIMATE CHANGEwww.ipcc.chRecognizingtheproblemofglobalclimatechange,theWorldMeteorologicalOrganization(WMO)andtheUnitedNationsEnvironmentProgramme(UNEP)establishedtheIntergovernmentalPanelonClimateChange(IPCC)in1988.TheroleoftheIPCCistoassessonacomprehensive,objective,openandtransparentbasisthescientific,technicalandsocio-economicinformationrelevanttounderstandingthescientificbasisofriskofhuman-inducedclimatechange,itspotentialimpactsandoptionsforadaptationandmitigation.TheIPCCdoesnotcarryoutresearchnordoesitmonitorclimaterelateddataorotherrelevantparameters.Itbasesitsassessmentmainlyonpeer-reviewedandpublishedscientific/technicalliterature.AmainactivityoftheIPCCistoprovideinregularintervalsanassessmentofthestateofknowledgeonclimatechange.
THE INTERNATIONAL EMISSIONS TRADING ASSOCIATION www.ieta.orgTheInternationalEmissionsTradingAssociation(IETA)isanon-profitbusinessorganizationcreatedinJune1999toestablishafunctionalinternationalframeworkfortradingGHGemissionreductions.ItsmembershipincludesleadinginternationalcompaniessuchasAlcan,OntarioPowerGeneration,SuncorandTransalta.TheIETAisdedicatedtotheobjectivesoftheUnitedNationsFrameworkConventiononClimateChange(UNFCC),theestablishmentofeffectivemarket-basedtradingsystemsforemissionsthataredemonstrablyfair,open,efficient,accountableandconsistentacrossnationalboundariesandmaintainingsocietyequityandenvironmentalintegritywhileestablishingsuchsystems.
THE KYOTO PROTOCOL 105
www.unfccc.int/2860.phpTheKyotoProtocolcameintoforceinFebruary2005.AsofJanuary2007,166countriesandothergovernmentalentitieshadratifiedtheAccord.Ratifyingcountrieshavecommittedtoreduce,by2008-12,theiremissionsby5.2%belowtheir1990levels.UnderKyoto’smain
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principle,governmentsareseparatedintodevelopedcountries,referredtoasAnnex1countries(whichhaveacceptedGHGemissionsreductionobligations);anddevelopingcountries,referredtoasNon-Annex1countries(which,althoughtheydonothavelegallybindingGHGcaps,mustsubmitandmonitortheirannualGHGinventory).
TheProtocolprovidesthreemechanisms:1.EmissionstradingamongAnnex1countries;
2.JointImplementation(JIs)whichallowAnnex1nationstoobtainemissioncredits(EmissionReductionUnits–ERUs)forprojectsthatreduceemissionsinotherAnnex1countries;and
3.CleanDevelopmentMechanisms(CDMs)wherebyAnnex1countriescanobtainpermits(CertifiedEmissionReductionunits–CERs)forprojectsthatreduceemissionsinnon-Annex1countries.Thisallowscountriestoearncreditsforestablishingorassistingclimate-friendlyprojectsindevelopingnations.
PartiestotheUNFrameworkConventiononClimateChange(UNFCCC)willmeetinBalitocontinuenegotiatingthesuccessortotheKyotoProtocolwhichexpiresin2012.BusinessesarelookingforclearsignalsfromgovernmentthattheKyotomechanismswillcontinuepost-2012andbebuiltupon.
MAY DAY BUSINESS SUMMIT ON CLIMATE CHANGE 2007www.maydaycompany.org.ukAnotherrecentexampleofbusinesscollaborationisHRHThePrinceofWales’sMayDay:BusinessSummitonClimateChange2007.Attendedbymorethan1,000businessleaders,itprovidedanopportunitytoshareexperiences,learnfromoneanotherandcommittoactionafterthedayitself.Itmarkedthebeginningofanation-widemovementofbusinessestakingactiononclimatechangeandmakingcommitmentstomobilizetheircompany,employees,suppliersandcustomers.
MONTREAL CLIMATE EXCHANGEwww.m-x.ca/accueil_en.phpTheMontrealExchangeinpartnershipwiththeChicagoClimateExchangewilllaunchtheMontrealClimateExchange(MCeX)carbonfuturescontractbytheendof2007.ThenewMCeXisexpectedtogeneratethepricesignalrequiredbylargeGHGemitterstomanagetherisksassociatedwiththeso-called“priceofatonneofcarbon”.
THE NATIONAL ROUND TABLE ON THE ENVIRONMENT AND THE ECONOMYwww.nrtee-trnee.caTheNationalRoundTableontheEnvironmentandtheEconomy(NRTEE)isdedicatedtoexploringnewopportunitiestointegrateenvironmentalconservationandeconomicdevelopment,inordertosustainCanada’sprosperityandsecureitsfuture.ItsmissionistogenerateandpromoteinnovativewaystoadvanceCanada’senvironmentalandeconomicinterestsincombination,ratherthaninisolation.Inthiscapacity,itexaminestheenvironmentalandeconomicimplicationsofpriorityissuesandoffersadviceonhowbesttoreconcilethesometimescompetinginterestsofeconomicprosperityandenvironmentalconservation.ThemembershipoftheNRTEEincludesdistinguishedleadersinbusinessandlabour,universities,environmentalorganizations,Aboriginalcommunitiesandmunicipalities.Itactsasanadvocateforpositivechange,raisingawarenessamongCanadiansandtheirgovernmentsaboutthechallengesofsustainabledevelopmentandpromotingviablesolutions.
OFFSETTERSwww.offsetters.caOffsettersassistscompanieswiththeirclimatechangemitigationeffortsbydevelopingandcustomizingGHGaccountingsystems,identifyingoffsetchoicesthatareconsistentwithacorporatebrand,verifyingthatanorganizationhastrulygonecarbonneutralandprovidingadviceonreducingthevolumeofemissionsthroughoutthesupplychain.Inalignmentwiththeirphilosophytopromotethemainstreamadoptionofnextgenerationenergysystems,Offsettersfundsareinvestedinrenewableenergyandenergyefficiencyprojectsthatwouldnothavetakenplacewithouttheirinvolvement.Workingwithindustry,municipalandfinancialpartners,theyareintheprocessofestablishingheatrecoveryprojectsinNorthAmerica.InternationalprojectsareprovidedincollaborationwithClimateCare,aworldleaderintheprovisionofsustainableoffsets.
THE PEMBINA INSTITUTEwww.pembina.orgThePembinaInstituteisanindependent,not-for-profitenvironmentalpolicyresearchandeducationorganizationthatenvisionsaworldinwhichourimmediateandfutureneedsaremetinamannerthatprotectstheEarth’slivingsystems;ensurescleanair,landandwater;preventsdangerousclimatechange;andprovidesforasafeandjustglobalcommunity.Pembina’smajorpolicyresearchandeducationprogramsareintheareasofsustainable
energy,climatechange,environmentalgovernance,ecologicalfiscalreform,sustainabilityindicatorsandtheenvironmentalimpactsoftheenergyindustry.Itscurrentclimatechangeworkincludesmonitoringandreportingonthefederalgovernment’sprogressinimplementingthefullrangeofpoliciesandmeasuresneededtomeetCanada’semissionreductiontargetundertheKyotoProtocol,outliningthecasefordeepemissionreductionspost-2012andworkingfortheimplementationofregulationstoreduceCanadianemissionsthroughasystemoftargetsandtrading.
PEW CENTER ON CLIMATE CHANGEwww.pewclimate.orgThePewCenteronGlobalClimateChangebringstogetherbusinessleaders,policymakers,scientistsandotherexpertstoadvancethebeliefthatcollaborativeeffortwillprotecttheclimatewhilesustainingeconomicgrowth.ThePewCenterhasissued92reportsfromleadingresearchersonkeyclimatetopicssuchaseconomicandenvironmentalimpactsandpracticaldomesticandinternationalpolicysolutions.Throughtheir43-memberBusinessEnvironmentalLeadershipCouncil(BELC)theyworktoshapepolicyandchartpracticalsolutionstoclimatechange.TheBELCconsistsofprimarilyFortune500companieswhotogetheremploymorethan3.8millionpeopleandrepresent$2.8trillioninmarketcapitalization.ItisnowthelargestU.S.basedassociationofcorporationsfocusedonaddressingthechallengesofclimatechange.
PLANETAIR www.planetair.caPlanetairisanot-for-profitserviceofferedbytheUnisféraInternationalCentre.Launchedin2005,Planetairaimstohelpsindividuals,corporations,andinstitutionstoreducetheirclimatefootprint.Unisférageneratesanddisseminatesknowledgeonabroadrangeofsustainabledevelopmentissuesandoffersresearch,consultingandtrainingservicestopublicandprivateorganizations.Unisféra’steamiscomprisedofjurists,economists,scientistsandengineers,aswellasexpertsinmanagement,communications,publicpolicy,andinternationalrelations.
POINT CARBONwww.pointcarbon.comPointCarbonisaleadingproviderofindepen-dentnews,analysisandconsultingservicesforEuropeanandglobalpower,gasandcarbonmarkets.PointCarbonoffersareal-timenewsservicewiththelatestdevelopmentsandpricesintheworld’scarbonmarkets,marketresearchservicestounderstandtheimplicationsof
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markettrendsandtradinganalytics/toolstoallowclientstotradeandmanagerisksinthepower,gasandcarbonmarkets.
POLLUTION PROBEwww.pollutionprobe.orgPollutionProbeisaCanadianenvironmentalorganizationthatdefinesenvironmentalproblemsthroughresearch,promotesunderstandingthrougheducationandpressesforpracticalsolutionsthroughadvocacy.ItsClimateChangeProgrammeactivitiesaredesignedtohelpCanadaachieveitscurrentandfutureclimatechangetargetsandfocusonrenewableenergyandGreenPower,transportationefficiencyprograms,forestcarbonmanagementandclimatechangeimpactsandadaptationassessments.PollutionProbehasalsoworkedinpartnershipwithhealthorganizationstoexploretherelationshipbetweenclimatechangeandhumanhealthandhasbeenactivelyengagedinthedevelopmentofstandardsforGHGreportingsystemsattheinternationalandnationallevels.
SUSTAINABILITY PURCHASING NETWORKwww.buysmartbc.com/TheSustainabilityPurchasingNetworkisaresourcefororganizations,includinglargeandsmallfirms,governmentsandnon-profitorganizations,seekingtominimizethenegativeandenhancethepositiveenvironmentalandsocialimpactsofpurchasing.TheNetworkprovidestraining,tools,on-lineforums,resources,business-to-businessprojectsandadvisoryservicesonenvironmentalandsocialpurchasing.Theyrunworkshopsonreducingthecarboninyoursupplychain,introducingsustainabilitypurchasingtoyourorganizationandintegratingsustainabilityintoyourtenderingtoolkit,andareavailableforon-sitetrainingandadvice.Publicationsinclude:GuidetotheBusinessCaseBenefitsofSustainabilityPurchasingandTrendsandDriversforSustainablePurchasing.
UK CLIMATE IMPACTS PROGRAMME www.ukcip.org.ukTheUKClimateImpactsProgramme(UKCIP)helpsorganizationsassesshowtheymightbeaffectedbyclimatechangeandhowtoprepareforitsimpact.EstablishedinApril1997,UKCIPisfundedbytheDepartmentforEnvironment,FoodandRuralAffairs(Defra)andbasedattheUniversityofOxford.UKCIPworkswithitsstakeholderstocoordinateresearchonhowclimatechangewillhaveanimpactatregionalandnationallevels.
UNITED NATIONS GLOBAL COMPACTwww.unglobalcompact.orgTheUNGCisanetworkofconcernedbusinessleadersandnon-profitgroups5,000membersstrongwhichseekstoimplement10principlesintheareaofhumanrights,labour,environment,andanti-corruption.UNGCrecentlypublishedCaringforClimate:Tomorrow’sLeadershipTodaywhichshowcasesinnovativeexamplesofGlobalCompactparticipantsaddressingclimatechange.
THE UNIVERSITY OF CAMBRIDGE PROGRAMME FOR INDUSTRYwww.cpi.cam.ac.ukTheCambridgeProgrammeforIndustryworkswithseniorleadersinternationallytohelpthemunderstandandrespondeffectivelytothemostsignificantsocialandenvironmentalchallengesthatfacetheirorganizationsnowandinthefuture.TheProgrammeforIndustryisactivelyinvolvedinthreeprojectsrelatedtoclimatechange:
1.TheClimateProject(UK)isaclimateleaderstraininginitiativewhichbringstogetherUKleaderstohelpthemcommunicatethechallengesofclimatechangeandexplorewaysoftakingfurtheraction.DevelopedinpartnershipwithAlGore’sinitiativeTheClimateProject.
2.TheCorporateLeadersGrouponClimateChangebringstogetherbusinessleadersfrommajorUKandinternationalcompaniestoworkwithgovernmenttodevelopnewandlonger-termpoliciesfortacklingclimatechange(seepage65).
3.TheClimateLeadershipProgrammebuildscapacityinorganizationstoaddressthechallengesandopportunitiesofclimatechange.DevelopedinpartnershipwithTheClimateGroupandDukeUniversity.
VOLUNTARY CARBON STANDARD www.v-c-s.org/TheInternationalEmissionsTradingAssociation(IETA),theClimateGroup,theWBCSDandtheWorldEconomicForumannouncedthecompletionoftheVoluntaryCarbonStandard(VSC)FrameworkinJuly2007.TheVCSwillintroduceastringentqualityassurancetothemarketandunderpinconsumerconfidence,marketcredibilityandinnovationinlowcarbontechnologies.Itwillbeaglobalstandardapplicabletoallprojecttypesinalljurisdictions.
WORLD BANK CARBON FINANCEwww.carbonfinance.orgTheWorldBankCarbonFinanceUnit(CFU)usesmoneycontributedbygovernmentsandcompaniesinOECDcountriestopurchase
project-basedGHGemissionreductionsindevelopingcountriesandcountrieswitheconomiesintransition.TheemissionreductionsarepurchasedthroughoneoftheCFU’scarbonfundsonbehalfofthecontributor,andwithintheframeworkoftheKyotoProtocol’sCleanDevelopmentMechanism(CDM)orJointImplementation(JI).
UnlikeotherWorldBankdevelopmentproducts,theCFUdoesnotlendorgrantresourcestoprojects,butrathercontractstopurchaseemissionreductionssimilartoacommercialtransaction,payingforthemannuallyorperiodicallyoncetheyhavebeenverifiedbyathirdpartyauditor.Thesellingofemissionreductions-orcarbonfinance-hasbeenshowntoincreasethebankabilityofprojects,byaddinganadditionalrevenuestreaminhardcurrency,whichreducestherisksofcommerciallendingorgrantfinance.Thus,carbonfinanceprovidesameansofleveragingnewprivateandpublicinvestmentintoprojectsthatreduceGHGemissions,therebymitigatingclimatechangewhilecontributingtosustainabledevelopment.TheBank’scarbonfinanceoperationshavedemonstratednumerousopportunitiesforcollaboratingacrosssectors,andhaveservedasacatalystinbringingclimateissuestobearinprojectsrelatingtoruralelectrification,renewableenergy,energyefficiency,urbaninfrastructure,wastemanagement,pollutionabatement,forestry,andwaterresourcemanagement.
TheWorldBank’scarbonfinanceinitiativesareanintegralpartoftheBank’smissiontoreducepovertythroughitsenvironmentandenergystrategies.Thethreatclimatechangeposestolong-termdevelopmentandtheabilityofthepoortoescapefrompovertyisofparticularconcerntotheWorldBank.Theimpactsofclimatechangethreatentounravelmanyofthedevelopmentgainsofthelastseveraldecades.TheBankisthereforemakingeveryefforttoensurethatdevelopingcountriescanbenefitfrominternationaleffortstoaddressclimatechange.
WORLD BUSINESS COUNCIL FOR SUSTAINABLE DEVELOPMENTwww.wbcsd.orgTheWorldBusinessCouncilforSustainableDevelopment(WBCSD)isaCEO-led,globalassociationofnearly200companiesdealingexclusivelywithbusinessandsustainabledevelopment.TheCouncilprovidesaplatformforcompaniestoexploresustainabledevelop-ment,shareknowledge,experiencesandbestpracticesandtoadvocatebusinesspositionsontheseissuesinavarietyofforums,working
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withgovernments,non-governmentsandintergovernmentalorganizations.
TheoverarchingobjectiveoftheWBCSDEnergyandClimatefocusareaistopromoteandfacilitateinteractionanddialoguesonenergysustainabilityanditsrelatedpolicyframeworks.TheWBCSDinteractswithinternationalbodiessuchastheIPCCandtheUNFCCCandfocusesonpost-2012discussionsandthedevelopmentofthe“Kyoto”flexiblemechanisms,anareawheremoreeffortsareneededtomaketheCleanDevelopmentMechanism(CDM)workableandattractivefortheprivatesector.
TheGHGProtocolInitiative(GHGProtocol)isajointinitiativeoftheWBCSDandtheWorldResourcesInstitute(WRI)thataimstoharmonizeGHGaccountingandreportingstandardsinternationallytoensurethatdifferenttradingschemesandotherclimaterelatedinitiativesadoptconsistentapproachestoGHGaccounting.
WORLD RESOURCES INSTITUTEwww.wri.orgTheWorldResourcesInstitute(WRI)wasfoundedin1982andisanenvironmentalthinktankthatgoesbeyondresearchtofindpracticalwaystoprotecttheearthandimprovepeople’slives.ItsmissionistomovehumansocietytoliveinwaysthatprotectEarth’senvironmentanditscapacitytoprovidefortheneedsandaspirationsofcurrentandfuturegenerations.TheWRIorganizesitsworkaroundfourkeygoals:
i)reverserapiddegradationofecosystemsandassuretheircapacitytoprovidehumanswithneededgoodsandservices;
ii)guaranteepublicaccesstoinformationanddecisionsregardingnaturalresourcesandtheenvironment;
iii)protecttheglobalclimatefromfurtherharmduetoemissionsofGHGsandhelphumanityandthenaturalworldadapttounavoidableclimatechange;and
iv)harnessmarketsandenterprisetoexpandeconomicopportunityandprotecttheenvironment.
Byconductingindependentresearchanddevelopinginnovativepolicyandbusinessoptions,WRIispromotinganeffectiveinternationalandUSresponsetoclimatechange.Inparticular,WRIaimsto:
>DeveloprobustinternationalagreementsandUSpoliciestoprotecttheclimatesystem;
>Fosterwidespreadinvestmentinclimate-friendlyenergyandtransportationtechnologies;and
>ReduceGHGemissionsthroughcleanalternativessupportedbybusinesses,governments,nongovernmentalorganizations,andthepublic.
WORLD WIDE FUND FOR NATURE / WORLD WILDLIFE FUND CLIMATE SAVERS PROGRAMwww.panda.org/about_wwf/what_we_do/climate_change/index.cfmTheWorldWideFundforNature(WWF)andWorldWildlifeFundCanada(amemberoftheglobalnetwork)isworkingwithleadingcompaniestoturnthenecessityofcarbonmanagementintoabusinessadvantage.ClimateSavercompanieshavesetambitiousgoalsandtargetsandmadeinnovativecommitmentstoreducetheirGHGemissions.CurrentClimateSaveragreementsarewithCatalystPaperCorporation,JohnsonandJohnson,IBM,Nike,Polaroid,Sony,Lafarge,TetraPakandNovoNordisk.
ZEROFOOTPRINTwww.zerofootprint.netZerofootprintisanot-for-profitorganizationthatcombinesfinancialandenvironmentalengineering,socialnetworkingtoolsandbusinessintelligencetocreateproductsandservicesthathelplargecorporations,organizationsandindividualssignificantlyreducetheirenvironmentalfootprint.Zerofootprintaimstobetheworld’sleadingbrandingreenbygeneratingthoughtleadershipanddesigningpracticalsolutionstosolveglobalproblems.
101.Labatt,SoniaandWhite,RodneyR.(2007)CarbonFinance:TheFinancialImplicationsofClimateChange.JohnWiley&Sons,Inc.Hoboken,NewJersey
102.TheClimateGroup(2007)“CarbonDownProfitsUp”.Thirdedition.Availableathttp://theclimategroup.org/assets/resources/cdpu_newedition.pdf
103.Llewellyn,John(2007)“TheBusinessofClimateChange:ChallengesandOpportunities”.LehmanBrothers.Availableathttp://www.lehman.com/#
104.UKCIP(2007)“IdentifyingAdaptationOptions”Availableatwww.ukcip.org
105.Llewellyn,John(2007)“TheBusinessofClimateChange:ChallengesandOpportunities”.LehmanBrothers.Availableathttp://www.lehman.com/#
106.AccountAbility(2007)“WhatAssuresConsumersonClimateChange:SwitchingonCitizenPower”.AccountAbility.Availableathttp://www.accountability21.net/blogs.aspx?id=996
“ Considering the costs of reducing GHG emissions but not the costs of failing to reduce emissions is highly misleading: if insufficient action is taken to curb GHG emissions, climate change impacts are likely to result in very large financial costs.”106
AccountAbility
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FLIGHT TRAVELTheCarbonNeutralCompany www.carbonneutral.com
Atmosfairwww.atmosfair.de
ClimateCarewww.climatecare.org
Offsetterswww.offsetters.ca
TerraPasswww.terrapass.com
SustainableTravelInternationalwww.sustainabletravelinternational.org/offset
Zerofootprintwww.zerofootprint.com
BUSINESS OR INDUSTRIAL EMISSIONS CALCULATORSGHGProtocolwww.ghgprotocol.org
ClimateFriendlywww.climatefriendly.com/business
TheCarbonTrustwww.carbontrust.co.uk
SafeClimatewww.safeclimate.net/calculator
PaperUsageCalculatorwww.environmentaldefense.org/papercalculator
VEHICLE TRAVEL EMISSIONSCertifiedCleanCar www.certifiedcleancar.com
TargetNeutralwww.targetneutral.com
TerraPasswww.terrapass.com
CoolDrivePasswww.cooldrivepass.com
CoolDriverwww.cooldriver.org
DriveNeutralwww.driveneutral.org
DrivingGreenwww.drivinggreen.com
CARBON CALCULATORS
BAT BestAvailableTechnology
BAU BusinessasUsual
BCM BusinessContinuityManagement
CCS CarbonCaptureandStorage
CCX ChicagoClimateExchange
CDM CleanDevelopmentMechanism
CDP CarbonDisclosureProject
CERs CertifiedEmissionReductionunitsfromtheCleanDevelopmentMechanism
CERES CoalitionofEnvironmentallyResponsibleEconomies
CH4 Methane
CO2 CarbonDioxide
CO2e CarbonDioxideEquivalent
CSR CorporateSocialResponsibility
EF EmissionFactor
EPA EnvironmentalProtectionAgency(U.S.)
ET EmissionsTrading
EUETS EuropeanUnionEmissionsTradingScheme
GHG GHG
GRI GlobalReportingInitiative
GWP GlobalWarmingPotential
IETA InternationalEmissionsTradingAssociation
IPCC IntergovernmentalPanelonClimateChange
ISO InternationalStandardsOrganization
JI JointImplementation
KPI KeyPerformanceIndicator
LEED LeadershipinEnergyandEnvironmentalDesign
NGO Non-GovernmentalOrganization
PPM PartsPerMillion
SRI SociallyResponsibleInvestment
SO2 SulphurDioxide
UKCIP UnitedKingdomClimateImpactsProgramme
UNEP UnitedNationsEnvironmentProgramme
UNFCCC UnitedNationsFrameworkConventiononClimateChange
WBCSD WorldBusinessCouncilonSustainableDevelopment
WRI WorldResourcesInstitute
WWF WorldWideFundforNature
ABBREVIATIONS AND ACRONYMS
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GLOSSARY
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AABSOLUTE TARGETAtargetdefinedbyreductioninabsoluteemissionsovertime(ie.reducesCO2emissionsby25%below1990levelsby2010)
ADAPTATIONAnadjustmentinnaturalorhumansystemsinresponsetoactualorexpectedclimatestimuli(variability,extremesandchanges)ortheireffects,whichmoderatesharmorexploitsbeneficialopportunities.
ADAPTIVE CAPACITYTheabilityofasystemtoadjusttoclimatechange(includingvariabilitiesandextremes)tomoderatepotentialdamages,totakeadvantageofopportunitiesortocopewiththeconsequences.Adaptationcanbespontaneousorplannedandcanbecarriedoutinresponsetoorinanticipationofchangesinclimaticconditions.
ADDITIONALITYCriterionforassessingwhetheraprojecthasresultedinGHGemissionreductionsorremovalsinadditiontowhatwouldhaveoccurredinitsabsence.Additionalityisanimportantcriterionwhenthegoaloftheprojectistooffsetemissionselsewhere.EmissionsreductionsareadditionaliftheyoccurredbecauseofthepresenceofincentivesassociatedwiththeexistenceofGHGmarkets,voluntaryormandatory.
AFFORESTATIONTheprocessofestablishingandgrowingforestsonbareorcultivatedlandwhichhasnotbeenforestedinrecenthistory.
ANNEX 1 COUNTRIESDefinedintheInternationalClimateChangeConventionasthosecountriestakingonemissionsreductionobligations:Australia,Austria,Belgium,Belarus,Bulgaria,Canada,Croatia,CzechRepublic,Denmark,Estonia,Finland,France,Germany,Greece,Hungary,Iceland,Ireland,Italy,Japan,Latvia,Liechtenstein,Lithuania,Luxembourg,Monaco,Netherlands,NewZealand,Norway,Poland,Portugal,Romania,RussianFederation,Slovakia,Slovenia,Sweden,Switzerland,Ukraine,UnitedKingdom,USA.
BBASELINETheemissionofGHGsthatwouldoccurwithoutthecontemplatedpolicyinterventionofprojectactivity.
BASE YEARAreferenceyearagainstwhichemissionsperformanceismeasuredovertime.
BASE YEAR EMISSIONS RECALCULATIONRecalculationofemissionsinthebaseyeartoreflectachangeinthestructureofthecompany,ortoreflectachangeintheaccountingmethodologyused.Thisensuresdataconsistencyovertime.
BEST AVAILABLE TECHNOLOGY (BAT)Withrespecttoenergyconsumption,theuseofcurrentbestavailabletechnologiescanreduceenergyintensitylevels.
BIOFUELSFuelmadefromplantmaterialie.wood,strawandethanolfromplantmatter.
BOUNDARIESGHGaccountingandreportingboundariesincludingorganizational,operational,geographic,businessunitandtargetboundaries.Theinventoryboundarydetermineswhichemissionsareaccountedandreportedbythecompany.
CCAP-AND-TRADE SYSTEMAsystemthatsetsanoverallemissionslimit,allocatesemissionsallowancestoparticipantsandallowsthemtotradeemissionscreditswitheachother.
CARBON ASSETThepotentialofGHGemissionsreductionsthataprojectisabletogenerateandsell.
CARBON CAPTURE AND STORAGEAlong-termalternativetoemittingCO2totheatmosphereiscapturingitatitssourceofemissionandstoringit.GeologicalcarbonstorageinvolvestheinjectionofCO2intosubsurfacegeologicalformations.
CARBON CREDITSCarboncreditsarereductionsinGHGemissionsthatcanbetradedandhaveafinancialvalue.Theyarecreatedunderalegalframeworkfor
emissionstradingsuchastheKyotoProtocolortheEUETSorgeneratedbyvoluntaryactionoutsideoflegalframeworkssuchascreditstradedontheChicagoClimateExchange.108
CARBON FINANCEExploresthefinancialrisksandopportunitiesassociatedwithacarbon-constrainedsocietyandanticipatestheavailabilityanduseofmarket-basedinstrumentsthatarecapableoftransferringenvironmentalriskandachievingenvironmentalobjectives.109
CARBON FOOTPRINTArepresentationoftheamountofCO2emittedthroughthecombustionoffossilfuels.Itisgenerallyreferredtoasameasureoftheamountofcarbonemitted;inthecaseofabusiness,aspartoftheireverydayoperations;inthecaseofanindividualorhousehold,aspartoftheirdailylives;oraproductorcommodityinreachingmarket.
CARBON MANAGEMENTReferstoacompany’sevaluationofemissionsacrossthevaluechain,anunderstandingoftherisksandopportunitiesassociatedwithcarbonconstraints,theestablishmentofprioritiesforactionandcommunicationoftheseresultstostakeholders.110
CARBON NEUTRALEmissionsofcarbondioxideand/orotherGHGsintotheatmospherefromthemanufactureofaproduct,acompanyoranotheractivityhavebeenoffsetbyremovinganequalamountofgasfromtheatmosphere.
CARBON PRICINGReferstotheactionofputtingapriceonatonofcarbon.Thereareseveralpossibilitiestoestablishacarbonprice.Optionsincludetheadoptionofacarbontaxorcap-and-tradescheme.
CARBON SEQUESTRATIONTheuptakeofCO2andstorageofcarboninbiologicalsinks.
CERTIFIED EMISSION REDUCTION (CER)AcertifiedreductioninGHGemissionsresultingfromaCDMproject.OneunitundertheKyotoProtocolequalsonemetrictonofCO2e.CERsaretradablecommoditiesthatcanbeusedbyAnnex1countriestomeettheircommitmentsundertheKyotoProtocol.
GLOSSARY OF TERMS107
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CLEAN DEVELOPMENT MECHANISM (CDM)AmechanismestablishedbyArticle12oftheKyotoProtocolforproject-basedemissionreductionactivitiesindevelopingcountries.TheCDMisdesignedtomeettwomainobjectives:toaddressthesustainabilityneedsofthehostcountryandtoincreasetheopportunitiesavailabletoAnnex1PartiestomeettheirGHGreductioncommitments.TheCDMallowsforthecreation,acquisitionandtransferofCERsfromclimatechangemitigationprojectsundertakeninnon-Annex1countries.
CLIMATETheaverageweatherexperiencedoveralongperiod,typically30yearsincludingtemperature,windandrainfallpatterns.
CLIMATE ADAPTATIONTheprocessoroutcomeofaprocessthatleadstoareductioninharmorriskofharm,orrealizationofbenefits,associatedwithclimatevariabilityandclimatechange.
CONSOLIDATIONCombinationofGHGemissionsdatafromseparateoperationsthatformpartofonecompanyorgroupofcompanies.
CO2 CONCENTRATIONTheamountofCO2intheatmosphereatanygiventime,typicallymeasuredinpartspermillion(ppm).
CO2-EQUIVALENT (CO2E)Theuniversalunitofmeasurementtoindicatetheglobalwarmingpotential(GWP)ofeachofthesixGHGs,expressedintermsoftheGWPofoneunitofcarbondioxide.Itisusedtoevaluatereleasing(oravoidingreleasing)differentGHGsagainstacommonbasis.
CDM GOLD STANDARDANGO-backedstandardforoffsetprojectswhichgoesbeyondthestandardrequirementsrequiredbytheKyotoProtocol.Itsaimistocoverthetop20%ofthemarket,certifyingprojectsthatcontributetoemissionsreductionsandmeetstringentsustainabledevelopmentrequirements.
DDECARBONIZATIONTheactionofreducingthecarboncontentrequired(carbonintensity)toproduceaproductorservice.
DIRECT GHG EMISSIONSEmissionsfromsourcesthatareownedorcontrolledbythereportingcompany.
DOUBLE COUNTINGTwoormorereportingcompaniestakeownershipofthesameemissionsorreductions.
EEMISSIONSThereleaseofGHGsintotheatmosphere.
EMISSION FACTORAfactorallowingGHGemissionstobeestimatedfromaunitofavailableactivitydata(ie.tonnesoffuelconsumed,tonnesofproductproduced)andabsoluteGHGemissions.
ENERGY INTENSITYThelevelofenergyinputperunitofoutput.
FFUGITIVE EMISSIONSEmissionsthatarenotphysicallycontrolledbyresultfromtheintentionalorunintentionalreleasesofGHGs.Theycommonlyarisefromtheproduction,processingtransmissionstorageanduseoffuelsandotherchemicals,oftenthroughjoints,seals,packing,gasketsetc.
GGREENHOUSE GASES (GHGs)AnumberofanthropologicallyproducedandnaturallyoccurringgaseswhosepresenceintheatmospheretrapsenergyradiatedbytheEarth.PrimaryGHGs,asidefromwatervapourincludethefollowingsixgases:carbondioxide(CO2),methane(CH4),nitrousoxide(N2O),hydroflurocarbons(HFCs),perfluorocarbons(PFCs)andsulphurhexaflouride(SF6).
GHG CAPTURECollectionofGHGemissionsfromaGHGsourceforstorageinasink.
GHG CREDITGHGoffsetscanbeconvertedintoGHGcreditswhenusedtomeetanexternallyimposedtarget.AGHGcreditisaconvertibleandtransferableinstrumentusuallybestowedbyaGHGprogram.
GHG INTENSITY OF ENERGYThequantityofGHGproducedrelativetototalenergyoutput.
GHG MARKETAGHGmarketissimilartoastockmarkethoweverintheGHGmarket,GHGallowancesorcertificatesaretradedinsteadofstocks.GHGmarketsaredesignedtoofferflexibilitytomarketparticipantsinmeetingmandatory/voluntarytargetsandtohelpidentifycost-effectiveGHGemissionreductionopportunities.
GHG OFFSETOffsetsarediscreteGHGreductionsusedtocompensatefor(ie.offset)GHGemissionselsewhere.Offsetsarecalculatedrelativetoabaselinethatrepresentsahypotheticalscenarioforwhatemissionswouldhavebeenintheabsenceofthemitigationprojectthatgeneratestheoffsets.Toavoiddoublecounting,thereductiongivingrisetotheoffsetmustoccuratsourcesorsinksnotincludedinthetargetorcapforwhichitisused.
GHG PROGRAMAgenerictermusedtorefertoanyvoluntaryormandatoryinternational,national,sub-national,governmentornon-governmentalauthoritythatregisters,certifiesorregulatesGHGemissionsorremovalsoutsidethecompanyincludingtheCleanDevelopmentMechanism(CDM),theEuropeanUnionEmissionsAllowanceTradingScheme(EUETS)andtheChicagoClimateExchange(CCX).
GHG PROJECTAspecificprojectoractivitydesignedtoachieveGHGemissionsreductions,storageofcarbon,orenhancementofGHGremovalsfromtheatmosphere.GHGprojectsmaybestand-aloneprojectsorspecificactivitiesorelementswithinalargernon-GHGrelatedproject.
GHG PROTOCOL INITIATIVEAmulti-stakeholdercollaborationconvenedbytheWorldResourcesInstituteandtheWorldBusinessCouncilforSustainableDevelopmenttodesign,developandpromotetheuseofaccountingandreportingstandardsforbusiness.Itcomprisestwoseparatebutlinkedstandards–theGHGProtocolCorporateAccountingandReportingStandardandtheGHGProtocolProjectQuantificationStandard.
GHG PROTOCOL PROJECT QUANTIFICATION STANDARDAnadditionalmoduleoftheGHGProtocolInitiativeaddressingthequantificationofGHGreductionprojects.Thisincludesprojectsthatwillbeusedtooffsetemissionselsewhereand/orgeneratecredits.
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GHG REGISTRYApublicdatabaseoforganizationalGHGemissionsand/orprojectreductionssuchastheCaliforniaClimateActionRegistry(CCAR)andtheWorldEconomicForum’sGlobalGHGRegister.Eachregistryhasitsownrulesregardingwhatandhowinformationisreported.
GHG REMOVALAbsorptionorsequestrationofGHGsfromtheatmosphere.
GHG SINKAnyphysicalunitorprocessthatstoresGHGs;usuallyreferstoforestsandunderground/deepseareservoirsofCO2.
GHG SOURCEAnyphysicalunitorprocesswhichreleasesGHGintotheatmosphere.
GLOBAL WARMING POTENTIAL (GWP)Afactordescribingtheradiativeforcingimpact(degreeofharmtotheatmosphere)ofoneunitofagivenGHGrelativetooneunitofCO2.
IINDIRECT EMISSIONSEmissionsthatareaconsequenceoftheoperationsofthereportingcompanybutoccurfromsourcesownedorcontrolledbyanothercompany(ie.asaconsequenceoftheimportofelectricity,heatorsteam).
INTENSITY RATIOSRatiosthatexpressGHGimpactperunitofphysicalactivityorunitofeconomicvalue(tonnesofCO2emissionsperelectricitygenerated).Intensityratiosaretheinverseofproductivity/efficiencyratios.
INTENSITY TARGETAtargetdefinedbyreductionintheratioofemissionsandabusinessmetricovertime(ie.reduceCO2pertonneofcementby12%between2000and2008).
INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE (IPCC)EstablishedbytheWorldMeteorologicalOrganization(WMO)andtheUnitedNationsEnvironmentProgramme(UNEP)toassesthescientific,technicalandsocio-economicinformationrelevantfortheunderstandingofclimatechange,itspotentialimpactsandoptionsforadaptationandmitigation.
INVENTORY
Aquantifiedlistofanorganization’sGHGemissionsandsources.
INVENTORY BOUNDARYAlinethatencompassesthedirectandindirectemissionsincludedintheinventorythatresultfromthechosenorganizationalandoperationalboundaries.
ISO 14064Aglobalstandardfordealingwithvoluntaryemissionsreductioncredits.IncludesrequirementsforquantifyingandverifyingbothorganizationalGHGemissionsandemissionreductionsataprojectlevel.
JJOINT IMPLEMENTATION (JI)TheJImechanismwasestablishedinArticle6oftheKyotoProtocolandreferstoclimatechangemitigationprojectsimplementedbetweentwoAnnex1countries.JIallowsforthecreation,acquisitionandtransferofemissionreductionunits.
LLIFE-CYCLE ANALYSISAssessmentofthesumofaproduct’seffects(ie.GHGemissions)ateachstepinitslifecycleincludingresourceextraction,production,usephaseandwastedisposal.
MMARKET INSTRUMENTSCarbontaxes,carbontradingandsubsidiesandtaxbreaksforlow-carbontechnologiesthataimtoenhancethecompetitivenessoflow-carbontechnologies.
MATERIALITY THRESHOLDAconceptemployedintheprocessofverification.Itisoftenusedtodeterminewhetheranerrororomissionisamaterialdiscrepancyornot.
NNON-ANNEX 1 COUNTRIESCountriesthathaveratifiedoraccededtotheUNFCCCbutarenotlistedunderAnnex1andarethereforenotunderanyemissionreductionobligation.
OOFFSETAspecificactivityorsetofactivitiesthatreduce,removeorsequesterGHGemissionsfromtheatmosphere.
OPERATIONAL BOUNDARYTheboundarythatdeterminesthecoredirectandindirectemissionsassociatedwithoperationsownedorcontrolledbythereportingcompany.Thisassessmentallowsacompanytoestablishwhichoperationsandsourcescausedirectandindirectemissionsandtodecidewhichoptionalemissionstoincludethatareaconsequenceofitsoperations.
ORGANIZATIONAL BOUNDARYTheboundarythatdeterminestheoperationsownedorcontrolledbythereportingcompanydependingontheconsolidationapproachtaken.
PPRIMARY EFFECTSThespecificGHGreducingelementsoractivities(reducingGHGemissions,carbonstorageorenhancingGHGremovals)thattheprojectisintendedtoachieve.
PRIMARY ENERGYThetotalenergycontainedinanaturallyoccurringrawmaterialsuchascoal,oilornaturalgasorgeneratedbyanyenergysystembeforebeingconvertedintoanend-useform.
PRODUCIVITY/EFFICIENCY RATIOSRatiosthatexpressthevalueorachievementofabusinessdividedbyitsGHGimpact.Increasingefficiencyratiosreflectapositiveperformanceimprovement.
RREFORESTATIONThisprocessincreasesthecapacityofthelandtosequestercarbonbyreplantingforestbiomassinareaswhereforestshavebeenpreviouslyharvested.
RENEWABLE ENERGYEnergytakenfromsourcesthatisinexhaustibleincludingwind,water,solar,geothermalenergyandbiofuels.
REPORTINGPresentingdatatointernalmanagementandexternaluserssuchasregulators,
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shareholders,thegeneralpublicorspecificstakeholdergroups.
RISK IDENTIFICATIONTheprocessbywhichhazardsarerecognizedandcharacterized.Inthecaseofclimatechangeriskassessment,riskidentificationisadeliberateproceduretoreviewandanticipatepossiblehazards.Risksassociatedwithclimatevariabilitycaningeneralbeidentifiedfrompastexperienceofclimate.
SSCOPEDefinestheoperationalboundariesinrelationtoindirectanddirectGHGemissions.
SCOPE 1 INVENTORYAreportingorganization’sdirectGHGemissions.
SCOPE 2 INVENTORYAreportingorganization’semissionsassociatedwiththegenerationofelectricity,heating/coolingorsteampurchasedforownconsumption.
SCOPE 3 INVENTORYAreportingorganization’sindirectemissionsotherthanthosecoveredinscope2.
SECONDARY EFFECTS (LEAKAGE)GHGemissionschangesresultingfromtheprojectnotcapturedbytheprimaryeffect(s).Thesearetypicallythesmall,unintendedGHGconsequencesofaproject.
SEQUESTRATIONReferstothecaptureofcarbondioxideinamannerthatpreventsiffrombeingreleasedintotheatmosphereforaspecifiedperiodoftime.
STABILIZATION WEDGE/SOCOLOW’S AND PACALA’S WEDGEAtheorydevelopedbyPrincetonprofessors,RobSocolowandStephenPacala.Tostabilizeemissionsinthenext50years,theworldmustreduceemissionsbyabout7gigatonsofcarbon(notCO2)comparedto“businessasusual”scenarios.SocolowandPacalaidentified15stabilizationwedgesthat,ifdeployedatasignificantglobalscale,couldconceivablyreduceemissionsby1gigatoneach.Someexamplesofthe15proposedstabilizationwedgesincludeincreasedfueleconomyfortwobillioncarsfrom30to60mpg,reducedcarbonemissionsby25%inbuildingsandappliancesprojectedfor2054,add100timesthecurrentBrazilorUSethanolproductionwiththeuseof250millionhectares.111
STAKEHOLDERIndividualsandorganizationsthathaveaninvestment,financialorotherwise,intheconsequencesofanydecisionstaken.
TTARGET BASE YEARThebaseyearusedfordefiningaGHGtarget(ie.toreduceCO2emissions25%belowthetargetbaseyearlevelsspecifiedbythetargetbaseyear2010.
TARGET COMPLETION DATEThedatethatdefinestheendofthetargetcommitmentperiodanddetermineswhetherthetargetisrelativelyshort-orlong-term.
UUNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE (UNFCCC)AninternationalconventionadoptedonMay9,1992inNewYorkandsignedattheEarthSummitinRiodeJaneirobymorethan150countriesandtheEuropeancommunity.ItsobjectiveistostabilizeGHGconcentrationsintheatmospheretolevelsthatwouldpreventdangerousanthropogenicinterferencewiththeclimatesystem.TheconventionenteredintoforceinMarch1994.
VVALUE CHAIN EMISSIONSEmissionsfromtheupstreamanddownstreamactivitiesassociatedwiththeoperationsofareportingcompany.
VERIFICATIONAnindependentassessmentofthereliability(consideringcompletenessandaccuracy)ofaGHGinventory.
VULNERABILITYTheextenttowhichclimatechangemaydamageorharmasystem.Itdependsnotonlyonasystem’ssensitivitybutalsoonitsabilitytoadapttonewclimaticconditions.
107.Glossaryadaptedfrom:WRIandWBCSD(2004)GHGProtocol,EnvironmentalProtectionAgency(2005)ClimateLeadersGHGInventoryProtocolDesignPrinciples,WBCSD(2007)Pathwaysto2050andUKCIP(2003)ClimateAdaptation:Risk,UncertaintyandDecision-Making.
108.TheGlobalReportingInitiativeandKPMG’sGlobalSustainabilityServices(2007)“ReportingtheBusinessImplicationsofClimateChangeinSustainabilityReports”.Availableathttp://www.globalreporting.org/NR/rdonlyres/C451A32E-A046-493B-9C62-7020325F1E54/0/ClimateChange_GRI_KPMG07.pdf
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Vicky Arroyo and Benjamin Preston
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